The UK's competition and consumer protection regulator, the Competition and Markets Authority (CMA), has announced that it will expand its efforts to combat so-called 'greenwashing' (i.e. the making of unsubstantiated or exaggerated environmental and sustainability claims about products and services).
Greenwashing has attracted regulatory attention because consumers are increasingly taking environmental considerations into account when choosing products and services. In response to this, businesses have started to include claims about their products' and services' environmental credentials.
While such claims are not prohibited, and are often a valuable means by which consumers can identify either a more environmental-friendly or at least a less environmentally-harmful option, they must be made in a legally compliant manner. This includes that they must not be misleading.
Greenwashing and consumer goods
After focusing on greenwashing in the fashion sector in 2022, the CMA has announced that it is now turning its attention to greenwashing in relation to 'fast-moving consumer goods'. These are products that are regularly purchased and used by consumers including:
- foodstuffs (both perishable and non-perishable);
- drinks (both alcoholic and non-alcoholic);
- cleaning products (such as washing up liquid, dishwasher detergent/tablets, surface cleaners, toilet cleaner, laundry detergent, fabric conditioner, etc.);
- home-care products (such as toilet rolls, kitchen rolls, hand wash, etc.); and
- self-care products (such as toothpaste, shampoo and conditioner, soap/body wash, etc.).
The CMA will consider whether businesses are complying with UK consumer protection law in relation to the claims they made about these products, whether in-store, online or in other marking materials.
The CMA has identified several particularly concerning practices, namely:
- the use of vague and broad eco-statements (for example packaging or marketing a product as ‘sustainable’ or ‘better for the environment’ without evidence to substantiate such claims);
- making misleading claims about the use of recycled or natural materials in a product and its recyclability characteristics; and
- entire product ranges being incorrectly branded as ‘sustainable’ on a blanket basis.
What can businesses do to ensure legal compliance?
The CMA has produced guidance – the Green Claims Code – to help businesses understand and comply with their obligations under consumer protection law when making environmental claims.
The Green Claims Code sets out several high-level principles which are designed to assist businesses in meeting their legal obligations. These are that claims must:
- be truthful and accurate;
- be clear and unambiguous;
- not omit or hide important relevant information;
- comparisons must be fair and meaningful;
- consider the full life cycle of the product or service; and
- be substantiated.
Although the Code is not legally binding and instead represents the CMA's understanding of what the relevant law requires, it should be considered to be strongly persuasive as to what is required of businesses to ensure that they meet their legal obligations. This is especially the case given that the CMA has an important role in enforcing the relevant legal obligations and will base its enforcement activities on the application of the Code.
What are the CMA's enforcement powers?
The CMA's activities concerning greenwashing form part of its duty to tackle undesirable market-wide practices which are in breach of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs contain a general prohibition of unfair commercial practices and, in particular, include prohibitions on misleading and aggressive commercial practices.
The CMA has stated that if it finds evidence of misleading claims, it will take "appropriate action" against responsible businesses. This could include going to court to require a company to take remedial steps, accepting a formal undertaking that no further legal breaches will be committed and requiring businesses to compensate affected consumers.
The CMA can also refer matters to Trading Standards, another UK consumer protection enforcement authority with responsibility for enforcing the CPRs, for criminal prosecution. This can result in fines and, in the most serious cases, imprisonment for up to two years.
However, "appropriate action" can also include measures below the threshold of formal civil or criminal enforcement. It could, for example, encompass the provision of education, advice and guidance in the first instance unless the circumstances indicated that immediate enforcement action is deemed necessary to address a serious risk to consumers.
At the outset, however, the CMA is likely to launch a fact-finding investigation into suspected non-compliance. By way of example, and in connection with its scrutiny of green claims in the fashion industry, the CMA has also announced that it is formally investigating the environmental claims made by ASOS, Boohoo and George at Asda about their fashion products. Such investigations are time-consuming and usually result in significant negative media coverage.
How can Fieldfisher lawyers assist?
We have experience in advising businesses on whether their environmental and sustainability claims are likely to be permissible under the Green Claims Code and, in conjunction with our colleagues in other Fieldfisher offices, equivalent regimes in other jurisdictions.
Where we have identified potential non-compliance, we can advise businesses on the changes necessary to bring their claims into compliance and what other steps, such as the collating of evidence to substantiate claims, could be required.
We also have experience in assisting businesses under investigation by the CMA and other market surveillance authorities, both in the UK and the European Union, in connection with breaches of consumer protection law. Where appropriate, we help businesses reach negotiated settlements thereby avoiding formal enforcement proceedings needing to be commenced.
If you are concerned that your business may have been making misleading environmental claims, or if you would like to discuss whether a claim that your business is proposing to make is legally compliant, please contact Aonghus Heatley (Director) or Jessica Gardner (Partner) in Fieldfisher's market-leading London Competition, Regulatory and Trade team.
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