The Competition and Markets Authority has published its much anticipated guidance on ‘greenwashing’ (misleading environmental claims made about products), as part of a wider awareness campaign launched ahead of COP26.
The Green Claims Code follows an investigation which found that 40% of green claims made online could be misleading and therefore fall foul of consumer legislation on misleading advertising, such as the Consumer Protection from Unfair Trading Regulations. The CMA has given businesses until January 2022 to bring claims into compliance. It is expected that the CMA’s initial focus will be sectors where consumers appear most concerned about misleading claims, such as fashion, travel/transport and FMCG. In previous similar initiatives (for example, investigations into secondary ticketing, online gambling, and online hotel booking) the CMA targeted particular businesses to obtain formal undertakings which are publicised on the CMA’s website, and it is anticipated that a similar approach may be taken in relation to the current greenwashing initiative.
The Green Claims Code focuses on six principles based on existing consumer law, including the Consumer Protection From Unfair Trading Regulations 2008. The legal principles (such as truth and accuracy, and a requirement to substantiate claims) are not new but the guidance is indicative of the CMA’s views on the application of existing consumer law to the specific topic of green claims, and the approach the CMA will take in enforcing the law. In particular, businesses will need to take care to:
- consider the full life cycle of a product when making a claim (this means thinking about all the components making up a product, packaging, ingredients, supply chain, disposal etc.);
- carefully analyse comparative claims such as “greener” to ensure that they are making fair and meaningful comparisons (including comparing like with like); and
- avoid promoting qualities of a product that are simply a function of compliance with the law (for example, promoting the absence of micro-beads in cosmetic products when micro-beads are in any event banned in the UK).
Failure to comply can result in the CMA and other bodies such as Trading Standards bringing court proceedings and in some cases businesses may have to pay compensation to consumers harmed by the relevant breach. The CMA works closely with the ASA, which can also take action against misleading adverts where they contravene the CAP or BCAP Code, both of which contain sections on environmental claims with principles similar to the Green Claims Code.
Sustainability and environmental issues are at the forefront of many consumers’ and policymakers’ minds, so the heightened scrutiny in this area carries material reputational and legal risk. Businesses using green claims should therefore review their claims over the coming weeks in light of the new guidance and ahead of the CMA’s January 2022 deadline.
CMA to carry out a full review of misleading green claims early next year and stands ready to take action against offending firms.