What is happening?
UK consumer regulators, the Competition and Markets Authority (CMA) and Advertising Standards Authority (ASA), are ramping up their enforcement of green claims to protect consumers from 'greenwashing'.
Following the publication of the Green Claims Code (Code) in September 2021, the CMA is now proactively investigating green claims with a specific focus on the fashion retail sector. The CMA recently announced it is investigating green claims made by ASOS, Boohoo and George at Asda. Recent research also suggests that almost 25% of the complaints received by the CMA since the introduction of the Code relate to the fashion sector.
The ASA is also actively enforcing the green claims rules under the CAP and BCAP Codes, resolving 435 green claims cases in 2021 alone. In line with the ASA's current focus on 'recycled'/'recyclable' claims and food sustainability claims, there have been a number of recent high-profile cases relating to green claims made by retailers and consumer brands including complaints upheld against Tesco, Oatly, Alpro, Aqua Pura and Pepsi Lipton. These kinds of public rulings risk damaging brand loyalty for retailers and consumer brands and diverting sales to competitors as consumers are increasingly willing to switch allegiance where a brand doesn't live up to its purported environmental credentials.
We're also seeing this trend for increasing regulatory and legal action on green claims in other jurisdictions. In France, a new law was recently passed banning the use of terms such as 'biodegradable' and 'environmentally friendly' on product packaging. In Denmark and the Netherlands, there has been a recent flurry of private litigation against companies accused of greenwashing (see Danish Crown and KLM) and the Dutch consumer authority (the NCA) has recently waded into the debate around substantiation of green claims, warning fashion retailers not to use the Higg Material Sustainability Index (MSI) to substantiate green claims due to shortcomings in its lifecycle assessment for different materials.
Why does it matter?
The risk for retailers of getting green claims wrong can be significant. Not only do retailers risk enforcement action from regulators but they also risk damage to reputation and brand loyalty.
These risks look set to increase following the UK Government's recent proposals to enhance the CMA's enforcement powers to include the ability to fine companies up to 10% of global annual turnover for breaches of consumer protection law. This approach follows recent changes in the EU where such 'GDPR-style' fines are already in place under the Omnibus Directive.
Following similar proposals by the European Commission, the CMA is also calling on the UK Government to add greenwashing to the list of 'blacklisted' practices in the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which would make it much easier for the CMA to take enforcement action against companies found to be making misleading green claims.
Taken together, these changes would make the green claims regulatory landscape much more difficult to navigate and the risks of getting green claims wrong much more severe. In the meantime, retailers face a patchwork of different green claims rules/ enforcement depending on the jurisdiction in which they are operating, making it increasingly difficult for marketing teams to plan green claims campaigns (and for legal teams to advise on them).
What action should you consider?
It’s advisable for retailers and brands to review their green claims now to ensure they comply with relevant consumer protection laws. Retailers and brands may want to consider taking the following steps to help ensure compliance and to reduce the risk of enforcement action:
- Be specific and avoid vague terms such as "green", "sustainable", "environmentally-friendly", "eco": claims should be as specific as possible – avoid making broad, absolute claims unless you clearly explain what they mean. Marketing & Comm teams should steer clear of these vague/unclear terms (or anything similar) which both the CMA and ASA consider to be misleading unless they can be substantiated across the full product lifecycle.
- Consider the full lifecycle of the product: you might wish to consider the effect of the full life cycle of a product on the accuracy of an environmental claim. If an environmental claim relates to a product as a whole (e.g. "environmentally-friendly cheese" on a cheese label) it will be more likely to mislead if it doesn't account for the full product lifecycle. If a claim relates to a specific part of a product, such as the packaging only (e.g. "40% less plastic than [X product]"), it will be less likely to mislead.
- Make qualifying information clear to consumers: if a claim is only accurate where a qualification/caveat is applied, ensure that such qualifying information is clear, prominent and close enough to the main claim to be easily seen by consumers before they make any purchasing decision. If this is challenging due to space limitations, consider other ways to provide this information to consumers (e.g. using a QR code or linking out to a website).
- Ensure comparisons are fair and meaningful: make sure any comparative claims compare 'like with like' – i.e. products intended for the same purpose and using the same measures/metrics. Ensure the basis of any comparison is clear.
- Keep a dossier of substantiating evidence for all claims: ensure all environmental claims are supported by robust, credible and up-to-date evidence. Internal data/records can be sufficient for this, however independent verification/certification will make environmental claims more robust.
- Be transparent about the use of carbon offsetting/carbon credits: where carbon neutrality claims are based on the use of carbon offsetting/carbon credits, ensure that this is made clear to consumers and provide details of the credits purchased/ scheme used. Failure to do so risks misleading consumers into thinking that a product/business doesn't generate any emissions.
- Ensure claims about future goals are backed-up: make sure that any claims relating to the business' future environmental goals are supported by a clear, verifiable and internally documented strategy to deliver them. Statements of intent should be in proportion to the business' actual efforts. They will be less likely to mislead if they are based on specific, short term and measurable commitments.
25% of complaints to the CMA since the introduction of the Green Claims Code relate to green claims made by fashion brands (see here) The ASA resolved 435 cases relating to green claims in 2021 (see here)