CMA publishes “Green Claims Code” to prevent greenwashing

The question

What steps should businesses now be taking to comply with consumer protection laws when making environmental claims?

The key takeaway

On 20 September 2021, the CMA published the “Green Claims Code” accompanied by guidance (as well as an instructive YouTube video) for businesses on how to comply with consumer protection laws when making green claims. The final guidance does not fundamentally change any of the key principles previously set out by the CMA, however it seeks to clarify certain points and incorporate feedback collated during its consultation process. All businesses making environmental claims regarding their products or services should review the Code to ensure compliance with consumer protection law. The CMA has warned it will carry out a full review of misleading green claims, both online and offline, at the start of 2022.

The background

Green claims (also known as environmental claims or eco-friendly claims) are claims that suggest a product, service, brand or business provides a benefit, or is less harmful to the environment. Green claims are genuine when they properly describe the impact of a product, brand, business or service, with evidence to back it up. Claims can be misleading if any information is: untrue or hidden; misrepresented; or if it is taken out of context.

Following an investigation last year that found 40% of green claims made online could be misleading, and a two-month consultation process with key stakeholders, the CMA’s Green Claims Code now supersedes the CMA’s draft guidance published in May this year.

The development

The aim of the new Code is to protect consumers from misleading environmental claims. The Code sets out six principles:

• claims must be truthful and accurate
• claims must be clear and unambiguous
• claims must not omit or hide important relevant information
• comparisons must be fair and meaningful
• claims must consider the full life cycle of the product or service, and 
• claims must be substantiated.

Why is this important?

Environmental claims are an increasingly important factor in consumers’ purchasing decisions. The CMA knows this, which is why it is stepping into advertising territory normally policed by the Advertising Standards Authority (ASA). The CMA packs more of a punch than the ASA, in that the CMA (unlike the ASA) can move straight to initiating court proceedings for breach of consumer regulation. In some cases, the business may be required to compensate consumers harmed by the breach and could also face legal action from consumers.

Any practical tips?

Any business making green claims should: 

• audit their existing environmental claims and carefully consider whether changes are required to ensure compliance with the CMA’s new Code and consumer protection laws, to avoid potential civil and criminal penalties
• avoid using broad terms such as “eco” and “sustainable”. These terms will be considered to apply to the whole life cycle of products and must be backed up with evidence
• understanding sustainability and related claims needs to be a core part of the marketing team’s training; it should not just be left to the legal team
• record the decision-making and analysis process for any green claims. This could be crucial to formulating a response should a claim be challenged.

Winter 2021