We have previously reported on the CMA's power to investigate the use of "eco-friendly" claims and their impact on consumer purchasing decisions, and the Advertising Standards Authority's ("ASA") investigations into both Quorn and Innocent drinks over misleading carbon footprint claims. However, the CMA's announcement that it is launching this investigation further emphasises the importance that the CMA is placing on getting 'green' claims right and also highlights the scrutiny that it is placing businesses under. The CMA has already indicated that it will consider a wider investigation into the fashion industry by looking at other companies, but it also begs the question of which sector could be next?
What are the CMA's key concerns about 'green-washing'?
The overriding key concern continues to be that greenwashing is misleading consumers into making purchasing decisions and paying higher prices based on false or exaggerated information.
'Green-washing' is where companies use misleading claims or exaggerations to create the impression that their products or services are more sustainable and better for the environment – there may be no direct comparison in the claim, but there is usually a suggestion that the product or service is either (i) more sustainable than alternative products or those of its competitors; or (ii) more sustainable than it was previously.
The CMA has confirmed that in this current investigation, it will be specifically looking at the following:
- Whether statements and language used by businesses making green claims are too broad or vague, giving consumers an exaggerated impression of how sustainable a clothing collection is. For example, where not all items in the collection meet the criteria for the claim or where only a small portion of a clothing item contains recycled fabric.
- How claims are substantiated by the brand.
- Whether businesses are providing sufficient information to consumers to allow them to make informed purchasing decisions, such as full information on what the fabric is made from.
- Whether statements in relation to fabric accreditation schemes and standards are true and if they can be conceived as misleading to the consumer.
What powers do the CMA have to investigate an advertiser's business?
Upon notifying the advertiser of the investigation, the CMA will use its information gathering powers to compile evidence for the investigation. This may include: written information requests, requiring individuals to attend interviews, or entering and searching premises.
If the CMA then find evidence of misleading green claims, they may request the brand to provide undertakings relating to future conduct e.g. withdrawing from a particular activity; withdrawing and revising marketing communications. The CMA may also impose financial penalties, or bring civil or criminal claims through court proceedings if the business is found to be in breach of consumer law and the CMA has made it clear that it is willing to take court action against infringers. It should also be noted that findings of investigations are published on the CMA's website and can generate accompanying press attention.
The ASA can also investigate and take action against misleading advertisements, as it continues to do so.
Your checklist for compliance
1. Get your house in order
- Think about how and where you are making 'green' claims.
- Hold an inventory of claims and materials.
- Create internal policies and guidance.
2. Know the Green Claims Code
The CMA makes it clear that it is the brands' responsibility to ensure that all advertisements comply with the Green Claims Code before they are published. Claims should:
- be accurate and true, avoiding broad terms such as "greener", 'sustainable' or 'eco-friendly';
- not be exaggerated;
- be clear and easily understandable to consumers (no jargon);
- include all relevant information forming the basis of the claim, including any caveats or specific consumer action required to be made to benefit from the claim;
- consider the full life cycle of the product;
- be supported by up-to-date evidence; and
- not be misleading through logos, packaging or other implied claims.
How can we help you?
We help our clients in a number of ways:
- auditing marketing communications;
- advising on specific advertising copy;
- creating internal guidance documents and policies; and
- providing bespoke training.
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