The CMA shows it is serious about regulating Green Claims

Since the ASA’s efforts to crack down on greenwashing, the CMA have recently shone the spotlight on companies making green claims. The Competitions and Markets Authority (“CMA”) has recently completed one of its most high profile investigations into misleading green claims. While the investigation focused on the fashion industry, the implications extend to any company in the UK that is making green claims.

What did the CMA decide?

The three investigated firms all agreed to sign a series of legally binding undertakings, signalling a commitment to adhere to specific guidelines. While these firms did not admit to any wrongdoing, it does mean that they have accepted measures that empower the CMA to act if they fail to live up to their undertakings.

The undertakings given by the investigated firms provide helpful examples that are relevant for almost all companies that are:

• Setting criteria for green ranges: Companies must be transparent with the criteria used to categorise products as ‘environmental’ or ‘green’, avoiding ambiguity, setting clear standards and identifying any minimum requirements;
• Advertising their environmental targets: Any claims made to consumers about environmental targets must be supported by a clear and verifiable strategy, and customers must be able to access further details about it. Such information should include what the target is aiming to achieve, when it is expected to be achieved, and how the company will seek to achieve it; or
• Referring to accreditation schemes: Statements made by companies about accreditation schemes and standards must be unambiguous and indicate whether they apply to particular products or to the firm’s wider practices.

Does this make green claims riskier?

Not necessarily, the CMA does not want to discourage businesses from shouting about the steps they are taking to reduce their environmental impact or discourage them from taking the steps in the first place. Businesses should see this ruling as protecting the many businesses who are making genuine progress from overblown or hyperbolic claims that are not backed by tangible evidence.

The CMA is clear in their surrounding commentary to this decision that they want businesses to reap the rewards of their investment in the environmental performance of their products and services, and the only way to do this is by ensuring that environmental claims are both accurate and truthful.

What does this mean for the future?

This investigation shows that the CMA is serious about regulating the way companies make green claims. It also shows the importance of businesses being familiar with the Green Claims Code and seeking guidance from a trusted advisor.

Businesses should particularly consider:

• Where green claims relate to third parties in your supply chain. Have you carried out sufficient due diligence that you can be confident in making a claim?
• Where the green claim relates to matters inside the business, is it made with enough context that a consumer can understand what has been done?
• Does the claim explain the environmental effect the action is having?

Finally, when undertaking green activities, retain documentary evidence of what you have decided, and why, and be prepared to justify your statements with that evidence.

The law in this area seeks to protect consumers from misleading environmental claims, and in doing so aims to protect businesses from unfair competition. By adhering to these standards, businesses can communicate their genuine efforts to consumers transparently, reaping both the ethical and commercial benefits.

If you are navigating the complexities of green claims and seek clarity, do not hesitate to get in touch with a member of our team. We are committed to guiding you through the evolving landscape of environmental regulation.

Previous Update

In 2022 the Advertising Standards Agency (“ASA”) continues its efforts to stop greenwashing, a marketing strategy which makes false and misleading claims that products or services are environmentally friendly. The increased availability of eco-friendly and sustainable goods and services provide a persuasive appeal to consumers who wish to contribute to the impact of climate change, but what is being uncovered is that sometimes these products and services cannot stand up to the environment claims made.

Recent ASA decisions highlight its commitment to stop greenwashing and ensure consumers understand the basis of environmental claims businesses are making:

• “Kinder to our planet” – The ASA found Unilever’s claims that Persil washing liquid was “kinder to our planet” was not clear and did not explain the basis on which their product was “kinder” to their previous Persil products or other competitive products.
• “100% Plant-Based Materials” and “#NoPlastic” – The ASA upheld complaints against a manufacturer of electric toothbrushes in respect of adverts on its website and Facebook that claimed their electronic toothbrushes were “100% Plant-Based Materials” and “#NoPlastic” as there was no evidence that the entire product (including the electronic components and battery) was made of materials which were biodegradable or recyclable and therefore the adverts were classed as unsubstantiated and misleading.
• Environmental initiatives – Complaints against HSBC’s advertising of their contributions to reducing carbon dioxide and greenhouse gas emissions in adverts that appeared on the high street during COP26 in October 2021 were upheld by the ASA on the basis that despite HSBC’s initiatives, HSBC continued to invest significant sums into businesses that emitted notable levels of carbon dioxide and greenhouse gases. This was not made clear as HSBC omitted this material information from its adverts.

What lessons for businesses?

Businesses who make environmental claims about their products and services are to ensure that:

1. advertising is not being used simply to capitalise on consumer’s focus to buy more sustainably i.e. by claiming that a product/service has been improved to make it more environmentally friendly, when in fact the product did not damage the environment in the first place;
2. any environmental claims are made clear and consideration is given to how a consumer may interpret the environmental claim being made. Businesses should think about the product lifecycle and whether any general environmental claims are reflective of the product’s full life cycle as a whole;
3. documentary evidence should be held which can show the environmental claims are objective and capable of substantiation; and
4. any claims comply with consumer law. The CMA has a Green claims checklist for businesses to apply when making environmental claims.

In July 2022, the CMA announced it was investigating a number of fashion brands including ASOS and George for Asda over the environmental claims of their products. While the outcome of the investigations is yet to be released, it is possible that investigations could be expanded to cover other industries. Businesses should be alert to this and ensure they are complying with any guidance that is given over the coming months.