Greenwashing Insurance: Purpose & Limits from 2026

EU Directive 2024/825 (EmpCo) tightens the rules for environmental claims in the B2B sector from 27 September 2026. Companies must scrutinise their communications to avoid warnings and claims for damages. Greenwashing insurance can help minimise financial risks, but it is not a panacea.

Risks from Greenwashing: Legal Basis

Under § 5 UWG (Gesetz gegen den unlauteren Wettbewerb, German Act Against Unfair Competition), misleading claims are prohibited. The EmpCo Directive specifies this through the prohibition of generic claims (Annex I No. 2 UCPD) and a per-se prohibition on the use of "climate neutral" with carbon offsetting (Annex I No. 4a UCPD). Breaches can lead to warnings, cease-and-desist declarations and claims for damages. The Bundesgerichtshof (BGH, German Federal Court of Justice) judgment of 27 June 2024 (I ZR 98/23 – Katjes) makes it clear that the use of "climate neutral" without transparent disclosure of offsetting measures is to be classified as misleading.

Current Greenwashing Insurance Products

The market for greenwashing insurance is still developing. Some insurers already offer specialist cover or are expanding existing products.

* **Liability insurance with greenwashing clauses:** Some insurers integrate greenwashing risks into their existing product liability or general liability insurance policies. However, cover is often limited and primarily relates to personal injury or property damage caused by misleading environmental claims. * **D&O insurance (Directors & Officers Liability Insurance) with extension:** These policies cover the liability of managers and executives. Some insurers offer extensions that also include damage arising from greenwashing allegations. * **Legal expenses insurance with greenwashing module:** Legal expenses insurance can cover the costs of legal disputes relating to greenwashing warnings. * **Cyber insurance with compliance extension:** Since greenwashing often occurs in connection with digital marketing campaigns, some cyber insurers offer extensions that also cover greenwashing risks.

It is important to note that there is currently no standardised greenwashing insurance. The scope and terms of cover vary considerably.

What Does Greenwashing Insurance Typically Cover?

Greenwashing insurance can cover the following costs:

* **Legal fees:** Costs for legal advice and representation in the event of a warning or legal dispute. * **Court costs:** Costs for court proceedings. * **Settlement and settlement agreements:** Costs for out-of-court settlement with the party issuing the warning. * **Costs for reviewing and adapting marketing materials:** Costs for having advertising materials reviewed by a lawyer or compliance expert. * **Reputation management:** Costs for measures to limit damage to the company's reputation.

Exclusions and Limits of Cover

Greenwashing insurance does not cover all risks. Typical exclusions are:

* **Intentional greenwashing:** If the company knowingly makes misleading claims, there is no insurance cover. * **Breaches of applicable law:** If the company violates other laws or regulations (e.g. the Packaging Act), the insurance is not responsible. * **Criminal prosecution:** The insurance generally does not cover costs for criminal proceedings. * **Damage caused by missing or inadequate compliance processes:** If the company has not implemented adequate compliance measures, the insurer may refuse to provide cover.

Preventive Measures Are Crucial

Greenwashing insurance should not be regarded as a substitute for effective compliance management. Companies should take the following measures to minimise the risk of greenwashing warnings:

* **Review of marketing materials:** All advertising materials should be checked for accuracy and compliance by a lawyer or compliance expert. * **Substantiation of environmental claims:** All environmental claims must be supported by verifiable data and facts. Recognised certifications such as EU-Bio, FSC or Blauer Engel can be helpful here. * **Employee training:** Employees in marketing and sales should receive regular training on current legal requirements. * **Implementation of a compliance workflow:** A clearly defined workflow for reviewing and approving marketing materials is essential. * **Use of compliance tools:** Tools such as Empcora can support companies in reviewing their marketing materials.

Conclusion: Insurance as Complement, Not Replacement

Greenwashing insurance can help companies minimise financial risks associated with misleading environmental claims. However, it is not a panacea. Preventive measures and effective compliance management are crucial to avoid greenwashing warnings. Those who have already established a sound compliance workflow can benefit from insurance as additional protection. Those who neglect compliance, on the other hand, will probably pay high insurance premiums and still bear considerable residual risk.