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Green Claims Code Compliance
For any business advertising or selling to UK consumers, Green Claims Code compliance should be a priority now.
The Green Claims Code, which came into effect in September 2021, is a piece of guidance designed to support businesses to communicate their sustainability and environmental benefits (AKA ‘green claims’) without misleading consumers.
Under existing Trading Standards laws, it is illegal to make misleading claims about any area of your business, including your sustainability practices and credentials, and fines can reach up to 10% of annual turnover, along with significant reputational risk and damage to stakeholder trust.
With more consumers showing an interest in sustainability, and new reporting directives coming into effect that force companies to disclose what they are doing about their environmental impact, it’s essential that all companies prioritise Green Claims Code compliance to protect their reputation and reduce the risk of penalties.
If you’re looking for support with your green claims compliance, book a discovery call with us today.
Green claims are any statements that suggest or create the impression that a product, brand or service:
- Has no impact or a positive environmental impact
- Is less damaging to the environment or more eco friendly than a previous version of the same product/service, or
- Is less damaging than a competitor
Green claims can be ‘broad brush’ – like claiming to be a ‘sustainable business’, or they can be specific, such as focusing on one element of the product, one area of the supply chain, or the end of life (e.g. ‘recyclable’).
The regulator also takes into account the imagery, logo and colours used to create an impression of being environmentally friendly, so it’s important to note that your Green Claims compliance needs to extend to how your brand looks and feels, not just written claims.
What is the Green Claims Code?
The purpose of the Green Claims Code is to help businesses understand and comply with existing obligations under consumer protection law, and understand how this applies to their environmental claims.
Consumers are increasingly interested in the environmental impact of the products or services they buy. Under consumer protection law, businesses must be truthful and accurate about any claims they make, including their environmental claims.
However, in a review undertaken by the Competition and Markets Authority (CMA), 40% of green claims being made online were found to be misleading, with many companies either intentionally or accidentally falling foul of the ‘Seven Sins of Greenwashing’.
As a result, the Competition and Markets Authority (CMA) – the UK regulator responsible for enforcing Green Claims Code compliance – published a non-exhaustive Green Claims checklist to help businesses identify whether their green claims may be misleading.
Since 2021, they have also expanded their green claims guidance following sector-specific investigations, and are working closely with the Advertising Standards Agency to enforce the Green Claims Code.
Who does the Green Claims Code apply to?
The Green Claims Code covers existing UK consumer protection law, and therefore applies to any claims being made by UK or overseas businesses, manufacturers, wholesalers or distributors targeting customers in the UK.
If sustainability reports, ESG reports or other corporate documents can be accessed by a consumer, then the code applies to them as well – so it’s important to take a holistic approach to Green Claims Code compliance across your organisation, not just in your marketing and advertising.
It’s also important to note that directories, marketplaces, retailers and resellers are responsible for any claims they make about products or services they sell or advertise, even when that claim is made by another business. Businesses should therefore prioritise asking suppliers for the data to support their claims as part of their Green Claims Code compliance due diligence processes.
What happens if your green claims aren’t compliant?
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.
Fines can be up to 10% of annual turnover or £300,000, whichever is greater, and serious cases where a premium has been charged because of green claims may also be subject to the Proceeds of Crime Act – which could mean that all the money made as a result of unlawful labels and untrue claims may have to be surrendered.
Greenwashing can also significantly damage your brand, reputation and sales and result in adverts being banned. Alt-milk brand Oatly recently settled a greenwashing suit for $9.3m, and HSBC had two Out Of Home adverts banned by the Advertising Standards Agency on the grounds that their green claims could be misleading.
How can businesses ensure Green Claims Code compliance?
Green Claims Code compliance should now be a priority for all businesses making environmental claims, or subject to incoming sustainability reporting requirements.
Even sustainability-focused businesses who are confident that they have evidence in place throughout their supply chain or life cycle assessment should take steps to ensure Green Claims Code compliance, given the requirements to present your evidence in a certain way, as outlined in the full Green Claims Code guidance.
Key actions you should consider now:
- Carry out review of existing green claims, gather relevant evidence, and assess your current level of green claims compliance
- Review existing policies, contracts and governance around green claims, both internally and in relation to your supply chain
- Train your staff to understand the Green Claims Code, across marketing, procurement, media relations, corporate affairs and anyone responsible for commissioning advertising, marketing or creative work
- Put a green claims compliance process in place for any new claims
- Ensure that your external agencies and suppliers are aware of their duties under the Green Claims Code
- Assess your data management practices to ensure evidence for green claims is kept up to date and made accessible to anyone in the organisation who needs it
- Incorporate green claims compliance into your risk management processes and develop mitigation plans, as well as stakeholder analysis to understand the impacts a potential CMA investigation could have
How can we help with your Green Claims Code compliance?
181st Street has an experienced team of sustainability, reputation, marketing and compliance experts, who can help you navigate your Green Claims Code compliance journey.
We can support you with:
Green Claims Audit
We can carry out a green claims audit on your existing public-facing communications and internal sustainability data, to identify what green claims you’re making, what evidence you hold to support those claims and provide you with a practical roadmap to follow to ensure that all existing claims are compliant.
Green Claims Risk Analysis
A Green Claims Risk Analysis can review claims you want to make and consider how the CMA would view them, check the processes you have in place to verify green claims, and identify the impact of non compliance on your stakeholders and reputation, to support you to mitigate your risks.
Staff Training
We can train your staff through bespoke workshops, Lunch & Learns or full bespoke green claims training programmes designed to meet your organisation’s needs.
Organisations we have designed and delivered workshops and training for previously include: eBay, Royal London, Social Enterprise UK, The Arts Marketing Association and the British Association of Fair Trade Shops.
Compliance Processes and Governance
We can work with your teams to design a full compliance process to roll out across your procurement, reporting, marketing and media relations.
Reputation Management
We can also support you to respond to regulatory action and manage your stakeholder relationships if your green credentials are subject to investigation.