Greenwashing: Overview (Singapore)

An overview of greenwashing risk in Singapore, covering the key concepts and definitions, the applicable legislative and regulatory frameworks, main compliance requirements, and enforcement options. It also provides information about greenwashing litigation and sets out the main heads of claim that may be used to pursue a civil claim for greenwashing.

With the growing importance of corporate sustainability-related information to consumers, investors, business partners, and employees, the accuracy of this information is coming under increased regulatory scrutiny in Singapore. As a result, misleading or inaccurate claims in sustainability related disclosures or other statements may result in reputational damage, regulatory intervention, and legal action.

What is greenwashing can vary across jurisdictions and between regulators and other enforcement agencies. This Practice Note explains the regulatory approach to greenwashing in Singapore and also sets out the basis on which legal action can be brought.

Greenwashing Concepts and Definitions

At its core, greenwashing refers to the act of misleading third parties by overstating the positive environmental impact of a product, service, brand, or business. However, there are nuances to this concept.

In Singapore, greenwashing is not defined by any legislation or regulation. Rather, the substantive act of greenwashing falls under the purview of several laws and regulations.

Greenhushing

Greenhushing (sometimes referred to as greenbleaching), is the downgrading, downplaying, or staying silent on the environmental credentials of a product or service to avoid extra regulation, legal sanctions, or reputational damage arising from inadvertent greenwashing or a failure to meet environmental targets. For example, greenhushing occurs when a company deliberately underreports its environmental, social, and governance (ESG) initiatives for fear of backlash. This underreporting can lead to legal or regulatory penalties or reputational damage. Greenhushing is often a result of over-regulation or a business’s lack of understanding of the law.

Advertising and Consumer Laws and Regulations

In Singapore, consumer laws prevent organisations from falsely advertising or marketing themselves or their activities as green. The main piece of legislation is the Consumer Protection (Fair Trading) Act 2003 (CPFTA) (see Consumer Protection (Fair Trading) Act 2003 (CPFTA)).

Regarding advertisements, the Singapore Code of Advertising Practice (SCAP), which is published by the Advertising Standards Authority of Singapore (ASAS) is relevant (see Singapore Code of Advertising Practice (SCAP).

Consumer Protection (Fair Trading) Act 2003 (CPFTA)

The CPFTA protects consumers from unfair practices, which can include greenwashing. The Competition and Consumer Commission of Singapore (CCCS) is the primary authority that regulates the CPFTA. The CCCS is a statutory board under the purview of the Ministry of Trade and Industry (MTI).

In February 2024, the Minister of State for Trade and Industry responded to a parliamentary question on whether the MTI was considering a review of the CPFTA to explicitly prohibit greenwashing by businesses operating in Singapore. In response, the Minister said that the CPFTA protects consumers against businesses that make false or misleading claims about their products or services, including greenwashing. (Oral reply to Parliamentary Question on greenwashing, MTI, 16 February 2024).

Although the CPFTA does not specifically address greenwashing, the law, as written, can capture greenwashing behaviour in the consumer market. CPFTA section 4 is broad enough to include most instances of greenwashing where a supplier misleads consumers by overstating the positive environmental impact of a product, service, brand, or business, such as by making:

• False environmental claims (section 4(b), CPFTA).
• Misleading or deceptive environmental statements or representations (including by omission) (section 4(a), CPFTA).

The Second Schedule of the CPFTA further lists specific examples of unfair practices. Examples that could apply to greenwashing include:

• Representing that goods or services have sponsorship, approval, performance characteristics, accessories, ingredients, components, qualities, uses, or benefits that they do not have.
• Representing that goods or services have a particular standard, quality, grade, style, model, origin, weight, volume, length, capacity, or method of manufacture that they do not.
• Making a representation that appears in an objective form, such as an editorial, documentary, or scientific report, when the representation is primarily made to sell goods or services, unless the representation states that it is an advertisement or a promotion.
• Omitting to provide a material fact to a consumer, using small print to conceal a material fact from a consumer, or misleading a consumer as to a material fact regarding the supply of goods or services.

For more information on consumer protection laws in Singapore, see Practice Note, Contracting with Consumers: Overview (Singapore).

Enforcement of the CPFTA

Under the CPFTA, the Consumers Association of Singapore (CASE) and Singapore Tourism Board (STB) are the respective first points of contact for local consumers’ and tourists’ complaints. CASE assists aggrieved consumers to obtain redress and, in some cases, compensation through negotiation, mediation, or both.

