In June 2021, we highlighted in this blog the Competition and Market Authority’s (the CMA) consultation on its draft guidance for businesses making environmental claims. The CMA has now concluded the consultation and published its final guidance on 20 September 2021, titled the ‘Green Claims Code’.
The Code sets out how businesses should communicate any claims on how a product, service, brand or business provides a benefit or is less harmful to the environment. It centres around six principles which businesses must follow and is accompanied by examples of their application as well as detailed case studies to help businesses understand how to comply with the guidance.
The six principles are as follows:
- Claims must be truthful and accurate: claims must not give consumers a deceptive impression, even if the claim is factually correct. This extends to impressions arising from the visual presentation of a product, such as the images, logos, packaging and colours used. For example, it may be misleading if a shampoo is packaged within a bamboo outer shell labelled ‘Natural’ in a green font, but the inner container glued to the outer shell is plastic. Businesses should also take care when using terms with widely assumed meanings such as ‘organic’ as, the CMA says, consumers will be misled unless almost the entirety of the product is made from organic materials.
- Claims must be clear and unambiguous: claims should be worded in a transparent and easily understandable manner. This means if vague terms such as ‘eco’ are used, businesses should include explanations of how the environmental impact has been measured. Businesses should also avoid making any aspirational claims, e.g. to ‘reduce waste’, without a clear overall strategy in place. Specific, shorter term and measurable commitments the business is actively working towards are less likely to be misleading.
- Claims must not omit or hide important information: claims must include all information on environmental impacts that the consumer needs to make informed choices. Information can only be omitted if it is impossible to fit all the necessary information onto the medium used. Even then, measures must be taken to provide the information in an easily accessible way by other means, e.g. a website link or QR code. If there are any caveats to a claim, those should also be disclosed prominently and not hidden away in small print.
- Claims must only make fair and meaningful comparisons: comparisons, whether with competitors’ or a business’ own products, should be based on clear, up to date and objective information. The comparison should be like with like, i.e. the products compared should meet the same needs and the comparison should be between important and verifiable features. The comparison must also be fair and representative. For example, if the claim is that toothbrush X contains 50% less plastic than other toothbrushes on the market, the claim is liable to mislead if the comparator group selected is not representative and average plastic content of most toothbrushes is actually less than toothbrush X.
- Claims must consider the full life cycle of the product: this does not mean that information about the full life cycle must always be included. However, if a general claim is being made, e.g. that the product is ‘eco’, then it must have an overall beneficial impact over the course of its entire life cycle. Likewise, if a claim about a specific part of a product is made, then it should be clear what that aspect is so that the consumer is not misled on the total impact of the product.
- Claims must be substantiated: there must be robust, up-to-date and credible evidence to show that the claim is true, and that evidence should be based on accepted science or methodology. The broader and more ambitious a claim, the stronger the evidence likely to be needed. For example, a claim that a cleaning solution is ‘the UK’s most sustainable’ will require proof that the company’s practices are more environmentally friendly than any other cleaning company across a range of objective measures. Businesses should be aware that the CMA has investigatory powers to seek evidence from businesses to support their claims.
After an initial bedding-in period, the CMA will carry out a full review of misleading environmental and sustainability claims made by businesses early next year. However, the CMA has emphasised that it may act before the formal review begins if it finds clear evidence of breaches.
The CMA will prioritise industry sectors where consumers appear most concerned about misleading claims, such as textiles and fashion, travel and transport, food and beverages, and beauty and cleaning products. However, the CMA has indicated that any industry where it finds significant concerns could become a priority.
The Green Claims Code reflects an ever-increasing focus on the impact of businesses’ approaches to sustainability on consumers by authorities across Europe, with not just the CMA but also the Netherlands Consumer and Markets Authority (Autoriteit Consument & Markt – ACM) leading the charge. It has been launched as part of a wider awareness campaign initiated by the CMA on environmental claims ahead of COP26 and follows a period of increasing focus by the CMA on greenwashing.
All of this comes at a time when the Government is consulting on significant and far-reaching reforms to strengthen the CMA’s consumer law enforcement powers (see more here), which envisage fines of up to 10 per cent of global turnover for consumer law breaches. We will see, if the proposals are ultimately implemented, whether the CMA will flex its new enforcement powers in the sustainability space.