Across several jurisdictions, eco-advertising and green marketing campaigns have become commonplace among businesses of all sizes and in all sectors. Understandably, advertising the environmentally-friendly attributes of a product or service – through slogans, trademarks, performance claims or various other marketing practices – appeals to consumers' growing concerns for the environment and calls for companies to "go green."
However, positioning products and services as having environmental benefits that don't actually exist can raise myriad legal and reputational concerns. False, misleading, overstated or unsubstantiated environmental advertising (often referred to as "greenwashing") is largely prohibited under laws and standards that regulate areas of consumer protection and advertising. Marketing a product as "eco-friendly," "safe for the environment," or using other descriptors that highlight environmental attributes or benefits that are vague, exaggerated, deceiving, result in misinterpretations or cannot be substantiated can lead to legal consequences. As such, regulators are taking a much tougher stance on greenwashing than ever before.
The following article explores the regulation of greenwashing in the UK, Canada and Singapore, as well as regulators' approach to greenwashing within these jurisdictions and practical tips on what to avoid when looking to attract environmentally conscious consumers.
Regulation of Greenwashing
In September 2021, the Competition and Markets Authority (CMA) published its Green Claims Code (Code) and accompanying guidance. The purpose of this Code and guidance is to help businesses understand and comply with their responsibilities under existing consumer protection law when making environmental claims.
Publication of the Code and guidance followed a review of hundreds of websites and the "green" claims made on those websites. The results of the audit were startling, with the CMA finding that four out of 10 "green" claims made online could be misleading consumers. The CMA found vague claims and unclear language such as "eco" and "sustainable," it found that businesses were hiding or omitting information and saw that, in some cases, brands were making up their own logos, which looked like some kind of third party verification of their ecological credentials. The CMA's concerns with these practices led to the introduction of the Code.
The Code sets out six principles specifying that environmental claims must:
- Be truthful and accurate;
- Be clear and unambiguous;
- Not omit or hide material information;
- Only make fair and meaningful comparisons;
- Consider the full lifecycle of the product or their service; and
- Be substantiated.
These are practical principles that should help businesses make more compliant environmental claims across all media formats.
The new Code does not prevent businesses from making truthful environmental claims, but is aimed at letting brands who can tell substantiated green stories do so without being drowned out by others who make claims without a basis.
The Code and guidance is not new law. Rather, it flows from the underlying UK consumer protection laws under the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) and Business Protection from Misleading Marketing Regulations 2008 (BPRs). The contents of the Code and guidance is also in keeping with the Advertising Standards Authority (ASA)'s rules around green claims.
In Canada, the federal Competition Act, Textile Labelling Act, and Consumer Packaging and Labelling Act contain prohibitions against making false or misleading representations. The Competition Act also prohibits representations of the performance, efficacy or length of life of a product that are not based on adequate and proper testing. Similarly, Canada's Trademarks Act carries a prohibition against making materially false and misleading statements about the character, quality, quantity, composition, geographical origin or mode of manufacture, production or performance of goods or services.
The Canadian Code of Advertising Standards, which is published and regulated by Canada's main advertising industry self-regulating body, Ad Standards, also contains relevant prohibitions. Under the Ad Standards Code, advertisements must not contain inaccurate, deceptive or otherwise misleading claims, statements, illustrations or representations, and all representations must be supported by competent and reliable evidence.
The Competition Bureau, which enforces the Competition Act, Textile Labelling Act, and Consumer Packaging and Labelling Act, has published guidelines regarding the direct application of these laws to greenwashing and the risks of making false, misleading and unsubstantiated environmental claims in Canada. Generally, claims highlighting environmental attributes or benefits that are vague, exaggerated, deceiving, result in misinterpretations or that cannot be substantiated, risk violating Canadian law. Of note, the Competition Bureau recently archived a comprehensive environmental claims guideline on its website, stating that it does not reflect the latest standards and evolving environmental concerns. As such, not only is it important that "green" marketers in Canada ensure that all environmental claims are true and appropriately supported, but also that they are aligned with up to date standards and guidance.
