What are the top 3 developments in your territory concerning green claims and the associated risk of greenwashing?
Environmental issues are increasingly important to the UK government and UK consumers alike. Accordingly, ‘green’ claims have fast become a key point of focus for companies keen to demonstrate their green credentials. These same claims have also attracted the attention of government regulators and campaigners who are increasingly cracking down on misleading or unsubstantiated claims. In addition to the reputational risk of a public ruling that an advert is in breach of the UK advertising codes, non-compliant advertisers face the risk of stiff sanctions from the Competition and Markets Authority under consumer law. These include formal investigations, financial penalties, civil sanctions, and criminal prosecution, which in the worst case could lead to custodial sentences for the company directors and officers involved.
We have identified the top three areas of development for those who operate or target consumers in the UK to be mindful of when making green claims.
1. New guidelines and enforcement by the government regulator
In response to the increasingly high-profile environmental issues, and concern that many consumers were being misled by unjustified environmental claims, the UK consumer regulator, the Competition and Markets Authority (the “CMA”), published an updated ‘Green Claims Code’ in September 2021.
The CMA’s Code has six key principles: (i) claims must be truthful and accurate; (ii) claims must be clear and unambiguous; (iii) claims must not omit or hide important information; (iv) comparisons must be fair and meaningful; (v) claims must consider the full life cycle of the product or service; and (vi) claims must be substantiated.
These principles apply to both business-to-business and business-to-consumer advertising, and are applicable to all kinds of marketing communications (including advertising on social media platforms). They have been actively applied and enforced by the CMA since publication, and already investigations have been launched. The CMA, unlike the Advertising Standards Authority (see below) has the power to conduct sector-wide enquiries and bring court proceedings against companies who fall foul of these principles. Clearly, the organisation intends to utilise those powers.
In January 2022, the CMA launched a review of green claims used in the UK’s fashion retail sector. Six months later, the CMA announced that three prominent fast-fashion retailers were under formal investigation. Further, in January 2023, the CMA announced a similar review into the use of green claims in the FMCG market. According to the CMA, this review is intended to focus on “concerning practices”, including the use of “vague and broad eco-statements” such as those which claim a product or a product’s packaging is “sustainable” or “better for the environment” without evidence. The CMA will examine the environmental credentials of individual products, as well as entire product ranges, thought to carry misleading green claims. Most recently, as part of an adjacent investigation by the CMA into consumer protection in the green heating and insultation sector, which began in September 2022, the CMA announced it was investigating a boiler manufacturer for potentially misleading green claims. In addition, the CMA has put the wider green heating and insulation sector and the travel and transport sector on notice that it too may soon be the focus of the CMA’s attention.
Companies operating or targeting consumers in the UK, irrespective of their sector or industry, should take great care to closely follow the CMA’s Green Claims Code and any subsequent guidance it issues, and should always seek to demonstrate, with regards their green claims, a ‘best practice’ against this Code. The flurry of recent activity by the CMA shows that UK companies should assume that their green claims will be scrutinised by the CMA. Companies should therefore ensure that, prior to publication of any green claims, they have documentation in place to demonstrate the substantiation which is required to comply with the regulator’s principles. Given the CMA’s wide powers to impose sanctions ranging from written warnings to criminal prosecution (including custodial sentences for company officers), and its evident willingness to utilise such powers, the CMA’s guidance should be taken seriously by advertisers.
2. A corresponding increase in scrutiny by the Advertising Standards Authority
The UK’s self-regulatory body for the advertising industry, the Advertising Standards Authority (the “ASA”), is also increasing the level of scrutiny that it applies to green claims, with the ASA recognising the role that advertising, and advertising regulation, needs to play if the UK is to meet its legally binding target of ‘Net Zero’ by 2050.
The ASA’s aim is to ensure that it (and advertisers producing such claims) ‘look behind’ green claims to ensure they can be fully substantiated and corroborated, and are therefore not misleading. The ASA has stated that its initial focus is on the travel, energy and heating sectors, but its attention has widened to claims made by companies operating in the waste and food industries.
The ASA assesses ads under UK Codes of Broadcast / Non-Broadcasting Advertising (the “BCAP” and “CAP” Codes, respectively), as applicable, and also takes into account compliance with its own guidance on green claims. Where it finds advertising to be non-compliant and environmentally irresponsible or misleading, it will uphold complaints against advertisers by way of a public adjudication on its website. An upheld complaint against an advertiser can, and frequently does, result in significant public relations damage.
