CMA publishes review of websites making "greenwashing" claims

The results of a CMA-led study of green claims reflect how working towards environmental sustainability has moved to the heart of regulators' agendas.

Results of the CMA's study

The Competition and Markets Authority (CMA) has published the results of a sweep of websites making environmental claims, finding that 40% appear to be using tactics that could be considered misleading and potentially in breach of consumer law.

The International Consumer Protection Enforcement Network (ICPEN) conducts an annual sweep of websites to identify fraudulent, deceptive or unfair online conduct. The CMA jointly led this year's sweep, which analysed the environmental claims made by a selection of 500 websites promoting consumer goods and services.

The CMA identified various types of potentially misleading claims, including:
 

• Vague claims and unclear language including terms such as "eco" or "sustainable" or reference to "natural products" without adequate explanation or evidence of the claims.
• Own brand eco logos and labels not associated with an accredited organisation.
• Hiding or omitting certain information, such as a product’s pollution levels, to appear more eco-friendly.

The CMA has commented on the detriment caused by such misleading practices, including consumers paying a premium for fake "eco-friendly" products, and companies offering products with a genuine environmental benefit not getting the customers they deserve. These results come at a time when the market for eco-friendly goods is increasingly valuable, as consumers are more conscious than ever of the environmental impact of the products they buy.

Neither the CMA nor ICPEN have reached any conclusions as to whether consumer law has been broken by the websites in question, although the CMA has indicated that it will take appropriate action against businesses if necessary. The CMA has powers under UK consumer law to investigate and pursue enforcement action against individual businesses. Breaches of consumer legislation can lead to consequences ranging from the CMA issuing warning letters to firms, to requiring businesses to take measures securing compliance, improving consumer choice and providing financial redress to consumers.
 

The CMA's environmental agenda

This year was the first time that the ICPEN annual sweep focused on green claims, and reflects how securing environmental sustainability has moved to the heart of regulators' agendas.

The CMA in particular has highlighted supporting the transition to a low carbon economy as a key aspect of its Annual Plan for 2021/22. Businesses should be aware of recent and ongoing actions by the CMA focusing on environment action, including:
 

• Investigating misleading environmental claims. The CMA launched an investigation in November 2020 to understand better how consumer protection legislation can be used to tackle false or misleading environmental claims that affect consumers. The CMA aims to find out how claims about the environmental impact of products and services are made, whether such claims are supported by evidence, and how these impact consumer behaviour. It intends to publish the research arising from its investigation to inform the public debate on these issues, as well as provide advice to government.
• Publishing consumer protection law guidance. The CMA has set a date of Summer 2021 when it intends to publish consumer protection law guidance for businesses in relation to environmental claims, informed by the results of its investigation.
• Publishing guidance on how competition law applies to sustainability agreements. In January 2021, the CMA published guidance to assist businesses and trade associations to better understand how competition law applies to sustainability agreements (i.e. cooperation agreements between businesses for the attainment of sustainability goals). This guidance will be particularly important for businesses seeking to work together to, for example, make products more energy efficient, or coordinate the use of recyclable packaging material, without falling foul of competition law restrictions on agreements between competitors.

While the CMA's various actions are unlikely to result in a change to its existing, wide-ranging powers to enforce consumer and competition law, businesses pursuing sustainability initiatives or making environmental claims can expect increased scrutiny and application of these powers. Environmental issues are likely to remain the focus of regulators for the foreseeable future, as countries recognise the urgency of tackling climate change, and the UK looks to transition to net zero carbon emissions by 2050.