Increasingly, countries around the world, including Singapore, are introducing safeguards to combat greenwashing. General laws in Singapore which have relevance to the issue include the following:
- The Consumer Protection (Fair Trading) Act (CPFTA), which protects consumers against unfair business practices such as deceiving or misleading, making of bogus claims, and gaining advantages knowing that consumers cannot judiciously understand the consequence of the transaction. Aggrieved consumers may lodge a complaint with the Competition and Consumer Commission of Singapore.
- The Misrepresentation Act, which allows a consumer to recoup damages from the merchant (according to contractual agreements) following a misrepresentation lead business transaction.
- The Singapore Code of Advertising Practice requires that all advertisements to be legal, decent, honest and truthful.
However, laws and regulations in Singapore do not explicitly cover greenwashing. Thus, the burden is often on consumers to determine what constitutes greenwashing. That said, it is often difficult to prove that certain acts constitute unfair business practices, or to prove that damage has occurred from misrepresentation due to greenwashing. There may be a need to update and clarify the existing laws and regulations in Singapore to protect consumers and help businesses to avoid greenwashing.
In the finance realm, the greenwashing of environmental, social, and governance (ESG) investment products to attract investments is becoming an issue of concern. Various organizations are working on regulations and standards to curb it, as detailed below:
- The Monetary Authority of Singapore (MAS) requests banks in Singapore to undergo stress tests from 2022, which means that banks will have to get a better handle on the climate risks tied to their borrowers, customers, and supply chains.
- The MAS has also devised a blueprint for sustainable investing and financing, which includes (1) a Green Finance Industry Taskforce (GFIT) taxonomy for Singapore-based financial institutions; (2) Project Greenprint, which aims to incorporate data and technology to marshal financing for ESG projects; and (3) mandatory climate-related financial disclosures for companies listed in Singapore.
- In line with major global banks, DBS, OCBC, and UOB, the three major Singapore banks, pledged to stop financing industries linked to climate change, such as new coal-fired power projects.
- On the technology side, Singapore has launched a new public artificial intelligence (AI) programme – the National AI Programme in Finance in late 2021, which includes an industry-wide AI platform, NovA!. NovA! aims to help financial institutions better assess companies' environmental impact and identify emerging environmental risks.
- The IRFS Foundation Trustees announced three new initiatives to combat greenwashing: (1) create an International Sustainability Standards Board (ISSB) to establish excellent sustainability disclosure standards to investors; (2) unify sustainability disclosure standards of the Climate Disclosure Standards Board and the Value Reporting Foundation; (3) publish mock-up climate and general disclosure guidelines.
- The CFA Institute has implemented a global ESG disclosure standard for investment products to safeguard investors against greenwashing.
- The Board of the International Organization of Securities Commissions (IOSCO) launched a set of recommendations to regulate ESG-related products, as well as to provide financial and investor education in the realm of sustainability.
In France, different legal mechanisms regulate greenwashing marketing.
The Consumer Code provides for a general provision prohibiting misleading commercial practices, including misleading advertising. This is most commonly based on false allegations and misleading information as to the essential characteristics of a good or a service, including those comprising greenwashing marketing.
The Climate and Resilience Law was also recently enacted, adding a specific provision according to which the misrepresentation of "the scope of the advertiser's commitments, in particular with respect to the environment, the nature, the process or the reason for the sale or the provision of services" can qualify as a misleading practice.
Violation of such provisions is punishable by imprisonment of up to two years and a fine of €300,000.
The law also provides for a name and shame mechanism through which a Court may order that its decision be communicated to the public by any means.
The Climate and Resilience Law also requires the Audiovisual and Digital Communication Regulatory Authority ("Autorité de Régulation de la Communication Audiovisuelle et Numérique") to promote codes of conduct called "climate contracts" to forbid commercial communications that favourably present the environmental impact of goods or services that actually have a negative effect on the environment.
