In November 2020, concerned about the impact of misleading green marketing on consumers, the UK's competition and consumer law enforcement body the Competition and Markets Authority ("CMA") asked the question: "how can consumer protection legislation tackle greenwashing?" In January 2021, the CMA stated that 40% of green claims made online could be misleading consumers.
After extensive consultation with businesses, the CMA has today published a Green Claims Code, which aims to help businesses understand and comply with their existing obligations under consumer protection law when making environmental claims. This is in anticipation of a formal review of misleading green claims made by businesses, both online and offline, due to start in 2022. The CMA has stated that it "stands ready to take action against offending firms", and may take action prior to the conclusion of the formal review where there is a clear breach of consumer law.
The CMA will soon announce the sectors it intends to prioritise in its formal review. It has indicated that these may be those industries in which consumers are likely to be most concerned about misleading claims, such as textiles and fashion, travel and transport, and fast-moving consumer goods (food and beverages, beauty products and cleaning products). However, any sector where the CMA finds significant concerns could become a priority.
The CMA has defined green claims as claims that:
"suggest or create the impression that a product or service:
- has a positive environmental impact or no impact on the environment;
- is less damaging to the environment than a previous version of the same good or service; or
- is less damaging to the environment than competing goods or services."
The key piece of consumer protection legislation relevant to the CMA’s guidance is the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs contain a general prohibition against unfair commercial practices and specific prohibitions against misleading actions and misleading omissions. Businesses must remember that this applies to all commercial practices, which can include various aspects of a trader’s behaviour, including but not limited to how it markets its products, services, processes or brand. This includes advertisements, product labelling and packaging or other accompanying information, and even product names.
The key principles of the Green Claims Code are as follows:
- claims must be truthful and accurate
- claims must be clear and unambiguous
- claims must not omit or hide important relevant information
- comparisons must be fair and meaningful
- claims must consider the full life cycle of the product or service
- claims must be substantiated
Accompanying each principle is guidance on how the principle should be applied, including examples. Businesses making green claims should review them against the guidance in preparation for the CMA's formal review in 2022 to avoid sanctions. The CMA have stressed that the Green Claims Code does not constitute legal advice, and if businesses are unsure whether their claims would be compliant, they should seek legal advice.
More information can be found at here.
Latest update - 27/09/2021
Following this announcement, the Advertising Standards Authority ("ASA"), who have been working closely with the CMA on their Climate Change and the Environment project, have published a statement setting out three steps it proposes to take in relation to its regulation of green advertising claims:
First, the Committee of Advertising Practice will issue guidance for advertisers, in line with the CMA's guidance, on how to ensure their ads are socially responsible and avoid greenwashing;
Second, the ASA will be commencing a series of enquiries into specific issues, starting with the Climate Change Committee’s identified priority areas requiring carbon reduction. These inquiries will be followed by any necessary guidance on specific problem areas. Energy, heating and transport issues will be the first areas of focus.
Finally, this autumn the ASA will commission research into consumer understanding of Carbon Neutral and Net Zero claims, and research to understand consumer perceptions of Hybrid claims in the electric vehicle market.
The full statement by the ASA can be found here.
It is clear, therefore, that in the coming years businesses will face increasing scrutiny in relation to any climate-related environmental or social claims that they make. Businesses making such claims will need to take care to adhere to the new guidance.