Errant retailers who persist in unfair trade practices are be referred to the CCCS for investigation, which has extensive powers to address suspected CPFTA violations. The CCCS can:

• Conduct an investigation if there are reasonable grounds to suspect that:
  • a supplier has engaged, is engaging, or is likely to engage in an unfair practice;
  • a person has knowingly abetted, aided, permitted, or procured a supplier to engage in an unfair practice; or
  • a person is knowingly abetting, aiding, permitting, or procuring a supplier to engage in an unfair practice (Section 19, CPFTA).
• Require the production of documents that are relevant to an investigation (section 20, CPFTA).
• Enter premises with or without a warrant in connection with an investigation (sections 21 and 22, CPFTA).

A person who refuses to provide information, destroys or falsifies documents, provides false or misleading information, or obstructs an officer conducting an investigation or enforcement can be guilty of an offence and liable on conviction to a fine up to SGD10,000, imprisonment up to one year, or both.

If a finding is made following an investigation, the CCCS can file injunction applications with the courts against persistent errant retailers and enforce compliance with injunction orders issued by the courts. If the supplier under injunction does not comply with the injunction order, the CCCS can take the supplier to court for contempt of court. This is a criminal offence that could result in a fine, imprisonment, or both. 

CPFTA violations can also lead to civil liability (see Civil Liability and Greenwashing Litigation).

Future Guidelines on the CPFTA

Businesses should be prepared to examine the regulatory risks concerning greenwashing and ensure compliance with future guidelines. The CCCS is developing guidelines to provide greater clarity to suppliers on environmental claims that could amount to unfair practices under the CPFTA. The guidelines are intended to help companies both:

• Make fair and accurate claims about the “green” credentials of their products.
• Avoid unintentional greenwashing that could amount to an unfair practice under the CPFTA.

(Written reply to Parliamentary Questions on CCCS’ Guidelines on product marketing to avoid greenwashing, MTI, 5 February 2024.)

In 2022, the CCCS funded a study by the National University of Singapore (NUS) Business School on green claims on e-commerce sites frequently visited by Singapore residents that will likely aid the CCCS’s work in drafting the impending guidelines. The study’s findings included that:

• 51% of online product claims were found to be vague with insufficient elaboration or supporting details.
• 14% of online product claims use technical language that made it difficult for consumers to understand or verify the claim.

Having examined the study’s findings, the CCCS concluded that:

• Environmental claims (such as language claiming a product or service is environmentally friendly, eco-friendly, green, sustainable, good for the Earth, natural, conscious, or responsible), may be vague or prone to overstatement or exaggeration regarding the actual environmental benefits.
• Claims that use technical jargon (such as “made of high-quality ABS eco-friendly material”) can confuse or mislead consumers on the environmental benefit of a supplier’s goods, services, or business.

(Media Release, CCCS, 16 November 2023.)

In anticipation of the release of the guidelines, the CCCS has advised suppliers to:

• Be specific in their environmental claims by presenting any qualifying or supporting information accurately and clearly alongside the claims.
• Avoid making claims that would imply or convey an overall impression that the environmental benefit of the product is more than it is (for example, the degree of recycled material used).
• Ensure that all environmental claims can be substantiated with valid and credible evidence.
• Use language that is easier for consumers to understand.
• Explain the meaning or implications of technical terms.

(Media Release, CCCS, 16 November 2023.)
 
While the CCCS’s advice does not have the force of law, the advice indicates what businesses can expect in the upcoming guidelines. Moreover, the advice can potentially be persuasive in a CPFTA unfair practices claim. Singapore regulators, including the ASAS, may also consider the CCCS’s recommendations in any decisions they make (see Singapore Code of Advertising Practice (SCAP)).

Singapore Code of Advertising Practice (SCAP)

The ASAS is a council under the CASE that promotes ethical advertising in Singapore. The ASAS is a self-regulatory body of the advertising industry that has published the SCAP to promote a high standard of ethics in advertising.

A business that is assessing the regulatory risks of greenwashing in advertising should give due regard to the SCAP. Advertisements that greenwash by overstating the positive environmental impact of a product or business can result in action taken by the ASAS (see Consequences of Breaching the SCAP).

