Misleading environmental claims – who cares?

With businesses under increasing pressure from customers, shareholders and investors to commit to more sustainable practices, many are turning to marketing as a way to showcase their eco-friendly products.  Much of this marketing may be genuine, but in some cases it raises concerns over false claims and "greenwashing" by businesses to improve the appearance of their ESG credentials.

In the run-up to COP26, the CMA has published a Green Claims Code to guide businesses on how to make environmental (or 'green') claims without breaching the law.  The Code sets out six guiding principles for companies to adhere to when making claims about the environmental impact of their products:

1. Be truthful and accurate: live up to the claims you make about your products, services, brands and activities

2. Be clear and unambiguous: a product's messaging and its credentials should reflect the meaning a consumer is likely to take from them

3. Do not omit or hide important information: this could prevent a consumer from making an informed choice about the product

4. Only make fair and meaningful comparisons: any products compared should meet the same needs or be intended for the same purpose

5. Consider the full life cycle or total impact of your product or service (not just one aspect of it)

6. Be substantiated: be able to back up your claims with robust, credible and up-to date evidence

Businesses have until the end of the year to get their claims intact under consumer protection law. 
 
From 2022, the CMA intends to launch a review of green claims in key 'at risk' sectors such as food & beverage, retail, FMCG, fashion and cosmetic & beauty.  The CMA will deploy its wide-ranging information gathering powers to identify potential non-compliance (e.g. through on-the-spot site visits, requests for information, online searches of marketing and labelling practices and third party complaints from customers and businesses).  
 
Non-compliant businesses will be required to change their behaviour, and a refusal to do so may lead to enforcement action through the courts (including imprisonment of up to two years and/or an unlimited fine).
 
We expect to see the CMA work hand in hand with the Advertising Standards Authority on these issues.  The ASA is itself launching inquiries into environmental claims and practices across key sectors including energy, heating and transport, and next year will be focussing on green claims made by companies around waste (such as products being biodegradable, recyclable or a "plastic alternative"), particularly in the food sector.
 
With a tougher enforcement regime looming across all industries, businesses should review their environmental claims now.
 
If you'd like to discuss these issues further, please don’t hesitate to contact Jessica Gardner.