CMA consultation on greenwashing claims

The Competition and Markets Authority (CMA) recently published a consultation regarding its draft guidance for businesses making environmental claims about their goods and services. The consultation closes in July 2021 and the CMA intends to issue its final guidance in September.

The draft guidance itself was published at the same time as the consultation and is in response to changing consumer priorities. The guidance states that at least 50% of consumers in the UK are considering environmental factors and impact when choosing which products to purchase. As such, it’s slightly alarming that at least 40% of online environmental claims, (such as a claim that a product is recyclable) could be misleading. The CMA voiced valid concerns that the increasing demand for environmentally friendly products might incentivise some businesses to “greenwash” i.e. make green claims which are misleading, vague or even untrue. It also wanted to help ensure greater transparency for consumers as many consumers are confused by the environmental information provided about goods and services and struggle to compare the impact of different products. This leads to a lack of trust by consumers and frustration by businesses who may feel the lack of clarity results in unfair competition.

Therefore, they produced the draft guidance for businesses. It is worth noting that the guidance does not create any new obligations and is simply a tool to help businesses navigate existing requirements. Nonetheless, it is hoped to be a useful tool to combat greenwashing.

There is already guidance available on making environmental claims published by DEFRA in 2016, which accompanies Rule 11 of the CAP Code and Rule 9 of the BCAP as applied by the Advertising Standards Authority. However this really focuses on the promotion and advertising of products and services, whereas the CAM’s guidance aims to be more comprehensive and also address environmental claims:

• Made during and after a contract is made
• Which mislead not just through advertising but through packaging design and labelling and naming
• That mislead through omission about key facts
• That mislead by not focussing on the entire supply chain effectively covering up an element which may cause environmental harm

This builds on existing ASA guidance and also aligns with the government’s Environmental Bill with its focus on labelling.

The draft guidance describes six core principles which businesses must follow to prevent misleading customers when making green claims. These six principles state that claims should:

1. Be truthful and accurate.
2. Be clear and unambiguous.
3. Not omit or hide important information.
4. Only make fair and meaningful comparisons.
5. Consider the full life cycle of the product.
6. Be substantiated.

The simplification helps to pigeon-hole the potential wrongdoings more clearly as greenwashing is not always obvious. For example where a business promotes the fact that its products does not contain a substance that in reality is banned under law in any event. For example marketing toiletries in the UK as more eco-friendly because they do not contain micro beads, but as micro beads are banned in the UK they should not be in any product anyway.

The purpose of the guidance is to provide a set of practical principles businesses can use to provide the necessary information to enable consumers to make informed environmental and sustainable choices in their purchases.

The consultation’s purpose is to ascertain whether the guidance is helpful or if any amendments are required. It essentially excludes businesses from being able to claim ignorance or lack of understanding when it comes to environmental claims in advertising.

Even though the draft guidance does not impose new obligations on advertisers, it does demonstrate the growing concern around greenwashing and misleading consumers and this is not unique to the UK. This comes at a time where global warming and environmental considerations are extremely rife and topical and we anticipate the concern will only become more acute with further legislation on the way.

To find out more about how we can help your business deliver on your sustainability goals, please click here or get in touch with your usual Stevens & Bolton contact.