Under the SCAP, environmental claims should: 

• Clearly explain their basis and, where necessary, qualify them, as unqualified claims can mislead if they omit significant information.
• Not be used without qualification unless advertisers can provide convincing evidence that their product will cause no environmental damage (for example, that the product is environmentally friendly or wholly biodegradable). Qualified claims and comparisons (for example, greener or friendly) can be acceptable when an advertiser can substantiate that its product provides an overall improvement in environmental terms either against their competitors’ or their own previous products.
• Not suggest that a claim has universal acceptance if it is not true. Where there is significant division of scientific opinion or where evidence is inconclusive, this should be reflected in any statements made in the advertisements.
• Not imply that a product has been changed to make it environmentally safe if the product never had a demonstrably adverse effect on the environment. However, an advertiser can claim a product omits chemicals that are known to damage the environment if the product’s composition has been changed or was purposely designed to omit those chemicals.
• Avoid using extravagant language or bogus and confusing scientific terms. The meaning of any necessary scientific expressions should be clear in advertising. 

(Appendix L, SCAP.)

The SCAP’s general provisions can also be applicable to greenwashing. Advertisements should not be misleading due to inaccuracy, ambiguity, exaggeration, omission, or otherwise. Specifically, an advertisement should not:

• Misrepresent any matter that is likely to influence a consumer’s attitude toward any product, advertiser, or promote.
• Include information to mislead consumers into believing any untrue matter, such as the source of the product, quality of the product, obligation (or non-obligation) in using a trial product, and others similar matters.

(Rule 5.1, SCAP.)

Additionally, an advertisement should not misuse research results or quotations from technical and scientific publications. Scientific jargon and irrelevancies should not be used to make a claim appear to have a scientific basis it does not possess.

(Rule 4.1, SCAP.)

Businesses must be prepared for increased greenwashing regulation in advertising. The CCCS recently announced that it is developing guidelines to help companies make fair and accurate claims about the “green” credentials of their products (see Future Consumer Laws and Regulations). Businesses will likely have to consider the new guidelines when assessing their legal and regulatory risks in Singapore and incorporate them into their internal policies and procedures.

For more information on advertising in Singapore, see Practice Note, Advertising Overview (Singapore).

Consequences of Breaching the SCAP

While the SCAP does not have the force of law, ASAS decisions can have serious consequences for businesses. The ASAS can:

• Require an advertiser to amend or remove an advertisement.
• Withhold advertising space or time from advertisers.
• Withdraw trading privileges from advertising agencies.
• Publish the details of an ASAS review, including naming advertisers that breached the SCAP.
• Refer the matter to the relevant authorities for further investigation, such as the CCCS when the ASAS suspects a CPFTA violation.

(Rule 6, SCAP.)

The ASAS has recently levelled public criticism at an advertisement for making greenwashing claims. In December 2023, the ASAS found that Prism+, a Singaporean electronics retailer, had breached the SCAP when an advertisement featuring a social media influencer claimed that using the company’s air conditioner was the “best tip” to “save Earth” (see PRISM+ air-con ad featuring Xiaxue deemed misleading by advertising standards watchdog, Channel News Asia, 15 December 2023).

The ASAS stated the advertisement breached the SCAP, particularly that advertisements must not mislead by inaccuracy, ambiguity, exaggeration, or omission or misrepresent any matter likely to influence consumers’ attitudes to the product (see SCAP Chapter II, rule 5.1). The ASAS viewed the advertisement as unacceptable, given the energy that appliances like air conditioners consume. While Prism+ defended the advertisement as being tongue-in-cheek and satirical, the company removed the advertisement from its Instagram page following the ASAS’s comments.

Environmental Disclosures in Company Reports

Mandatory Climate Reporting for SGX Listed Issuers

The Singapore Exchange Securities Trading Limited (SGX) has been progressively introducing mandatory climate reporting. In financial year 2022, climate reporting was introduced on a “comply or explain” basis, which requires an SGX-listed issuer to provide an explanation if it does not disclose its social and environmental impact and performance. In-scope companies need to ensure that their environmental disclosures are complete and accurate to mitigate the risk of greenwashing.

Based on the recommendations from the Task Force on Climate-related Financial Disclosures, the SGX is phasing in additional reporting requirements, starting with companies that operate in industries that have been identified as having the highest climate-related risks:

• In financial year 2023, climate reporting became mandatory for issuers in the financial, agriculture, food and forest products, and energy industries.
• In financial year 2024, mandatory climate reporting is being extended to the materials, buildings, and transportation sectors.