These climate contracts are entered into with different advertising actors and contain five clauses relating to:
- What is measured;
- What is produced;
- What is promoted;
- What is monitored; and
- What they raise awareness about.
Moreover, under the French Environmental Code, the affirmation, in an advertisement, that a good or a service is carbon neutral or the use of any formulation of equivalent signification or scope is prohibited, unless the advertiser makes information on greenhouse gas emissions easily available.
The violation of such provision is punishable by a fine of €20,000 for natural persons and €100,000 for legal persons.
Regulators' Approach to Greenwashing
Undoubtedly, the Code and the CMA's approach to environmental claims will influence other UK regulators as to when and where they choose to take enforcement action. If a business does not follow the Code principles, then it is more likely to be the subject of action from the CMA, as well as Trading Standards, sector-specific regulators and/or the ASA.
The CMA and Trading Standards have broad enforcement powers in relation to the underlying consumer law and, on top of that, the UK government is also consulting on potential additional powers for the CMA, which may include the power to levy fines without pursuing a business through the courts.
The ASA can take action against misleading advertisements and businesses could face legal action from consumers themselves for breaches of consumer protection law.
We have not yet seen regulatory action from the CMA since the introduction of the Code, but the ASA in particular has been active in this area over the past couple of years, and notably since the beginning of 2022 (when the Code took effect). Recently, the ASA has considered the following complaints about environmental claims:
- In April 2022, the ASA found claims made by Tier (an electric scooter hire company) misleadingly implied that electric scooters caused no environmental damage. Tier had used the following slogan: "Be environmentally … friendly. Take a TIER," with smaller text stating "#changemobilityforgood." Tier explained their electric scooter service could be described as environmentally friendly because in their operations they used electric vans and electric cargo bikes for servicing (which had lowered Tier's carbon emissions), renewable energy for charging, recycled materials in production and decommissioned scooters were recycled. They also provided documentation noting their production facilities were certified to minimize environmental risks and results of the lifecycle assessment of their electric scooters in Berlin. The ASA ultimately treated the claim "be environmentally friendly" as an absolute claim (rather than a comparison), and considered it would be interpreted as meaning the Tier electric scooter caused no environmental damage over the full lifecycle of the scheme. The ASA did not think Tier could substantiate this.
- In February 2022, the ASA considered complaints made about Innocent's claims that drinking its smoothies was good for the environment. Innocent defended the complaints and said it was not making any specific environmental claims in the ad and, indeed, weren't making any claims at all but were rather talking about their company's ambitions and aspirational journey which they wanted the customer to join them on. Innocent also said that despite that, they were making strides towards using only a minimum amount of plastic while also supporting recycling. So, in their view, they did have some grounds to make environmental claims. The ASA disagreed and found that Innocent was making claims in its advertisements and considered that Innocent had created an impression that its products had a positive environmental impact. In order to support that impression, Innocent needed to hold evidence showing that its drinks have a net positive impact on the environment across their whole lifecycle. The ASA did not find that the steps Innocent had explained it was taking were sufficient to support a net positive impact across the whole lifecycle of the products. Therefore, the advertisements were ruled to be misleading, meaning they could not be run again.
- In January 2022, a complaint about an advertisement for a beverages company which featured the headline "DELICIOUSLY REFRESHING, 100% RECYCLED" was upheld. The poster also featured small print that stated "Bottle made from recycled plastic, excludes cap and label" and pack shots of the bottles, with a recycling logo and the text "I'M 100% RECYCLED PLASTIC". The ASA considered that consumers would understand that all components of the bottle were made entirely from recycled materials. Even with the small print, which the ASA thought may be overlooked by consumers, the qualification was insufficient to counter the strong impression and the ASA ruled the advertisement misleading.
