The Competition and Markets Authority (CMA) and Advertising Standards Authority (ASA) are increasing their scrutiny and enforcement of ‘green claims’ to protect consumers from 'greenwashing'.
What are green claims?
Green claims (also known as ‘environmental claims’ or ‘eco-friendly claims’) are claims that a product, service, or business provides a benefit or is less harmful to the environment. There have been a number of cases reported in the press in recent months (Hyundai, Unilever, and Lufthansa, for example) where advertising has been challenged as misleading as to its green credentials by the authorities, and ultimately ruled to be so.
Last year the CMA announced it would prioritise the fashion sector as part of its efforts to crack down on greenwashing. It is now investigating green claims made by three fast fashion chains. More recently the CMA announced that it will look into green claims, both online and in store, made about ‘fast-moving consumer goods’ (household essentials such as food, drink, and toiletries), and will also consider whether to open further investigations into other sectors.
At this early stage into its investigations, the CMA has not reached a view as to whether there have been any breaches of consumer protection law in either the fashion sector or the fast-moving consumer goods sector.
ASA enforcement and guidance
The ASA enforces rules under the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP) and the UK Code of Broadcast Advertising (BCAP).
The CAP and BCAP have had dedicated environmental rules for many years and the ASA regularly adjudicates on green claims. The ASA’s 2021 ‘Climate Change and the Environment’ project identified that there were issues with consumer understanding of ‘carbon neutral’ and ‘net zero’ claims. Given their increasing prevalence and the potential for consumers to be misled by them, it set out its insights and next steps in late 2022.
In February 2023, the CAP and BCAP were updated to include guidance on the use of ‘carbon neutral’ and ‘net zero’ claims in advertising, which reflects key principles of the CMA guidance on environmental claims.
It is apparent that there is still misunderstanding and a lack of consensus around the meaning of ‘carbon neutral’ and ‘net zero’ claims. To assist understanding, the CAP and BCAP now advise marketers to take the following into consideration:
- Avoid using unqualified carbon neutral, net zero or similar claims. Information explaining the basis for these claims should not be omitted.
- Marketers should ensure that they include accurate information about whether (and the degree to which) they are actively reducing carbon emissions or are basing claims on offsetting, to ensure that consumers do not wrongly assume that products or their manufacture generate no or few emissions.
- Claims based on future goals relating to reaching net zero or achieving carbon neutrality should be based on a verifiable strategy to deliver them.
- Where claims are based on offsetting, marketers should provide information about the offsetting scheme they are using.
- Where it is necessary to include qualifying information about a claim, that information should be sufficiently close to the main aspects of the claim for consumers to be able to see it easily and take account of it before they make any decision. The less prominent any qualifying information is, and the further away it is from any main claim being made, the more likely the claim will mislead consumers.
The ASA will carry out monitoring for six months in order to assess how such claims are being substantiated and, if required, will provide further guidance about what sort of evidence is likely required to substantiate ‘carbon neutral’ and ‘net zero’ claims.
Consequences of non-compliance
Brands operating outside of the guidance, particularly those making entirely unqualified claims, should expect regulatory intervention. At present, failure to comply risks a public adjudication from the ASA, as well as the removal of the offending content and withdrawal of certain trading privileges. However, there is the potential for more severe enforcement, particularly for serious and repeated breaches.
The UK government has proposed to enhance the CMA's enforcement powers to include the ability to fine businesses up to 10% of global annual turnover for breaches of consumer protection law. The CMA is also calling on the UK government to add greenwashing to the list of 'blacklisted' practices in the Consumer Protection from Unfair Trading Regulations 2008 (CPUT), which would make it much easier for the CMA to take enforcement action against businesses making misleading green claims. Breaches of CPUT can lead to unlimited fines, so brands are advised to check their green claims before an expected ramping up of enforcement action by consumer regulators.
It is always worth being mindful that being challenged by a regulator is not reliant solely on the eagle-eyed scrutiny of the regulator itself. Competitors have traditionally been a significant generator of complaints to the regulators – they will be scrutinising any green claims very carefully. Additionally, campaigning groups are very aware of, and active in, this area and quick to complain when they feel justified. Finally, members of the public are increasingly attuned to and educated on this type of subject matter, and increasingly prepared to want to do something about it by complaining to a regulator.
Steps to take when making green claims
Brands wanting to make green claims should:
- Be clear about what claim it is you are making and avoid broad and absolute claims such as ‘green’, ’environmentally-friendly’ and ’eco’ unless you clearly explain what the claim means.
- Consider the full lifecycle of the product - your claim is more likely to be considered misleading if it doesn't account for the full product lifecycle.
- Ensure comparisons are fair and meaningful – i.e., ensure are you comparing like for like on a fair and meaningful basis.
- Ensure any qualifying information is made clear to consumers - this should be prominent and close enough to the main claim to be easily seen by consumers.
- Be transparent about the use of carbon offsetting/carbon credits - failure to do so risks misleading consumers into thinking that the product/business doesn't generate any emissions.
- Ensure claims about future goals are based on a verifiable strategy.
- Keep a file of your substantiation – ensure that all claims are backed up by robust, credible, and up-to-date evidence that is held before the claim is made.