Eco-Claims and the Convention on Contracts for the International Sale of Goods: Filling the Green Gap

Introduction

In a time when corporate sustainability claims fill billboards, product labels, and investor pitches, the promise of ‘green’ has become both a marketing point and a legal challenge. From biodegradable plastics to carbon-neutral delivery, environmental marketing and the demand for green products are everywhere—but how much of it is genuinely accurate? As global trade moves toward Environmental, Social, and Governance (ESG) standards, the legal community questions: what happens when ‘green’ is just a facade? Should there be contractual penalties for such false claims?

The growing phenomenon of greenwashing has been defined in various ways. It can be described as misleading consumers about a company's environmental practices or the eco-friendliness of its products or services. However, greenwashing practices do more than mislead consumers; they may also undermine trust in international commerce and supply chains, distort fair competition, and harm honest, sustainability-focused businesses. Regulators and courts are beginning to respond, but the primary international sales law — the United Nations Convention on Contracts for the International Sale of Goods (CISG) — lacks explicit rules on environmental representations and appears insufficient for addressing this issue from a private law perspective. This post examines the gap and suggests ways to adapt international contract law to meet the challenges of greenwashing.

The Unseen Consequences of Greenwashing

Greenwashing is both a public relations problem and a trade problem between private parties. It allows companies to gain market share, access to environmentally conscious consumers, and even favorable investor treatment without making real sustainability commitments. This manipulative practice disadvantages businesses that invest heavily in sustainable processes, creating a race to the bottom.

More troubling, it erodes trust across supply chains and causes consumers to develop biases against such products, even when they are environmentally friendly. If buyers cannot trust the accuracy of sustainability claims, how can they confidently participate in cross-border transactions? A shipment might include unrecyclable packaging; a ‘carbon neutral’ product might rely on offset schemes that are more symbolic than meaningful. When these claims are left unchecked, reputational damage spreads—sometimes to unwitting importers, investors, and retailers caught in the web.

The CISG’s Struggle on Greenwashing Claims

The CISG covers most international sales contracts. It offers a strong and consistent framework for contract formation, remedies, and obligations, helping to reduce uncertainty in cross-border deals. However, it was created before the ESG movement. It lacks specific rules on environmental claims or sustainability statements. 

Still, one might argue that CISG Articles 35, 40, and 49 can be interpreted to address some greenwashing cases. For example, if a seller claims their goods are ‘made from 100% recycled materials’ but are not, Article 35 could be used for lack of conformity. Or if the seller knew the claim was false, Article 40 might provide recourse. If a seller fundamentally breaches the contract, the buyer may terminate it under Article 49.However, these provisions were not designed with ESG considerations in mind.

Environmental claims are often vague, technical, or symbolic. Was the seller’s ‘eco-friendly’ label a binding promise? Was the buyer relying on that label, or was it mere puffery? Such questions are difficult to resolve within the CISG’s current framework. Additionally, the current remedies might be insufficient to address the damage—particularly when reputational harm, regulatory risks, or consumer backlash follow a poorly executed transaction. 

Some academics mention ‘Sustainability Contract Clauses’ (SCC) alongside the CISG. Sharma and Choudhurynote that utilizing blockchain and smart contracts could help track the enforceability of SCC and improve sustainability and authenticity.

Why This Legal Blind Spot Matters

There’s a bigger question at stake: can a contract law system that ignores ESG misrepresentation stay relevant in an economy focused on sustainability?

Governments around the world are tightening regulations on environmental disclosures. Consumers demand transparency. Investors are moving toward ESG portfolios. However, when a buyer in one country sues a seller in another over false green claims, they often find that the CISG provides little assistance. This gap between legal tools and market realities creates uncertainty and risk. Such uncertainty is the enemy of commerce.

Legal clarity is essential for businesses—especially small and medium enterprises—operating internationally; it is not a luxury. Without enforceable rules on environmental misrepresentation, the costs of doing sustainable business increase.

Toward a Greener CISG

It’s time to reconsider how international contract law tackles greenwashing. Instead of starting from scratch, we can begin by modifying the CISG to address current needs. A few strategic updates could have a major effect.

First, environmental claims should be explicitly recognized as material contractual terms in business-to-business settings. If a seller advertises a product as ‘compostable’, that claim should be given legal importance—not treated as casual marketing.

Second, assumptions of reliance should be established. In a world where environmental attributes influence procurement and investment decisions, buyers shouldn’t have to prove they relied on a green claim; the law should assume it unless proven otherwise.

Third, improved remedies and deterrent private law sanctions are crucial. Greenwashing is not just about broken promises; it’s about eroding entire systems of trust and fairness. Remedies should extend beyond replacement or refund. They should also consider reputational damage and deter bad faith actions.

Finally, the right to avoid a contract should be extended in cases of material environmental misrepresentation—even if the breach would not otherwise be considered fundamental. Sustainability is no longer just a ‘nice-to-have’. For many businesses, it is an essential part of their value and identity.

A Hybrid Future: CISG Meets ESG

Of course, the CISG cannot handle this burden alone. Its provisions must work together with and align with emerging ESG regulations. What’s needed is a hybrid model that combines the CISG’s transactional certainty with the normative power of environmental governance. 

This is not a utopian dream. It’s a legal and economic necessity. As cross-border transactions increasingly rely on sustainability credentials, international contract law must evolve—or risk becoming outdated. 

Conclusion: Fit for Purpose?

The CISG has served global trade well for over four decades. However, to remain ‘fit for purpose’ in the environmentally conscious 21st century, it must address the green gap by including specific, clear, and direct clauses to ensure green commitments in contracts. Updating the CISG to recognize environmental misrepresentation as a basis for nonconformity, presuming reliance, expanding remedies, and aligning with ESG regulations will rebuild trust in international commerce. 

Greenwashing is not a passing trend—it’s a structural threat to fair trade, consumer confidence, and environmental progress. Now is the time for international contract law to speak clearly: greenwashing can be excluded from global commerce, and the CISG plays a crucial role.

Dr. Çiğdem Ileri Köksal is a Contract Manager at Asklepios, Germany.

Bahadır Köksal is a Doctoral Candidate at the University of Hamburg.