Greenwashing

Greenwashing takes place when an organisation or individual suggests they are doing more to protect the environment than they actually are.

In a world where people increasingly want to know the environmental impact of their purchases and investments, every organisation should be alert to the risks of greenwashing.

Green claims are usually assessed over the full life cycle of a product or service. For construction and real estate businesses, this means focusing on the end-to-end process.

Environmental claims can be highly technical, so a business making such claims must be able to support them with evidence. 

Any environmental or green claim should be:

• Truthful and accurate.
• Clear and unambiguous.
• Substantiated.

In addition:

• Claims should not omit or hide important relevant information.
• Any comparisons made should be fair and meaningful.
• Claims should usually cover the full life cycle of a product or service.

A focus for governments and regulators

The last two years have seen an increased focus from regulators on misleading green claims.

In March 2023, the European Commission introduced a proposal for a Green Claims Directive, which is expected to come into force by early 2024.

The directive aims to improve the reliability of information provided to customers and eliminate misleading or false claims by introducing minimum requirements for corroboration of claims included in communications.

The UK government is looking to extend the power of the CMA in this area, allowing it to impose fines of up to 10% of worldwide turnover. Another UK regulator, the Advertising Standards Authority, has recently published important decisions against a number of major businesses for greenwashing.