- In September 2020, claims made in a TV advertisement for Quorn Thai Wondergrains were considered by the ASA. Quorn claimed their product could reduce carbon emissions, and they used on-screen text that stated, "Quorn Wonder Grains. Awarded Carbon Reduction Footprint certification by the Carbon Trust for the full life cycle of the product. See Quorn.co.uk/TV for details." Quorn had an agreement with the independent certification body which benchmarked their carbon emissions and they had a commitment registered with that independent body to reduce those emissions over time. The ASA concluded that Quorn hadn't worded their claims specifically enough, with consumers likely understanding the claims to mean that if they consume the product, they themselves would be reducing their emissions as compared to a competitor product, which Quorn was not able to prove.
The ASA has also published specific guidance on misleading environmental claims and social responsibility in December 2021 and are enquiring into the use of green claims in different sectors (including aviation, heating/energy, automotive, waste and animal-based food). In particular, the ASA has made it know it will be conducting research into consumer understanding of "carbon neutral" and "net zero" claims – claims made that touch on heating/energy and transport, waste claims (e.g. "recyclable"/"recycling", "biodegradable"/"compostable" and "plastic alternative" claims) and meat-based, dairy and other forms of food sustainability issues.
Canada's Competition Bureau actively investigates environmental claims and enforces the rules against making representations that are false, misleading or not based on adequate and proper testing. In a recent news release, the Competition Bureau noted that, along with an increase in "green" products, there has been an increase false, misleading or unsupported environmental claims that are illegal in Canada. The release encourages consumers who believe that a business may have made a false, misleading or unsupported environmental claim to report it to the Competition Bureau.
Notable examples of the Competition Bureau's enforcement of greenwashing in Canada include a recent $3 million penalty imposed as part of a settlement agreement reached with a company found to have made false or misleading recycling claims in respect of consumer goods, as well as a $15 million penalty imposed as part of a settlement agreement regarding (among other practices at issue) misleading marketing and advertising of vehicles as green and environmentally friendly.
Ad Standards also administers complaint procedures for inaccurate, deceptive or otherwise misleading environmental representations. Consumers and competitors can submit complaints to Ad Standards, which, if accepted, are managed in accordance with the Ad Standards Consumer Complaint Procedure or Advertising Dispute Procedure, respectively. Ad Standards' decisions regarding prohibited greenwashing may result in a request to amend or withdraw the offending advertising, as well as a published summary of the decision (which under certain circumstances may identify advertiser).
Greenwashing is an evolving area of regulation in Canada, with potential risks involving substantial penalties and reputational harm. Businesses must be careful to ensure their practices are not offside the applicable legislation and guidelines when marketing their products or services in Canadian jurisdictions.
Greenwashing, the act of making false or misleading claims about the environmental benefits of products or services, is not a new phenomenon in Singapore.
One recent, high-profile example involves the Alliance to End Plastic Waste (AEPW), a Singapore-based not-for-profit organization. In 2019, AEPW claimed to be spending $1.5B USD on cleaning up plastic waste in developing countries. However, a Reuters investigation in 2021 discovered that one of its flagship initiatives, Renew Oceans, failed to dredge the Ganges river in India of substantial plastic waste, despite publishing targets on its website to collect 45 tonnes of plastic trash from the river in 2019 and 450 tonnes in 2020. In addition, AEPW and the large oil and chemical companies backing it were allegedly planning to ramp-up plastic production. According to a report from Belgian-Dutch NGO Recycling Netwerk (CRCT) in 2019, many of the 28 members forming the alliance, including major companies had scheduled future billion-dollar investments in the expansion of plastic production.
Greenpeace has called AEPW an industry scam designed to allow for endless plastic production. AEPW responded to the criticism by explaining that Renew Oceans' termination occurred due to complications caused by COVID-19. It also published an article, "Why proper waste management is more important than going plastic-free," to argue against means of reducing plastic production. These claims themselves received further criticism for being unfounded, for example an ocean clean-up organisation commented that "(the article) made AEPW seem like a plastic industry lobby group."
