In recent years, consumer demand for sustainable products has increased – with 57% of UK consumers saying they are willing to pay more for environmentally friendly products (according to YouGov).
But this has led to a huge rise in ‘greenwashing’; a misleading marketing tactic where companies spend more on making themselves look eco-friendly, than actually changing their business practices to go greener.
These included:
- Vague claims and unclear language; using terms such as ‘eco’ or ‘sustainable’ or reference to ‘natural products’ without adequate explanation or evidence
- Own brand eco logos not associated with accredited third party organisations
- Hiding or omitting certain information (such as a product’s pollution levels) to appear more eco friendly
This is misleading marketing, and it’s against the law.
It is covered by consumer protection rules set out within the Unfair Trading Regulations 2008 and Business Protection from Misleading Marketing Regulations 2008.
This means that in the UK, the CMA, Advertising Standards Authority and Trading Standards Services can take action against any company making misleading claims, including claims about their sustainability.
To help companies understand how to make compliant claims about their sustainability without misleading consumers, the CMA has now published the Green Claims Code and accompanying guidance.
Environmental claims that do not comply could face penalties from regulatory bodies and even face legal action from consumers themselves, who can bring companies to court for certain breaches of consumer protection law.
Dr Andrea Coscelli, Chief Executive of the CMA, said:
The six principles of the Green Claims Code
To avoid breaking the law and misleading consumers, any green claims about how a product, service, brand or business provides a benefit, or is less harmful to the environment, must:
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Be truthful and accurate:
Businesses must live up to the claims they make about their products, services, brands and activities
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Be clear and unambiguous:
The meaning that a consumer is likely to take from a product’s messaging and the credentials of that product should match
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Not omit or hide important information:
Claims must not prevent someone from making an informed choice because of the information they leave out
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Only make fair and meaningful comparisons:
Any products compared should meet the same needs or be intended for the same purpose
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Consider the full life cycle of the product:
When making claims, businesses must consider the total impact of a product or service. Claims can be misleading where they don’t reflect the overall impact or where they focus on one aspect of it but not another
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Claims must be substantiated:
Evidence must be given to support any claims made. This should be presented alongside the claim, in a way that’s easy for the average consumer to understand. Evidence must be up to date and based on real world conditions, not just lab tests.
What happens if the code is breached?
Any business found to be in breach of consumer law, including misleading marketing claims, can face civil action or criminal prosecution.
Breach of the Green Claims Code could therefore result in criminal liability for directors and other officers of corporate bodies.
Consumers also have a civil right of redress which might result in financial liabilities.
Big brands including Coca-Cola and Oatly have recently faced lawsuits over greenwashing so regulators are clearly stepping up the pace of action.
Greenwashing can damage your brand, reputation and sales. Even if you’re not based in the UK, the Green Claims Code forms part of a broader clamp down on greenwashing, with competition regulators across Europe taking a greater interest in the green economy.
Who needs to pay attention to the Green Claims Code?
Any business talking about their positive environmental impact in relation to products, services or operations needs to take the Green Claims Code into account.
Companies selling “ethical” or “green” investment services are also a current focus of the financial services regulator, the Financial Conduct Authority (FCA) so should be prioritising compliance.
The Green Claims Code applies to UK companies, and those that sell to consumers in the UK, even if you’re not based here.
What about sustainable brands?
Even if you’re confident that you’ve already got the evidence to support your green claims, you’ll need to do a thorough risk assessment to ensure that your communications are compliant.
As all brands begin to provide more detailed information about their sustainability, consumer understanding of these issues and the credentials required will deepen. You won’t need to work so hard to stand out in a sea of greenwashing, but you will need to adapt your strategy to stay competitive.
As regulators begin to succeed in weeding out inaccurate and dishonest eco claims, transparent brands who walk the walk will benefit from a greater market advantage.
With the right risk management and communications strategy, your existing investment in ESG can become a strong commercial advantage.
Download your free Green Claims Guide here:
This article has been prepared for general informational purposes only and is not intended as legal advice.
