BERLIN -  The German Federal Court of Justice (BGH) ruled against greenwashing in advertising on Thursday, mandating that products marketed as "green" must provide clear, detailed explanations of their climate benefits.

The ruling came after sweets manufacturer Katjes labeled its products as "climate-neutral," a term the court found misleading due to its ambiguity. The BGH determined that Katjes should have clarified that its production was not climate-neutral but achieved this status solely through CO2 compensation.

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Misleading consumers in this way is "competitively relevant," as portraying the product as climate-neutral can influence consumer purchasing decisions, the BGH said.

When it comes to limiting climate change, we really need to emphasize this: We need to reduce emissions from fossil fuels as quickly as possible.

Heather Graven, a climate physicist at Imperial College London

Backing the association Headquarters for Combating Unfair Competition, the court overturned a regional verdict, prohibiting Katjes from labeling its products climate-neutral. The court stressed that carbon offsetting does not equate to actual CO2 reduction.

Last year, voluntary carbon markets faced scrutiny after studies and reports questioned the effectiveness of forest protection projects and highlighted the exaggerated compensation figures.

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A recent study published in the journal Science further challenges industry practices, revealing that while plants can absorb more CO2 than previously assumed, they also release it back into the atmosphere faster than anticipated.

"When it comes to limiting climate change, we really need to emphasize this: We need to reduce emissions from fossil fuels as quickly as possible," Heather Graven, a climate physicist at Imperial College London and lead author of the study, said in an interview with German Focus magazine.