Disclosure of Greenhouse Gas Emissions by SGX Listed Issuers and Large Non-Listed Companies

The SGX and Accounting and Corporate Regulatory Authority of Singapore (ACRA) have jointly announced that mandatory climate-related disclosures of greenhouse gas (GHG) emissions will be progressively introduced for SGX-listed issuers and large non-listed companies in Singapore. These disclosures are separate from the SGX’s mandatory climate reporting (see Mandatory Climate Reporting for SGX Listed Issuers).

Beginning with financial year 2025, all listed issuers must report and file climate-related disclosures on both:

• Direct GHG emissions from owned or controlled sources (Scope 1 emissions).
• Indirect GHG emissions from the generation of purchased energy (Scope 2 emissions).

(See Response to Public Consultation on Climate Reporting and Assurance Roadmap for Singapore, SGX and ACRA, February 2024.)

Beginning with financial year 2027, the same requirements apply to large non-listed companies with an annual revenue of at least $1 billion and total assets of at least $500 million (Turning Climate Ambition into Action in Singapore, SGX and ACRA, February 2024).

Reports on all Scope 3 emissions (indirect greenhouse gas emissions that occur in the value chain of a reporting company, including both upstream and downstream emissions):

• Are required for SGX-listed issuers starting financial year 2026.
• Will not be required for large non-listed companies until at least financial year 2029.

The ACRA will confirm the exact timing for implementing these reporting requirements for large non-listed companies after reviewing the reporting experience of listed issuers. The ACRA has given assurances that it would provide at least two years’ notice for large non-listed companies to prepare for the reporting. (Turning Climate Ambition into Action in Singapore.)

Assurance Requirements for GHG Disclosures

External limited assurance on direct greenhouse gas emissions from owned or controlled sources and indirect greenhouse gas emissions from the generation of purchased energy must be conducted for:

• SGX-listed issuers beginning financial year 2027.
• Large non-listed companies beginning financial year 2029.

Limited assurance has a lower level of assurance and involves fewer tests than that applied to statutory audits of financial statements.

Enforcement of Corporate Reporting Requirements

The SGX may take regulatory action if there are breaches of the Listing Rules (see SGX, Enforcement Framework). However, it remains to be seen what enforcement action may be taken by the SGX for any failure to comply with the environmental disclosure requirements. For large non-listed companies, we await clarity from the ACRA on the possible penalties for breaches.

Regulating Greenwashing in Financial Services

The Monetary Authority of Singapore (MAS) has published guidelines on ESG standards that are applicable to certain financial sectors and can be relevant to greenwashing (CFC 02/2022 Disclosure and Reporting Guidelines for Retail ESG Funds, MAS, 28 July 2022 (CFC 02/2022)).These guidelines seek to provide clarity on the MAS’s expectations of how existing requirements under the Code on Collective Investment Schemes and Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations apply to retail ESG funds and the disclosure and reporting guidelines applicable to these funds.

From January 2023, fund managers for retail ESG funds must disclose both:

• The investment’s ESG focus and relevant criteria, methodologies, or metrics.
• The sustainable investing strategies of retail funds sold with an ESG label.

The ESG fund’s name cannot be misleading and the fund’s investment portfolio or strategy should reflect its sustainable focus. At least two-thirds of the fund’s net asset value must be invested in accordance with the stated ESG investment strategy (CFC 02/2022.)

Separately, the MAS’s Green Finance Industry Taskforce (GFIT) has suggested a classification system or taxonomy for Singapore-based financial institutions aimed at identifying activities that are considered green or transitioning towards green. The inclusion of transitioning activities allows for a gradual move towards greater sustainability while considering their starting positions and supporting inclusive economic and social development.
 
The Third GFIT Taxonomy Consultation Paper was released in February 2023 to gather opinions on the specific thresholds and requirements for the classification of green and transitioning activities in the following sectors:

• Agriculture and forestry or land use.
• Industrial.
• Waste and water.
• Information and communications technology.
• Carbon capture and sequestration.

Amongst other matters, the consultation sought feedback on its “do no significant harm” criteria, where activities that significantly contribute to mitigating climate change should not be carried out in a way that negatively impacts the environmental objectives of:

• Climate change adaptation.
• Protecting healthy ecosystems and biodiversity.
• Promoting resource resilience and the circular economy.
• Pollution prevention and control.

On 28 June 2023, the Fourth GFIT Taxonomy Consultation Paper on the thresholds and criteria for financing the early phase-out of coal-fired power plants under the Singapore-Asia Taxonomy was released.

