Environmental or ‘green’ credentials, and the promotion of them (so-called ‘green claims’), are now a key factor in consumer decision-making. Numerous studies have shown that consumers are willing to pay more for products or services – and have greater trust in brands – that have strong green credentials, and this trend will only continue to grow as younger, more environmentally conscious consumers begin to dominate the consumer market.

However, as the number, and importance, of green claims has increased, so has the prevalence of so-called “greenwashing” – that is, claims that mislead consumers about the true environmental impact of a company’s activities (in 2021, a global review of randomly selected websites found that 40% of green claims were potentially misleading). It comes as no surprise, then, that the regulation of green claims is tough and getting tougher.

Below we discuss some of the key tips and pitfalls to help your business navigate the choppy waters of green claims.

In short, because:

1. The regulators (see “In more detail” below) have emphatically demonstrated their commitment to stamping out greenwashing by taking a highly active role in enforcement, particularly over the past year or so (see for example the CMA’s investigation launched in January of this year).
2. The enforcers’ ‘teeth’ will soon be much, much sharper thanks to the incoming Digital Markets, Competition and Consumers Bill (DMCC) which will introduce a number of significant enforcement powers including fines of up to 10% of global annual turnover. You can follow our DMCC tracker page here.

In more detail:

Whilst there is (currently) no specific law against greenwashing in the UK, it is nevertheless heavily regulated under both legislation[1] (enforced by the Competition and Markets Authority (CMA)) and under the advertising industry’s self-regulatory codes (enforced by the Advertising Standards Authority (ASA)).

Being hauled over the coals by a regulator has never been a welcome occurrence, carrying as it does various unpleasant repercussions including reputational damage, being required to give undertakings to correct non-compliant behaviours, wasted costs (non-compliant advertising will have to be withdrawn, with the loss of all the resources that went into it), broadcast sanctions, and withdrawal of benefits or trading privileges, to name just a few.

In addition, the incoming DMCC, which we expect to see passed into law in 2024, significantly ups the ante where consumer law compliance is concerned. The courts and enforcers (chiefly, but not solely) the CMA) will be newly empowered to impose a range of hefty sanctions, from the fines noted above (significant enough to pose a potentially business-critical risk) to new investigative powers and strengthened powers to issue or direct enforcement orders, undertakings, infringement notices, ‘enhanced consumer measures’, and online interface orders. (You can read our summary of the incoming consumer law changes, including enforcement powers, here).

In short:

Businesses must ensure that all green claims are truthful and accurate; clear and unambiguous; do not omit or hide important information or context; compare goods or services in a fair and meaningful way; consider the full life cycle of the product or service; and are substantiated by robust documentary evidence. (Imagine, if you will, someone argumentatively yelling “Go on, prove it” in response to every green claim you’re intending to make).

In more detail:

When making green claims, businesses must be able to answer ‘yes’ or agree to each of the following statements:

• The claim is accurate and clear for all to understand.
• There’s up-to-date, credible evidence to show that the green claim is true (though note that even true claims can be misleading if they don’t meet the other criteria – see our practical pointers below).
• The claim clearly tells the whole story of a product or service; or relates to one part of the product or service without misleading people about the other parts or the overall impact on the environment.
• The claim doesn’t contain partially correct or incorrect aspects or conditions that apply.
• Where general claims (for example, “eco-friendly”, “green”, “planet friendly” or “sustainable”) are being made, the claim reflects the whole life cycle of the brand, product, business or service and is justified by the evidence.
• Any applicable conditions or caveats are clearly set out and can be understood by all.
• The claim won’t mislead customers or other suppliers.
• The claim doesn’t exaggerate its positive environmental impact or contain anything untrue – whether clearly stated or implied.
• Durability or disposability information is clearly explained and labelled.
• The claim doesn’t miss out or hide information about the environmental impact that people need to make informed choices.
• Where it really cannot fit into the claim, relevant information can be easily accessed in another way (e.g., QR code, website, etc.).
• Necessary or legally-required standard features aren’t claimed as environmental benefits.
• The basis of comparisons should be fair, like-for-like, and accurate, and clear for all to understand.

Below are some pointers to keep in mind when planning any green claims or statements.

• Be quantifiable: Avoid using unqualified claims such as “carbon neutral”, “net zero” or similar unless the quantifiable basis for these claims is clearly provided.
• Be verifiable: claims of, for example, future goals relating to reaching net zero or achieving carbon neutrality must based on a verifiable strategy to deliver them.
• Context is key: businesses shouldn’t publicise the positive aspects of their activities while omitting the negatives.
• Imagery matters: Imagery of the natural world, when used by a business responsible for significant emissions or environmental harms, is likely to mislead without balancing, qualifying information.
• Be clear on timings: claims which present negative environmental activities as being in the past are likely to mislead if that business is still having a significant negative impact, even if caused by a different activity.
• Choose terminology carefully: an environmental claim that uses terms its audience is unlikely to understand could be misleading for that reason alone, quite apart from the actual content of the message.
• True claims can still be misleading: A statement describing, for example, an initiative intended to reduce environmental harm will still be misleading, even if true to the letter, if it omits a wider context or is misleading in some other way.
• Beware comparisons: Comparative claims such as “greener” or “friendlier” must be justified by, for example, evidence that the advertised product provides a total environmental benefit over that of a previous product or competitor products and the basis of the comparison is clear. Comparisons must also be equivalent – for example, by comparing equivalent parts of the life cycle of the relevant products.

Given all the risks and pitfalls, should businesses avoid making green claims? Absolutely not: green claims are incredibly valuable in a market where consumers are increasingly demanding products and services which minimise harm to, or have a positive effect on, the environment.

Yes, green claims must be made carefully, diligently and verifiably, but the heavy regulation can also bring significant advantages for businesses that genuinely invest in the environmental performance of their products. Not only the obvious one – avoiding the wrath of the regulators – but the wider point, too: namely, the ability to communicate these genuine efforts to consumers (and to reap the commercial rewards) without being drowned out by the noise of other businesses making similar – but dishonest – claims.

There’s a lot of useful guidance out there, including:

• The CMA’s Green Claims Code and longer form guidance.
• The ASA’s environmental claims resource page, which includes general background and information as well as links to guidance on ”Environmental claims: general” and ”Environmental claims: “green” claims”.
• The Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice (BCAP)’s joint Advertising Guidance: misleading environmental claims and social responsibility which illustrates how each rule in the CAP and BCAP advertising codes governing green claims may be applied.
• The CAP and BCAP advertising codes also contain specific requirements for environmental claims (section 11 of the CAP code, and section 9 of the BCAP code).

If you’d like to discuss any of the above issues, please do get in touch.

References

[1] Currently, the Consumer Protection from Unfair Trading Regulations 2008, soon to be repealed but restated (almost verbatim) under the DMCC.