CMA launches Investigation into green claims
The CMA, the UK's consumer watchdog, has launched an investigation into environmental claims made by businesses to promote their products.
The CMA will consider whether 'green' claims, such as "eco-friendly", could mislead consumers and breach UK consumer law, particularly where they are not substantiated or where businesses fail to provide all relevant information about the environmental impact of their product. The investigation will focus on sectors (including the food and drinks industry) where consumers appear to be most concerned about misleading green claims, with the aim of providing detailed guidance for businesses in the summer of 2021.
There has been a sharp rise in ethical spending in recent years with consumers becoming increasingly conscious of the environmental impact of their purchasing decisions. According to an 'Ethical Consumerism' report by the Co-op, last year the UK ethical consumer market was estimated to be worth £41.1bn – this shows a four-fold increase over the last 20 years. Ethical food and drink (which includes Fairtrade, organic, vegetarian, plant-based alternatives and free-range eggs) makes up the largest section of the market at £12bn.
Why is the CMA concerned?
However, the CMA is concerned that the rising consumer demand for ethical products could increase the risk of 'greenwashing' as businesses might be incentivised to make false or misleading claims about the environmental impact of their products to try to 'cash in' on the ethical consumer market. According to the CMA, examples of such misleading behaviour could include:
- exaggerating the positive environmental impact of a product or service;
- using complex or jargon-heavy language; or
- implying that items are eco-friendly (eg through packaging or use of logos) when they are not.
The CMA's investigation also takes places in the context of its wider Annual Plan for 2020/2021, one of the aims of which is to support the transition to a low carbon economy by, as the CMA says, "[improving] our understanding of ‘green’ claims made by sellers to consumers and, where appropriate, [making] use of our powers to correct false or misleading statements that affect consumers."
It also follows action taken by other regulators, such as the ASA, in response to misleading green claims. Updated environmental claims guidance was published by the Committee of Advertising Practice (CAP) in June and in September the ASA upheld a complaint against the meat-substitute brand, Quorn, relating to misleading claims about the carbon footprint of its 'Thai Wondergrains' product (see further below). Within this backdrop, the CMA's investigation appears timely.
The CMA's investigation
The CMA's investigation will assess how consumer protection law can be used to deal with greenwashing and protect consumers from false or misleading environmental claims. In particular, the CMA will focus on:
- how claims about the environmental impact of products and services are made;
- whether such claims are supported by evidence;
- whether such claims influence peoples’ behaviour when purchasing such goods and services; and
- whether consumers are misled by an absence of information about the environmental impact of products and services.
The investigation will involve a ‘sweep’ of randomly-selected websites across a number of sectors (which takes place from 9 - 20 November 2020) to identify the types of misleading green claims currently being made by businesses, as well as an invitation to consumers, businesses and other key stakeholders to share their views through a series on online questionnaires. The questionnaire for businesses addresses issues such as: (a) the types of green labelling and information currently used; (b) how businesses ensure compliance with consumer law; (c) general trends/behaviour by other businesses in the sector; and (d) what further guidance and improvements to the regulatory system businesses would like to see. The deadline for submissions is 14 December 2020.
Following its investigation, the CMA plans to issue guidance next summer 2021 setting out how businesses can promote the environmental and sustainable credentials of their products without misleading consumers and breaching consumer protection law.
Advice for businesses
Businesses, particularly those in the ethical food and drinks sector for whom it is important to promote the sustainable features of their products, should consider responding to the CMA's request for information as a way of helping to influence future guidance and policy in this area. Businesses can also keep up to date with the CMA's investigation on the 'Misleading Environmental Claims' case page.
Separately, the CMA has made it clear that where its investigation reveals businesses that are misleading consumers it will take appropriate enforcement action. As the Quorn and other recent rulings highlight, the ASA is also clamping down on brands that mislead consumers as to the environmental benefits of their products. With this in mind, businesses should continue to ensure they comply with existing guidance and rules in relation to environmental claims – such as the Government's Green Claims Code, the CAP code (Rule 11) and any accompanying guidance notes.
Under these rules, where businesses make environmental claims for their products, they must make sure: (a) the claim is not misleading (eg does not over-exaggerate the environmental benefit of the product or make unfair comparisons with competitors); (b) they clearly and accurately explain the basis for their green claim and how it has been measured (eg against recognised measurements or standards); and (c) that any green claim is backed up by robust, transparent and objective evidence (which itself uses the most current guidance, methods and measures and is based on generally agreed scientific evidence). As the Quorn ruling highlights, businesses that fall foul of these rules may well be required to amend their claims (for example, to make them more specific or to provide additional information) or remove their green claims altogether. It seems highly likely that the CMA will be prepared to take similar, and more stringent, enforcement action.