China

Relevant legislation or guidelines

• Advertising Law of the People's Republic of China (2021 Amendment) (the “Advertising Law”).

Other relevant legislation:

• Anti-Unfair Competition Law of the People's Republic of China (2019 Amendment) (the “Anti-Unfair Competition Law”).
• Law of the People's Republic of China on the Protection of Consumer Rights and Interests (2013 Amendment).
• Product Quality Law of the People’s Republic of China (2018 Amendment) (“Product Quality Law”)
• Measures for the Supervision and Administration of Operation of Publicly Offered Securities Investment Funds (2014) (“Measures for the Supervision of Operation of Funds”)

Other relevant guidelines:

• China’s Ministry of Ecology and Environment issued the Measures for the Administration of Legal Disclosure of Enterprise Environmental Information) (企业环境信息依法披露管理办法) (the “Measures”) in December 2021. The Measures came into effect on 8 February 2022.
  The Measures do not include any provision regarding the making of green claims but impose standards and requirements on Chinese companies in particular industries to prepare and make annual ESG disclosures.
• China Enterprise Reform and Development Society, a State Council-basked, Beijing-based think tank, has designed the Guidance for Enterprise ESG Disclosure (企业ESG披露指南T/CERDS2-2022) (the “Guidance”), which was implemented on 1 June 2022. The Guidance includes different parameters in assessing different ESG performance such as carbon emission.
• However, the Guidance is not legally binding.

Is there any upcoming relevant legislation or guidelines?

N/A

Who are the responsible authorities or bodies?

The State Administration for Market Regulation (“SAMR”) and local AMRs are the principal regulators of advertising laws, anti-unfair competition laws and product quality laws in China.

The China Securities Regulatory Commission is responsible for regulating the securities industries in China.

What are the enforcement measures?

• SAMR at the state or local level may take administrative action against companies who breach the provisions of the Advertising Law or Anti-Unfair Competition Law.
• Enforcement measures may include taking down the advertisement or publication, requiring the advertiser to publish rectification, the imposition of fines, and/or the revocation of business licences.

Who can pursue infringements?

• The SAMR at the state or local level may take administrative action against companies who breach the provisions of the Advertising Law or the Anti-Unfair Competition Law.
• Private parties such as consumers may bring a civil claim under the Advertising Law where a false advertisement is published in violation of the Advertising Law to defraud or mislead consumers, causing any damage to the lawful rights and interests of consumers who purchase goods or receive services.
• Private parties may bring a civil claim under Anti-Unfair Competition Law where offenders acted in violation of the Anti-Unfair Competition Law, causing any damage to the lawful rights and interests of any businesses.
• Private parties may bring a civil claim at the People’s Court when there are disputes related to product quality.
• Private parties may bring a civil claim pursuant to Supreme People's Court’s Several Provisions Concerning the Trial of Civil Compensation Cases of False Statement in the Securities Market.

What are the general rules of thumb for green claims?

Green claims should comply with the provisions of the Advertising Law.

• Article 4 of the Advertising Law provides that advertisements shall not have any false or misleading content or defraud or mislead consumers. An advertiser shall be responsible for the veracity of the contents of the advertisement.
• Article 28 provides that any advertisement that defrauds or misleads consumers with any false or misleading content shall be a false advertisement.

Green claims should also comply with the provisions of the Anti-Unfair Competition Law.

• Article 8 of the Anti-Unfair Competition Law provides that business operators shall not conduct any false or misleading commercial promotion of their goods in terms of performance, function, quality etc., to defraud or mislead consumers.

Green claims should comply with the provisions of the Product Quality Law.

• Article 5 of the Product Quality Law states that it is forbidden to forge or infringe upon quality marks such as certification marks and marks for fine quality products; it is forbidden to forge the place of origin, forge or infringe upon the factory names, factory addresses; it is forbidden to produce or market adulterated products or to use fake goods as genuine or sub-standard products as standard.

Investment funds that invest in green industries should comply with the Measures for the Supervision of Operation of Funds.

• For self-proclaimed ESG funds, 80% of the non-cash asset in that fund should be directed to ESG-related investments.

Do green claims need to be substantiated by evidence?

• Green claims should comply with the provisions of the Advertising Law and the Anti-Unfair Competition Law and should not be misleading.
• Article 28(3) of the Advertising Law provides that misleading content incudes instances where any scientific research result, statistical data, investigation result, excerpt, quotation, or other information which is fabricated or forged or cannot be validated has been used as certification material.
• Article 17 of Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Anti-Unfair Competition Law of the People's Republic of China (2022) provides that misleading content incudes comparisons with other goods in a biased manner, using a scientifically inconclusive view as a conclusive fact or using any ambiguous language in commercial promotion, etc. The courts in China will consider the relevant daily usage, average consumer’s degree of attention, factual circumstance and the target audience when determining the presence of misleading content.
• Article 3 of the Measures for the Supervision of Operation of Funds indicates that the operations of investment funds must adhere to the principle of honesty.