What is greenwashing?
‘Greenwashing’ is giving a false impression or providing misleading information about how a company’s products are more environmentally sound than they truly are. Companies apply these greenwashing techniques to promote their products to appeal to the environmentally conscious consumer. This may involve the use of vague and general statements like ‘eco-friendly’, ‘sustainable’, or ‘green’ when marketing their product to consumers.
Ryanair came under fire last year when the UK’s Advertising Standard Authority criticised it for using outdated information by claiming it was the UK’s lowest emission airline while failing to include many rival airlines in its comparison. In 2019, H&M launched a line of clothing titled ‘Conscious’ which was allegedly made from ‘organic’ cotton and recycled polyester. H&M soon received media criticism for using this as a marketing ploy to make the clothes appear more environmentally friendly than they actually were.
Current Irish legal landscape
The Consumer Protection Act 2007
Where greenwashing claims amount to a ‘misleading commercial practice’ under the Consumer Protection Act 2007, they are prohibited in Ireland. A misleading commercial practice or advertising includes false, misleading or deceptive information that is likely to cause the average consumer to purchase goods or services that they would not otherwise. A marketing communication can also be considered misleading if important information about the product is omitted, and that omission misleads a consumer regarding the essential characteristics of the product.
The Advertising Standards Authority for Ireland (ASAI)
The ASAI is an independent self-regulatory body whose primary objective is to ensure that all commercial advertisements and promotions are legal, decent, honest, and truthful. Although the ASAI Code is a non-binding industry code, advertisers are still required to abide by it.
The ASAI Code requires that any marketing communications relating to sustainability or eco-friendly materials should be supported by robust evidence. They must not mislead, or be likely to mislead, by inaccuracy, ambiguity, exaggeration, omission, or otherwise. Therefore, any environmental claims should not be used without qualification unless advertisers can provide evidence that their products will not cause any environmental damage.
The Competition and Markets Authority (CMA)
The UK’s CMA has published draft guidance to help businesses understand and comply with their existing consumer law obligations when making environmental claims. The draft guidance sets out six principles to help businesses comply with existing consumer protection law when making sustainability claims:
- Be truthful and accurate
- Be clear and unambiguous
- Fully disclose all relevant information
- Ensure that any comparisons made are fair and meaningful
- Consider the full product life cycle
- Be sure that claims can be substantiated
The final guidance is set to be published by the end of September 2021. It is relevant for all UK businesses that make environmental claims aimed at consumers. It is also a useful reference point for Irish traders, in the absence of any more detailed CCPC rules.
The Consumer and Markets Authority (ACM)
The ACM in the Netherlands is also trailblazing with sustainability initiatives. In January 2021, it published guidelines on Sustainability Claims from a consumer protection perspective. The guidelines set out five ‘rules of thumb’ for businesses to abide by when making sustainability claims:
- Set clear descriptions of the sustainability benefits
- Updating any sustainability claims
- Sustainability claims must be accurate and true
- Comparisons should also be accurate and true
- Quality claims must not be misleading
EU red card for greenwashing
The European Commission is making sustainability a top priority in its European Green Deal. The deal introduces a framework of regulations and measures targeting the environmental impact of products sold within the bloc. A new draft regulation or directive is expected to be published this year to empower consumers for ‘the green transition’. This is intended to strengthen consumer protection against practices like greenwashing. The draft will give consumers better and clearer information about the eco-credentials of products they are purchasing and will require green claims to be substantiated.
In its Circular Economy Action Plan, the European Commission recommends that companies should substantiate any green or environmental claims against a standard methodology to assess their impact on the environment.
It is also worth noting that the Unfair Commercial Practices Directive (Directive 2005/29/EC) is one of the four EU consumer protection laws that will be amended by the Enforcement and Modernisation Directive. From May 2022, consumer protection authorities will be able to impose higher-level penalties and GDPR style fines of up to 4% of annual turnover, or at least €2 million for widespread breaches of certain consumer protection laws, including misleading commercial practices, thereby increasing the importance of traders making accurate ‘green’ claims.
Conclusion – Key takeaways
Inaccurate, misleading, or unsubstantiated environmental claims may be in breach of current Irish and EU laws. Penalties for these practices will increase in 2022. It is time for traders to:
- Verify any green claims they are making or proposing to make for their products, services or processes
- Be aware of the requirements of the Consumer Protection Act and ASAI Code
- For more detailed guidance, look to the UK (CMA) and Netherlands (ACM) authorities’ publication
- Keep an eye out for proposed EU law on greenwashing