Tackling greenwashing: CMA published new guidance on green claims
Companies have until the New Year to address potentially misleading claims
The Competition and Marketing Authority (CMA) has published its Green Claims Code, new guidance to help businesses understand how to communicate their green credentials while reducing the risk of misleading them.
The guidance follows a review by the CMA of online green claims, which found that 40% of them could be potentially misleading – an offence under UK consumer protection law. The CMA is now asking companies to review the guidance and ensure any claims are compliant with the law ahead of a full compliance review by the CMA of green claims, both on and offline.
The new guidance focusses on six principles which are based on existing consumer law. A dedicated website has been produced to support companies understanding the guidance. There is also a video and some social media underway.
Overview of the Green Claims Code
The new guidance focusses on six principles which are based on existing consumer law.
- Are your claims truthful and accurate?
- Are your claims clear and unambiguous?
- Do your claims omit or hide important information?
- Do they only make fair and meaningful comparisons?
- Have you substantiated your claims?
- Do they consider the full lifecycle of the product?
What is the CMA?
The CMA is short for the Competition and Markets Authority. Their objective is to make the markets work well for consumers, businesses and the broader economy.
The CMA has the power to tackle practices and market conditions that harm consumers and hinder their decision making. They use consumer protection laws to pursue these ends, having the ability to go to court to enforce customer protection laws. This enforcement also applies to B2B marketing.
What are environmental claims?
These are claims which suggest that a product, service, process, brand or business is better for the environment. They include claims that suggest a product or a service:
- has a positive environmental impact or no impact on the environment;
- is less damaging to the environment than a previous version of the same good or service; or
- is less damaging to the environment than competing goods of services.
Environmental concerns may include:
- ‘climate’ or ‘carbon’
Broader claims of ‘sustainability’ are also covered in the CMA’s guidance.
Environmental claims may be explicit or implicit, meaning all information provided to consumers in the delivery of the product qualifies. This includes branding, such as colours, pictures and logos. The guidance argues that genuine environmental claims properly describe the impact of the good or service and do not hide or misrepresent crucial information.
What does my business need to do?
If your business is making, or considering making environmental claims, there are several actions you must take to ensure compliance.
- Comply with any sector- or product-specific laws that apply to them or their products/services.
- Take time to read the CMA’s full guidance available here to ensure that you are complaint with your obligations around consumer protection law.
- Consider carefully whether your environmental claims need changing.
- Implement necessary changes if required. This includes:
- Stopping making misleading statements
- Amending claims to ensure compliance
- Ensuring claims are backed up with evidence
- Ensuring their customers are well informed
- Seek independent legal advice on the topic of environmental claims and consumer protection law. You can also consult Trading Standards Service for advice.
What are the risks of non-compliance?
- Being taken to court by the CMA
- Redress payments to consumers may be required.
- ASA (Advertising Standards Authority) may also take legal action
- Legal action from consumers.
- Consumers are entitled to compensation if their rights under consumer protection law are breached.
It is worth noting that despite Northern Ireland remaining in the European Union single market for goods, thereby being subject to several EU rules, the CMA’s guidance still applies.
CMA have confirmed that the guidance will be reviewed following any divergence between UK and EU law if it occurs.
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