Although laws to combat greenwashing in Singapore may not be perfect at this stage, the country is working towards various measures to curb the practice and help consumers to rebuild trust. Sellers should aim to follow widely-accepted best practices to ensure their company is not greenwashing, such as making clear, easy to understand claims, backing up those claim with data, using honest statements about practices and plans, and avoiding misleading images on ads and packages. It is also advisable to follow Singapore-specific regulations, such as the disclosure requirements by MAS.
In France, there is very little case law with respect to greenwashing marketing. Nonetheless, some advertisers have been sued and condemned for greenwashing before French Courts:
- In 2013, the Paris Court of Appeal upheld the interim relief judge's decision which held, concerning an advertisement of a vehicle in nature, outside of any traffic lane, that "by leading the public to believe that the possession of this type of vehicle is a permit to do anything in nature, the dissemination of this type of advertising obviously promotes behaviour that is contrary to the protection of the environment and the preservation of natural resources […]. It appears that the existence of an unlawful disturbance caused by the broadcasting of the disputed advertisements is clear, a disturbance that the interim relief judge can put an end to". This decision is interesting, as it is not grounded on misleading advertisement but on a provision prohibiting the circulation of vehicles outside the roads classified in the public road domain, in order to preserve natural areas.
- On March 2, 2022, Greenpeace France and other not-for-profit organizations filed a lawsuit against TotalEnergies alleging that TotalEnergies’ objectives to achieve a carbon neutral ambition by 2050, are misleading and solely for marketing purposes. This is the first action of its kind in France, and it will be interesting to know the outcome and understand French Courts' position on greenwashing.
Beyond legal sanctions, the Advertising Ethics Board ("Jury Déontologique de la Publicité") is also equipped to issue opinions on the compliance of an advertisement. The Board reviews complaints from natural or legal persons, and issues an opinion which can be used as evidence in a litigation:
- On February 21, 2022, the Board held that the advertisement claiming that the elimination of over-wrapping of water bottles reduced the plastic used by 90% was mathematically false, and therefore contrary to the rules of advertising ethics.
When looking to produce and use ads, slogans, logos or packaging that highlights the environmental attributes of a product or service, the following tips should be kept in mind to help avoid accusations of greenwashing and associated legal and reputational risks:
- DO follow the published regulatory guidance;
- DO remember that green claims can relate to products and services, processes or the activities of a business as a whole. They can be directed at consumers or businesses;
- DO remember that green claims can be express or implied and that all aspects of the materials will be relevant, including copy, imagery, overall presentation, supporting information, etc;
- DO ensure that claims are accurate and clear to understand;
- DO NOT use broad or absolute terms such as "green" "sustainable" and "eco-friendly" without explanation, especially in instances where the product or service as a whole does not have a positive environmental impact or no adverse impact;
- DO be specific with claims;
- DO NOT make representations that are not substantiated and verifiable; claims must be based on robust evidence;
- DO NOT be vague or ambiguous; claims about the environmental benefits of a product or service should be precise;
- DO NOT make claims about a business' environmental ambitions unless the claims are in proportion to the business' actual efforts, there is a clear, documented and verifiable plan (which is detailed and realistic) as to how the business is going to meet those goals and the business monitors progress against that plan;
- DO NOT use claims or other representations that result in misinterpretations or could mislead;
- DO NOT hide information about the environmental impact of a product or service or only cherry-pick the positive environmental aspects;
- DO NOT exaggerate the environmental benefits;
- DO ensure claims are based on the full lifecycle of the product or service, unless the claim is worded explicitly to link to only part of the lifecycle;
- DO ensure that if qualifying information applies to the claim, it is set out clearly and does not contradict the main claim;
- DO NOT rely on space constraints as a defence;
- DO ensure information that cannot fit into the claim is easily accessible;
- DO NOT claim features or benefits that are necessary standard features or legal requirements as environmental benefits;
- DO only make fair and meaningful comparisons, with language setting out the basis for the comparison;
- DO not imply that a product or service is endorsed by a third-party organization if it isn't;