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CMA draft guidance has greenwashing in its sights

27 May 2021. Published by Ciara Cullen, Partner and Sophie Tuson, Associate

After launching its investigation into environmental claims last November 2020, the CMA has now published draft guidance to help businesses understand and comply with their existing consumer law obligations when making environmental claims. The draft guidance is open for consultation until 16 July 2021 with the final guidance set to be published by the end of September 2021.

Advice to businesses

Although the CMA's final guidance will not be published until the end of September 2021, businesses should take notice now and review their existing environmental claims to ensure they comply with consumer protection laws and the current guidance and rules in relation to environmental claims (such as the Government's Green Claims Code and the CAP code (Rule 11)). The CMA has indicated it will continue to take enforcement action for "egregious" breaches of consumer law pending publication of the final guidance in September. See our "top tips for compliance" below. There is also a unique opportunity to potentially influence future policy in this area by responding to the consultation – see "consultation and next steps" below.

The CMA's draft guidance

Who is the guidance for?

The draft guidance is relevant to all UK-based businesses (and businesses outside the UK that do business in the UK) that make environmental claims ultimately aimed at consumers. This includes brands and retailers, as well as manufacturers and wholesalers to the extent their claims have a direct impact on consumers or mislead the businesses they supply.

What is included in the draft guidance?

The CMA’s draft guidance follows a six-month investigation into green claims (see our previous commentary on the investigation here). The guidance does not create any new legal obligations; instead it sets out six principles to help businesses comply with existing consumer protection law when making environmental claims. These principles broadly restate the position under UK and EU law. For further information on these principles see our "top tips for compliance" below.

Although the draft guidance focuses on environmental claims, the CMA has indicated it is also relevant to broader ‘sustainability’ claims (e.g. relating to animal welfare or workers' rights). There may also be sector/product specific requirements (e.g. labelling requirements) that businesses must comply with when making environmental or sustainability claims.

Top Tips for compliance

  1. Ensure your business lives up to any environmental claims it makes: any claims about your brand, products or services must be truthful and accurate. Ensure your claims are specific; avoid making broad, absolute claims (e.g. "eco-friendly") unless you clarify what they mean; explain any caveats/qualifications that apply; and don't use visual symbols that might give consumers a misleading impression about the environmental impact of your products/services.
  2. Be transparent: do not use unclear or vague statements and make sure any information about the environmental impact of your brand, products or services is presented in a way consumers can easily understand.
  3. 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 a website or using a QR code.
  4. 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.
  5. Consider the full life cycle of the product: when making environmental claims, you must consider the total environmental impact of your brand, products or services – e.g. the supply chain, business processes and disposal. Avoid claims that focus on one aspect while ignoring others, or which do not reflect the overall environmental impact unless you clearly explain what they relate to.
  6. 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.

Consultation and next steps

The CMA has published a consultation document inviting views on the draft guidance. In particular, businesses have the opportunity to input on the following areas:

  • whether the scope of the guidance is sufficient and whether any sectors should be given special treatment;
  • whether the guidance should cover both B2C and B2B;
  • whether the principles are the right ones;
  • whether any additional case studies would be helpful; and
  • any areas of the guidance that need further clarification.

Responses should be submitted to misleadinggreenclaims@cma.gov.uk by 5pm on 16 July 2021.

Businesses, particularly those in the food and drinks and retail sectors for whom it is important to promote the sustainable features of their products, should review the draft guidance carefully and consider responding to the CMA’s consultation to help shape the final form guidance and future policy in this area.

Although the CMA’s provisional view is that guidance to business is the most effective way to improve levels of compliance, it is clearly envisaging enforcement action further down the road where this is necessary. Following publication of the final guidance in September 2021, the CMA will run a campaign to raise awareness of the guidance and encourage compliance. It will also run a compliance review and take enforcement action against businesses found to be in breach of their consumer protection law obligations. Businesses should take action now to ensure any environmental claims are compliant.

 

If you’d like any assistance with these issues, including responding to the CMA's consultation, please contact:

Ciara Cullen: ciara.cullen@rpc.co.uk / +44 (0)7747 033 165

Sophie Tuson: sophie.tuson@rpc.co.uk / +44 (0)7712 511 815

or your usual RPC contact