Greenwashing in Chile: Chile v USA, EU and Brazil

As part of its efforts to implement the United Nations’ 2030 Agenda for Sustainable Development, Chile is currently discussing a bill to regulate greenwashing. The bill seeks to establish specific rules that go beyond simply classifying greenwashing as misleading advertising, in line with the European Union, whilst adopting certain elements sourced from the Brazilian greenwashing regulation.

Various institutions and market actors have implemented measures to mitigate the environmental impact of business activity within the framework of sustainability strategies (ESG). However,  in parallel to these efforts, the phenomenon of greenwashing has emerged .

Greenwashing can be defined as a commercial practice through which companies claim that their products or services are more environmentally friendly or sustainable than they actually are.

These practices can be seen through product labelling, where terms such as “eco-friendly”, “biodegradable”, and “100% natural” appear without supporting information.

This article examines how greenwashing has been addressed in the United States, the European Union and Brazil, before exploring the situation in Chile.

USA, EU and Brazil

In the United States, regulation on greenwashing is limited as there are no federal laws addressing this issue. Consequently, some states have created their own laws on this matter.

However, the Federal Trade Commission (“FTC”) has published “Guides for the Use of Environmental Marketing Claims” (“Green Guides”), which offer guidance [1] on avoiding misleading environmental claims, but these are not legally binding.

In contrast, the European Union has been regulating greenwashing for several years through various legislative measures. These include transparency requirements in the financial sector [2] [3], taxonomy regulations [4] and consumer rights protections [5] [6].

In this regard, Directive N°2024/825 [7], which was approved [8] in 2024, seeks to prohibit the use of labels that make broad allusions about a product or service’s sustainability, whilst restricting the use of certifications. Additionally, the Directive seeks to encourage producers to provide more detailed information on product durability and reparability.

Although Brazil does not have a specific law on greenwashing, this is regulated under Consumer Law which prohibits misleading advertising.

Under this law, it is up to the sponsor to verify the truthfulness of the advertisement, with breaches potentially resulting in fines and imprisonment of up to one year for the entity sponsoring an advertisement and for the entity making it.

Additionally, the non-governmental organization Conselho Nacional de Autorregulamentação Publicitária (“CONAR”) published the Código Brasileiro de Autorregulamentação Publicitária [9], a standard self-regulatory framework, which also provides rules on misleading advertising.

Looking at other countries in the region, Colombia lacks specific regulation on greenwashing. Instead, this is treated as misleading advertising under their Consumer Law and under Decree No. 1369 of 2014, which sets requirements for environmental advertising. However, in 2023, a bill [10] was introduced to explicitly regulate greenwashing. A similar situation has been observed in Mexico [11] and Argentina [12], where no specific legislation exists, but efforts to address the issue continue.

Chile: Current regulation and draft law

A bill [13] to regulate greenwashing (the “Bill”) is currently being discussed in Chile. For the time being, Consumer Law No. 19,046 on misleading advertising remains applicable.

As for the Bill, its objective is, among other aspects, to define the concept of greenwashing and establish tools to sanction those who violate the regulation.  

If approved, the Bill will require companies to provide information in their advertising that is not only truthful and not misleading, but also verifiable. It will also require companies to maintain permanent and updated information on their websites concerning their environmental practices in Chile, as well as in other countries where they operate or invest.

The Bill will also introduce a change around the burden of proof at trial. Instead of the burden falling on the complainant, the Bill establishes that it is for the companies to prove the veracity of their statements.

In terms of penalties, the Bill introduces fines of up to 9,000 UTM [14] (approximately USD 640,000) and a ban on any kind of advertising for a period of one to five years.

The Court will also order the offender to carry out the necessary corrective publicity to amend the errors or falsehoods in the misleading advertising. In addition, the verdicts will be published in the National Environmental Information System (‘SINIA’). 

The Bill intends to sanction the media that broadcast advertising classified as greenwashing, establishing fines equivalent to twice the economic benefit gained from such publication.

In addition, the Bill will prohibit companies convicted of environmental damage or sanctioned by the Superintendence of the Environment from advertising on sustainability-related issues. The same will apply to companies whose partners, shareholders, directors or managers have been convicted, among other offenses, for anti-union practices or for violations of fundamental workers’ rights. 

Comment

Chile is  now close to adopting the Bill, which, once approved, will be applicable nationally. Through this new legislation, Chile seeks to demonstrate its commitment to sustainability and position itself as a serious player capable of adhering to ESG standards aligned to those that are being adopted globally.