This article is provided by BRC Associate Member, RPC.

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Date of development:

20 September 2021

Speed read:

The CMA has recently published guidance – the 'Green Claims Code' - to help businesses, including retailers and consumer brands, understand and comply with their existing consumer protection law obligations when making environmental claims. Retailers should review their existing claims now to ensure they are compliant as an uptick in the CMA’s enforcement action is expected in early 2022.

What is happening?

Regulators are taking action in respect of 'greenwashing' to help protect consumers from misleading green claims. Following an investigation last year that found that 40% of green claims made online could be misleading, and a two-month consultation period, the Competition and Markets Authority (CMA) has published guidance – the 'Green Claims Code' – to help businesses understand and comply with their consumer protection law obligations in order to avoid enforcement action. Based on six core 'principles', the guidance broadly restates the position under existing UK consumer law (particularly under the Consumer Protection from Unfair Trading Regulations 2008) and includes examples of what compliance might look like in practice for those making green claims. The guidance incorporates feedback the CMA received during the recent consultation process including during various roundtables hosted by the British Retail Consortium in the summer. Compliance with the guidance is expected from January 2022 onwards - the CMA is offering no 'grace period' on the basis that these rules are based on existing legal obligations with which businesses should, strictly speaking, already be complying.

Why does it matter?

With consumers increasingly demanding greener and more sustainable products, many retailers are innovating to reduce the environmental impact of their business/products / services (e.g. by reducing plastic packaging, switching to renewable energy sources, using recycled fabrics and using less water in their production processes). Retailers will naturally want to share these successes with consumers and tap into the growing ethical consumer market, however the risks of getting green claims wrong can be significant. Retailers face not only enforcement action from regulators (such as the CMA and the Advertising Standards Authority (ASA)) but also risk damaging brand loyalty with increasing numbers of consumers ready to switch allegiance where a brand does not live up to its purported environmental credentials.

The CMA has made it clear it expects businesses, including retailers, to take steps to comply with the new guidance by January 2022, although the CMA has confirmed that it intends to investigate particularly egregious examples of greenwashing now. The ASA has also reviewed its green claims guidance and has recently published an outline of key steps it will be taking in the coming months to regulate green claims – these include launching a series of enquiries into specific green claims issues starting with carbon reduction issues in the aviation, cars, waste, animal-based foods and heating sectors. The ASA has shown it is prepared to take enforcement action against businesses for misleading green claims. A number of recent ASA decisions have resulted in businesses having to pull their ads which can be costly as well as reputationally damaging (for example, Hyundai were forced to withdraw ads that claimed their new car “purifies the air as it goes” and claims by Ryanair about its CO2 emissions were deemed misleading, as were Gousto’s claims that their new cool boxes were 100% plastic free).

What action should you consider?

With a tougher enforcement environment looming, retailers and consumer brands should review their environmental claims now to ensure they comply with consumer protection laws. Our 'top tips' for compliance are:

  1. Be specific and avoid vague terms such as "green", "sustainable", "environmentally-friendly", "eco", "less", "more", "better": claims should be as specific as possible – avoid making broad, absolute claims or comparative claims unless you clearly explain what they mean/ compare to.
  2. Include all relevant information: do not 'cherry-pick' or omit information about the environmental impact of your brand, products or services if it might prevent consumers from making an informed choice. If necessary, include additional information by linking to your website or using a QR code.
  3. Ensure comparisons are fair and meaningful: make sure any comparative claims compare ‘like with like’ – i.e. products intended for the same purpose and using the same measures/metrics. Make the basis of any comparison clear.
  4. Consider the full life cycle of the product: you should consider the effect of the full life cycle of a product on the accuracy of a green claim. If a green claim relates to a product as whole, it will be more likely to mislead if it does not account for the full product lifecycle. If a claim relates to a specific part of a product, such as product packaging only, it will be less likely to mislead.
  5. Substantiate your claims: ensure your claims are supported by robust, credible and up-to-date evidence. Demonstrating that your claims have been independently verified and are based on accepted scientific evidence may help ensure they are robust. Keep a dossier of substantiating evidence for each claim which can be relied upon in the event of any enforcement action.
  6. Ensure claims about future goals are backed-up: make sure that any claims relating to the business' future environmental goals are supported by a clear, verifiable and internally documented strategy to deliver them. Statements of intent should be in proportion to the business' actual efforts. They will be less likely to mislead if they are based on specific, short term and measurable commitments.
  7. Record your decision making and analysis process: this information can be helpful when formulating a response if a claim is challenged and will be valuable in demonstrating compliance.