Context is everything – key takeaways on green claims from the CMA's recent consumer law conference
On 28 June 2023, the Competition and Markets Authority (CMA) held a highly anticipated conference on consumer law and enforcement. RPC's Senior Partner Oliver Bray was invited to speak on green claims alongside a stellar panel comprising Anna Jewitt (CMA), Justine Grimley (Advertising Standards Authority (ASA)), Tim Rowe (Financial Conduct Authority), and Rupert Earle (Bates Wells).
The all-star panel of advertising experts dove straight into the hot topics, discussing current developments in green claims, starting with the recent run of upheld rulings by the ASA. Oliver provided some top tips on framing green claims within the strict regulatory landscape, advising businesses to be "narrow and specific" in their green claims so they can be fully substantiated. However, he warned businesses to be wary of the context in which any claim is being made, which can potentially make it misleading. As ASA guidance on green claims updated on 23 June 2023 emphasises, "while claims that are more specific may be less likely to mislead, that will not always mean they are acceptable" and that "unqualified claims could mislead if they omit significant information".
Comparing the rulings for ads by Anglian Water and Severn Trent Water is particularly helpful. Each ad made claims regarding the company's contribution to the environment. However, Anglian Water had most recently been awarded an Environmental Performance Assessment (EPA) rating of 2 out of 4 stars and been recently subject to repeated enforcement action by environmental regulators. Conversely, in the past few years, Severn Trent Water had been awarded an EPA rating of 4 out of 4 stars and was classed as an "industry leading company". For this reason, along with the fact that their green claims were narrower and more specific, Severn Trent Water's ad was not considered to be misleading, while Anglian Water's broader ad was.
Context, therefore, is crucial when making green claims about a brand, product or service. Context must be provided in relation to the product itself, for example, if there are still negative impacts from the product or if the benefit claimed comes at an environmental cost. Context must also be provided regarding the advertiser's business and track record. As Oliver stressed, "beware the skeletons in your closet". Advertisers should not focus claims on a minor environmentally-positive part of a business if the bulk of the business has a significant negative impact. Similarly, ads cannot present a business' negative environmental impact as being in the past if this is in fact continuing. And of course, ads must include qualifying information that consumers cannot be expected to know themselves and which, if not provided, would render the ad misleading.
The complexity around green claims is brought into sharp relief by recent proposals from Brussels. The EU Green Claims Directive sets out new rules regarding the communication and substantiation of green claims. Separately, the EU Greenwashing Directive seeks to add new greenwashing-related practices to the existing 'black list' under the Unfair Commercial Practices Directive. As Oliver flagged to the audience, businesses need to be alive to the 'Europeanisation of the world' – whereby new green claims laws coming into the EU will set the bar high for UK and international businesses wanting to sell to EU consumers.
In the UK, the recently introduced draft Digital Markets, Competition and Consumers Bill will provide the CMA with broader enforcement powers including the ability to fine businesses up to 10% of their global annual turnover for breaches of consumer law. Green claims – which, along with online choice architecture, is an area of focus for the CMA – will present an obvious opportunity for the CMA to flex its new muscles when taking up new powers. However, as discussed amongst the panel, these new powers are an addition to the CMA enforcement toolkit and will not replace existing tools. Therefore, we expect that undertakings will remain an important part of the CMA enforcement activity, and a useful way to influence and foster industry-wide change.
Rewards for investment
Equally, in this new age of conscious consumers, for businesses who can navigate the rules on green claims successfully, the potential rewards are evident. Numerous market surveys indicate that consumers value sustainability information and will spend more on a brand that has made green claims – provided those consumers trust what the business is telling them about its green credentials. This interest will only increase as younger, more eco-conscious shoppers make up more of the market. As summed up by Oliver at the conference, "There is a clear win-win in getting it right on green claims. Not only do you avoid the risk of regulatory wrath, but you could put clear water between you and your competition on that most valuable of market forces - consumer trust."