What if the CEO asks me about… avoiding greenwashing?

With consumers increasingly demanding greener and more sustainable products, retailers and consumer brands are busy innovating in an effort to reduce the environmental impact of their business, products and services.

Whilst these businesses will naturally want to share their successes with consumers and tap into the growing ethical consumer market, the risks of getting green claims wrong can be significant. Businesses face not only enforcement action from regulators but also risk damaging brand loyalty with increasing numbers of consumers ready to switch allegiance where a brand does not live up to its purported environmental credentials and is seen to be "greenwashing".

What are green claims? 

"Green claims" is a catch-all term used to describe a large variety of marketing claims relating to the environmental impact of a product, service or brand. These might include claims that a product has a positive environmental impact (or no impact) or that it is less damaging to the environment than competing products or the advertiser's previous products. Spurred by the growing environmental movement, these kinds of claim have seen a marked rise, as retailers and brands seek to tap into an increasingly environmentally conscious consumer base.

And what are the rules around making green claims?

In the UK, green claims are governed by consumer protection laws, in particular the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs make it unlawful for a business to make misleading statements about a product (including omitting material information about a product) if it is likely to affect consumers’ purchasing decisions. This includes making misleading statements (or omitting material information) about the environmental impact of a product.

Green claims are also governed by a number of regulatory codes – in particular the Competition and Marketing Authority's (CMA) Green Claims Code (published in September 2021) and the Advertising Standards Authority's (ASA) CAP Code (Rule 11). These codes broadly reflect the position under existing UK consumer protection law and are designed to help businesses, including retailers and consumer brands, understand and comply with their consumer protection law obligations when making green claims. 

The CMA's Green Claims Code is based on six key principles (reflecting existing legal obligations under UK consumer protection law):

• Claims must be truthful and accurate;
• Claims must be clear and unambiguous;
• Claims must not omit or hide important information;
• Comparisons must be fair and meaningful;
• Claims must consider the full life cycle of the product or service; and
• Claims must be substantiated.

The CMA has also published supporting guidance including a Green Claims Checklist of questions and statements that businesses should consider and be able to either agree with or answer affirmatively when making green claims to avoid greenwashing.

The ASA has recently published advertising guidance setting out the key principles that advertisers must follow to ensure their green ad campaigns don't mislead consumers.  The guidance draws on a number of ASA rulings to highlight the ASA's approach to enforcing the CAP Code Rules on environmental claims and social responsibility. The ASA has also launched a dedicated resource hub to help advertisers making green claims – this contains specific guidance on a number of issues such as recycling claims and claims relating to electric vehicles. 

Why is this important?

The regulation of green claims has historically been fairly limited, however, we are now seeing a sea-change in this area with increasing scrutiny of green claims by regulators such as the CMA and the ASA (as well as by environmental campaign groups and members of the public). The repercussions of enforcement action are wide-ranging – they include reputational damage (eg resulting from a negative ASA ruling or formal CMA investigation), being required to amend/remove misleading claims (eg from ads/online content, physical marketing and/or product packaging) and, in the worst case scenario, court proceedings.

Following the recent publication of its Green Claims Code, the CMA has made it clear it expects businesses, including retailers, to take steps to comply with the code now (there's no 'grace period' as these rules are based on existing legal obligations with which businesses should, strictly speaking, already be complying). The CMA will also be conducting reviews of green claims within specific sectors, starting with the fashion retail sector. This review will look at how green claims (eg sustainability and recycling claims) are being used by fashion retailers.

The ASA has also shown it is prepared to take enforcement action against businesses for misleading green claims. A number of recent ASA decisions have resulted in businesses having to pull their ads, which can be costly as well as reputationally damaging (for example, Hyundai was forced to withdraw ads that claimed its new car “purifies the air as it goes” and claims by Ryanair about its CO2 emissions were deemed misleading, as were Gousto’s claims that their new cool boxes were 100% plastic free Most recently, an ad for Lipton Ice Tea was found to be misleading by incorrectly claiming that its bottles were "100% recycled" when, in fact, the cap and label were not).