Enforcement of Financial Services Greenwashing

The MAS can take regulatory action under section 199 of the Securities and Futures Act 2001 when an issuer of a collective investment scheme makes a materially false or misleading statement that fulfils the following criteria:

• The statement is likely to:
  • induce the subscription, sale, or purchase of securities; or
  • affect the market price of securities.
• The issuer:
  • does not care whether the statement was true or false; or
  • knew or ought reasonably to have known the statement was false or misleading in a material particular.

This prohibition can apply to a materially false or misleading statement relating to an issuer’s environmental claim. A breach of this provision is an offence punishable under section 204 of the Securities and Futures Act 2001, which carries a fine up to SGD250,000, imprisonment up to seven years, or both.

Civil Liability and Greenwashing Litigation

Greenwashing litigation is a developing area of risk. In addition to regulatory liability, civil liability can also arise. Civil claims for greenwashing can be brought under:

• The CPFTA (see Consumer Protection (Fair Trading) Act 2003).
• The common law doctrine of misrepresentation (see Common Law Misrepresentation).
• The Misrepresentation Act 1967 (Misrepresentation Act) (see Misrepresentation Act 1967).

Consumer Protection (Fair Trading) Act 2003

A consumer that has entered a transaction involving an unfair practice under the CPFTA can bring a court action against the supplier (section 6(1), CPFTA). A court that finds a supplier to have engaged in an unfair practice can order:

• Restitution of any money, property, or other consideration that the consumer gave or furnished.
• Damages for any loss or damage the consumer suffered from the unfair practice.
• Specific performance against the supplier.
• The supplier to repair goods or provide parts for goods.
• A variation of the contract between the supplier and consumer.

(Section 7(5), CPFTA.)

An aggrieved consumer can claim up to SGD30,000 or any other amount that the MTI may prescribe (Section 6, CPFTA).

Common Law Misrepresentation

Statements that misrepresent the positive environmental impact of a product, service, brand, or business, may give rise to a cause of action under the common law doctrine of misrepresentation.

There are two categories of misrepresentation claim:

• Fraudulent misrepresentation.
• Negligent misrepresentation.

In both instances, the claimant must show a reliance on a false representation. The false representation does not have to be the only factor but must have played a real and substantial part in operating on the mind of the claimant such that the claimant was induced to enter the contract in question and suffered losses as a result (Jurong Town Corp v Wishing Star Ltd [2005] 3 SLR(R) 283 at [72]). Whether this requirement is met depends on the facts of the case.
 
A fraudulent misrepresentation requires the claimant to show the representor’s dishonesty. Dishonesty is a high threshold that requires proof on a preponderance of probabilities (Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and Others [2005] SGCA 27 at [14]). Damages for a fraudulent misrepresentation claim should compensate the claimant for the loss suffered, such that the court will seek to place the claimant in the same financial position that the claimant would have been in if the deceit had not occurred.
 
A negligent misrepresentation requires the claimant to show that the representor owed the claimant a duty of care in making the representation, that the representor breached that duty, and that the breach caused damage to the claimant (Bay Lim Piang v Lye Cher Kang [2023] 5 SLR 602 at [99]). Damages awarded for a negligent misrepresentation claim is limited to losses that are reasonably foreseeable (RBC Properties Pte Ltd v Defu Furniture Pte Ltd [2015] 1 SLR 997 at [81] (RBC Properties)).

Misrepresentation Act 1967

A statement that misrepresents the positive environmental impact of a product, service, brand, or business, can also give rise to a cause of action under section 2(1) of the Misrepresentation Act 1967. Under this provision, a claimant must establish that they:

• Entered into a contract after the representor made a misrepresentation to them.
• Suffered loss from the misrepresentation.

If the claimant establishes these facts, the representor is liable unless they can prove they had reasonable grounds to believe, and did believe up to the time the contract was made, that the represented facts were true. The Singapore Court of Appeal has stated that there are two sequential stages to this analysis of the proper basis for damages:

• An objective assessment of the particular facts of the case to determine the representor’s subjective belief in the truth of the representation.
• An objective determination of whether the representor had reasonable grounds for holding that belief.

(RBC Properties 1 SLR 997 at [69].)
 
The courts have suggested that since section 2(1) of the Misrepresentation Act is the statutory analogue of the common law action for negligent misrepresentation, it may be more appropriate to apply a similar measure of damages (so that the measure of damages would be limited to loss that was reasonably foreseeable) (see Common Law Misrepresentation).