.svg)
The UK’s Competition and Markets Authority (CMA) is warning "greenwashers" that they have until the end of the year to clean up their misleading environmental marketing. It has issued guidelines to help them obey the law.
On Monday (September 20), the CMA published the Green Claims Code to help businesses understand how to advertise their green credentials and to protect consumers against misleading environmental claims.
As environmental, social and governance-related (ESG) considerations have become an effort of global proportions, more and more consumers want to buy products that minimise the damage that they do to the environment.
To profit from this trend, many businesses promote themselves as green companies. Green claims, or environmental claims, are claims that suggest that a product, service, brand or business provides a benefit to, or is less harmful to, the environment.
"Greenwashing" is the term that regulators use to describe unsubstantiated or exaggerated claims that an investment or product is environmentally friendly.
The CMA, which is responsible for protecting consumers from unfair trading practices, is warning businesses that consumer protection law prohibits businesses from making environmental claims about their products that mislead consumers.
In doing so, the CMA relies on the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which contain a general prohibition against unfair commercial practices and specific prohibitions against misleading actions and misleading omissions.
The principles are that:
- Claims must be truthful and accurate.
- Claims must be clear and unambiguous.
- Claims must not omit or hide important relevant information.
- Comparisons must be fair and meaningful.
- Claims must consider the full lifecycle of the product or service.
- Claims must be substantiated.
Although the CMA acknowledges that regulation is less comprehensive for business-to-business marketing than for business-to-consumer commercial practices, the agency is asking businesses to apply the same high standards in their business-to-business communications.
This will not only promote trust in the green economy but also offset the risk of harm to consumers, the guidelines say.
After an initial bedding-in period, the CMA will carry out a full review of misleading green claims, both on and offline, at the start of 2022.
The CMA is warning businesses that, together with the Trading Standards Services and other regulators in the sector, it can sue anyone who fails to comply with consumer protection law.
“We’re concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms don’t get the recognition they deserve,” Andrea Coscelli, chief executive of the CMA, said.
“Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA,” he added.
Greenwashing has been a growing concern of European regulators as well. In January last year, Italy’s competition authority fined oil and gas giant Eni a record €5m penalty for greenwashing its Eni Diesel+ fuel.
A report titled “Synthetics Anonymous: Fashion brands’ addiction to fossil fuels” analysed the biggest fashion brands against the CMA’s draft guidelines for green claims and found that of the 39 percent of products accompanied by sustainability claims, 59 percent flouted green-claims guidelines in some way.
Earlier in June, HM Treasury announced the creation of the Green Technical Advisory Group to develop a so-called Green Taxonomy that sets a standard for classifying investments as environmentally sustainable.
The European Union adopted its Taxonomy Regulation last June and it came into force the following month. It establishes four overarching conditions that an economic activity has to meet to qualify as environmentally sustainable.
The regulation requires the European Commission to introduce delegated acts that set technical screening criteria for each of the six environmental objectives. The first “delegated act on sustainable activities for climate change adaptation and mitigation objectives” was approved in principle this April, and formally adopted on June 4 for scrutiny by the EU’s legislators. The commission plans to publish the second delegated act for the remaining objectives next year.