In an issued ruling against well-known food company, Oatly, in January 2022, the ASA focused on the company’s failure to (a) make clear what part of its products’ life cycle the claims applied to, and (b) make a like-for-like assessment when comparing CO2 emissions from the meat and dairy industry with the transport industry. Similarly, in a ruling against beverage manufacturer, Innocent, in February 2022, the ASA found that apparently innocuous green messaging which encouraged consumers to “Reduce. Re-use. Recycle” amounted to an implied claim that the manufacturer was environmentally friendly and that, overall, its products benefited the environment (a claim Oatly could not substantiate).
ASA enforcement against green claims appeared to become even stricter when, in October 2022, it ruled against two HSBC adverts describing specific environmental initiatives undertaken by the bank. Despite the claims being specific and accurate, in accordance with good practice, the ASA nonetheless decided that they were misleading when viewed against the bank’s wider practices, which include the financing of greenhouse gas-emitting industries. The HSBC ruling has been greeted with some concern, as it appears to suggest that environmental claims may not be made unless the advertiser simultaneously describes any activities that harm the environment. However, the ASA’s CEO has told CMS that this concern is misplaced and that forthcoming rulings will clarify the position.
The ASA has upheld several complaints over the course of 2023 in relation to misleading green and environmental claims indicating that it will continue to scrutinise any such claims made by businesses. These include, amongst others, rulings against businesses with particularly high greenhouse gas emissions (such as airlines, oil and gas companies, and car manufacturers).
In June 2023, the ASA published an updated version of its guidance on misleading environmental claims and social responsibility, in an effort to alleviate marketers’ concerns that they face a “binary” choice when making green claims: choosing between advertising their green credentials and risk “greenwashing”, on the one hand, and not mentioning their green efforts and “greenhushing”, on the other.
That said, when taken together with active enforcement action by the CMA, advertisers targeting UK consumers should be mindful of the ASA’s hardening stance on green claims.
3. The increasing role of public pressure
Pressure on companies to comply with UK regulation and guidance (including the Green Claims Code), and to demonstrate responsibility with regards to their green claims not only stems from the CMA and ASA, but also from an increasingly proactive UK public. Pressure groups are increasingly calling out companies for what they deem to be irresponsible green advertising; such groups are joining the tens of thousands of complaints made to the ASA each year which are filed by individual members of the public in relation to a variety of allegedly misleading or irresponsible forms of advertising. Complaints from pressure groups, such as Adfree Cities and A Greener World, led to the HBSC, Innocent and Oatly rulings described above.
This heightened awareness among the UK public has manifested in the development of the term ‘greenwashing’ and the range of activities businesses might be engaging in that warrant this label. A report published by Planet Tracker, a non-profit organisation producing climate analysis, has identified a ‘greenwashing hydra’ that consists of six types of activities conducted by businesses that all fall under the umbrella term of ‘greenwashing’. These are:
- ‘Greenlabelling’ - of the six types, this is the most pertinent for advertisers, whereby a business makes misleading claims stating that its products or practices are green but has little or no substantiating evidence.
- ‘Greenlighting’ - when a business highlights its climate-friendly behaviours in an attempt to shift attention away from more harmful activities. An example is the HSBC advertisements that were the subject of the ASA ruling, described above.
- ‘Greenshifting’ - a label given to businesses’ practices that attempt to shift the blame of harmful environmental practices up or down the value chain – for example, this can be seen through advertising that suggests it is consumers who must make a conscious change in their behaviour.
- ‘Greencrowding’ – when a business ‘hides’ within a crowd of other businesses by undertaking joint activities in order to avoid scrutiny, but which fails to address its own, individual, environmental credentials.
- ‘Greenrinsing’ – whereby businesses will regularly amend their climate or sustainability targets before they have been achieved; and
- ‘Greenhushing’ – when businesses deliberately under-report, or even hide, their sustainability data in order to avoid accountability to their shareholders.
Companies targeting UK consumers should be mindful, therefore, of the increasing sophistication and significance of the role now played by the UK public in the regulation of green claims. The UK public is adopting an ever more hostile approach towards advertisements perceived to be environmentally irresponsible, including those which “omit or hide important information” (contrary to principle 3 of the CMA’s Green Claims Code). Companies should therefore expect all green claims to be subject to public scrutiny and, for even those claims which sit on the borderline between ‘fair’ and ‘misleading’, to be subject to complaints by the UK public.
Read latest news on sustainability claims and greenwashing in the UK here.
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.