What if the CEO asks me about… avoiding greenwashing?
With consumers increasingly demanding greener and more sustainable products, retailers and consumer brands are busy innovating in an effort to reduce the environmental impact of their business, products and services.
Whilst these businesses will naturally want to share their successes with consumers and tap into the growing ethical consumer market, the risks of getting green claims wrong can be significant. Businesses face not only enforcement action from regulators but also risk damaging brand loyalty with increasing numbers of consumers ready to switch allegiance where a brand does not live up to its purported environmental credentials and is seen to be "greenwashing".
What are green claims?
"Green claims" is a catch-all term used to describe a large variety of marketing claims relating to the environmental impact of a product, service or brand. These might include claims that a product has a positive environmental impact (or no impact) or that it is less damaging to the environment than competing products or the advertiser's previous products. Spurred by the growing environmental movement, these kinds of claim have seen a marked rise, as retailers and brands seek to tap into an increasingly environmentally conscious consumer base.
And what are the rules around making green claims?
In the UK, green claims are governed by consumer protection laws, in particular the Consumer Protection from Unfair Trading Regulations 2008 (CPRs). The CPRs make it unlawful for a business to make misleading statements about a product (including omitting material information about a product) if it is likely to affect consumers’ purchasing decisions. This includes making misleading statements (or omitting material information) about the environmental impact of a product.
Green claims are also governed by a number of regulatory codes – in particular the Competition and Marketing Authority's (CMA) Green Claims Code (published in September 2021) and the Advertising Standards Authority's (ASA) CAP Code (Rule 11). These codes broadly reflect the position under existing UK consumer protection law and are designed to help businesses, including retailers and consumer brands, understand and comply with their consumer protection law obligations when making green claims.
The CMA's Green Claims Code is based on six key principles (reflecting existing legal obligations under UK consumer protection law):
- Claims must be truthful and accurate;
- Claims must be clear and unambiguous;
- Claims must not omit or hide important information;
- Comparisons must be fair and meaningful;
- Claims must consider the full life cycle of the product or service; and
- Claims must be substantiated.
The CMA has also published supporting guidance including a Green Claims Checklist of questions and statements that businesses should consider and be able to either agree with or answer affirmatively when making green claims to avoid greenwashing.
The ASA has recently published advertising guidance setting out the key principles that advertisers must follow to ensure their green ad campaigns don't mislead consumers. The guidance draws on a number of ASA rulings to highlight the ASA's approach to enforcing the CAP Code Rules on environmental claims and social responsibility. The ASA has also launched a dedicated resource hub to help advertisers making green claims – this contains specific guidance on a number of issues such as recycling claims and claims relating to electric vehicles.
Why is this important?
The regulation of green claims has historically been fairly limited, however, we are now seeing a sea-change in this area with increasing scrutiny of green claims by regulators such as the CMA and the ASA (as well as by environmental campaign groups and members of the public). The repercussions of enforcement action are wide-ranging – they include reputational damage (eg resulting from a negative ASA ruling or formal CMA investigation), being required to amend/remove misleading claims (eg from ads/online content, physical marketing and/or product packaging) and, in the worst case scenario, court proceedings.
Following the recent publication of its Green Claims Code, the CMA has made it clear it expects businesses, including retailers, to take steps to comply with the code now (there's no 'grace period' as these rules are based on existing legal obligations with which businesses should, strictly speaking, already be complying). The CMA will also be conducting reviews of green claims within specific sectors, starting with the fashion retail sector. This review will look at how green claims (eg sustainability and recycling claims) are being used by fashion retailers.
The ASA has also shown it is prepared to take enforcement action against businesses for misleading green claims. A number of recent ASA decisions have resulted in businesses having to pull their ads, which can be costly as well as reputationally damaging (for example, Hyundai was forced to withdraw ads that claimed its new car “purifies the air as it goes” and claims by Ryanair about its CO2 emissions were deemed misleading, as were Gousto’s claims that their new cool boxes were 100% plastic free Most recently, an ad for Lipton Ice Tea was found to be misleading by incorrectly claiming that its bottles were "100% recycled" when, in fact, the cap and label were not).
What can I do to help my business avoid greenwashing?
With a tougher enforcement environment looming, you should review your business's green claims now to ensure they comply with consumer protection laws.
Our 'top tips' for compliance are:
- Encourage your Marketing & Comms teams to involve Legal in the business' green claims strategy from the outset: this helps to manage expectations with internal clients about what can/cannot be said about your products/business and reminds them of the requirement to collate substantiating material and talk to suppliers etc before committing to a particular "green" marketing campaign. This should help to avoid internal conflicts (and wasted costs) later on. You should also remind Marketing & Comms teams to involve Legal as soon as possible if there is a regulatory challenge so you can manage the business' response.
2. Keep a dossier of substantiating evidence for all claims: ensure all environmental claims are supported by robust, credible and up-to-date evidence. Internal data/records can be sufficient for this, however independent verification/certification will make environmental claims more robust. Keep a dossier of substantiating evidence for each claim on file and do not sign-off any claim unless you are satisfied with this evidence.
3. Record your decision making/risk analysis for claims: keep a separate (confidential and privileged) record of all advice and any risk assessment you conduct for each environmental claim. This information can serve as a refresher and inform any discussions the business has with regulators should the claim be challenged further down the line.
4. Be specific and avoid vague terms such as "green", "sustainable", "environmentally-friendly", "eco", "less", "more", "better": Claims should be as specific as possible – avoid making broad, absolute claims or comparative claims unless you clearly explain what they mean/compare to. Marketing & Comms teams should steer clear of these vague/unclear terms (or anything similar) which both the CMA and ASA consider to be misleading.
5. Put yourself in the consumer's shoes: take a step back - if the meaning of a claim seems unclear or leaves you asking questions, that's a strong indication that it will be potentially confusing or misleading to consumers. If in doubt, claims should be more specific. Remember that Marketing & Comms teams can always include additional explanatory information by using a QR code or linking to a page on the business' website.
6. Consider the full life cycle of the product: you should consider the effect of the full life cycle of a product on the accuracy of an environmental claim. If an environmental claim relates to a product as a whole (e.g. "environmentally-friendly cheese" on a cheese label) it will be more likely to mislead if it doesn't account for the full product lifecycle. If a claim relates to a specific part of a product, such as the packaging only (e.g. "40% less plastic than [X product]"), it will be less likely to mislead.
7. 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. Ensure the basis of any comparison is clear.
8. Be transparent about the use of carbon offsetting/carbon credits: where carbon neutrality claims are based on the use of carbon offsetting/carbon credits, you must make this clear to consumers and provide details of the credits purchased/scheme used. According to the CMA, failure to do so risks misleading consumers into thinking that a product/business does not generate any emissions.
9. Ensure claims about future goals are backed-up: make sure that any claim relating to the business' future environmental goals are supported by a clear, verifiable and internally documented strategy to deliver them. Statements of intent should be in proportion to the business' actual efforts. They will be less likely to mislead if they are based on specific, short term and measurable commitments.