Greenwashing: competition watchdog puts UK businesses on notice
The move comes amid concerns from the CMA that consumers are misled by environmental claims from businesses. Last year, it found that 40% of green claims made online from companies in a host of sectors, including food and beverage, could be misleading.
The CMA has warned businesses they have until the New Year to make sure their environmental claims comply with the law. It will out carry out a full review of misleading both on and offline green claims (e.g. claims made in store or on labelling) at the start of 2022 and said it stands ready to take action against offending firms.
Andrea Coscelli, Chief Executive of the CMA, said: “More people than ever are considering the environmental impact of a product before parting with their hard-earned money. 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.
“The Green Claims Code has been written for all businesses – from fashion giants and supermarket chains to local shops.
“Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA.”
It is hoped the new Green Claims Code will ensure that businesses feel confident navigating the law in this area. “We hope it will give confidence to those businesses whose products are genuinely ‘green’ to provide consumers with the information they need to make informed decisions,” the CMA added.
It makes it clear that firms making green claims “must not omit or hide important information” and “must consider the full life cycle of the product”.
According to the CMA, claims must be truthful and accurate; must be clear and unambiguous; must not omit or hide important relevant information; must consider the full life cycle of the product or service; and must be substantiated. Comparisons must be ‘fair and meaningful’.
By way of an example, to be labelled as organic, food products must be made from at least 95% organic ingredients. Labelling foodstuffs ‘organic’ when they contain fewer organic ingredients would be both illegal under food standards legislation and misleading advertising under consumer protection law.
In another example, the CMA noted a restaurant takeaway service that had updated its branding with the slogan ‘working to reduce food waste’. This claim was based on the fact that it had switched its takeaway food containers from plastic to paper and also pledged to cut food waste 50% by the end of the year.
Yet this was misleading consumers, the CMA said. That’s because at the time of the claim, UK law prohibited companies from supplying certain single-use plastic takeaway containers. Therefore, the restaurant’s switch from plastic to paper ones was simply necessary standard practice. What’s more, the claim ‘working to reduce waste’ was merely aspirational. It would have been less likely to mislead if the restaurant company had a clear strategy setting out how it planned to reduce waste, made up of specific and measurable targets and deadlines, and including updates to consumers on steps taken to meet the targets.
What are environmental claims, and when are they misleading?
Environmental claims are claims which suggest that a product, service, process, brand or business is better for the environment, according to the CMA.
They include claims that suggest or create the impression that a product or a service:
- has a positive environmental impact or no impact on the environment;
- is less damaging to the environment than a previous version of the same good or service; or
- is less damaging to the environment than competing goods or services.
Environmental claims are genuine when they properly describe the impact of the product, service, process, brand or business, and do not hide or misrepresent crucial information.
Misleading environmental claims occur where a business makes claims about its products, services, processes, brands or its operations as a whole, or omits or hides information, to give the impression they are less harmful or more beneficial to the environment than they really are.
Explicit vs implicit claims?
Environmental claims can be explicit or implicit, the CMA added. They can appear in advertisements, marketing material, branding (including business and trading names), on packaging or in other information provided to consumers. All aspects of a claim may be relevant, such as:
- the meaning of any terms used;
- the qualifications and explanations of what is said;
- the evidence that supports those claims;
- the information that is not included or hidden;
- the colours, pictures and logos used; and
- the overall presentation.
The code was published following extensive consultation with businesses of all sizes from a host of sectors.
Nestle, in its response, strongly welcomed the code. But the FMCG giant wanted further guidance on what is meant by “implicit” environmental claims. “This concept remains vague and its scope is unclear, which would make it difficult for businesses to identify and address,” it said. “The CMA notes that all aspects of the claim will be relevant but what does this mean in practice? Could a product that depicts the natural world or animals be considered implicitly indicating environmental credentials?”
The CMA was contacted but would not elaborate on the difference between implicit vs explicit claims.