As part of this creative marketing feature, Robert Starr, Regulatory Partner at Howes Percival, warns businesses to be wary of ‘greenwashing’.
Modern consumers are far more discernible when it comes to the impact their shopping habits may have on the planet. It is now commonplace for consumers to choose products, brands or services which purport to be sustainable and environmentally friendly. In many instances, consumers are also willing to pay more for products which they perceive to be greener than comparable alternatives.
To capitalise on these consumer needs there is, understandably, an increasing trend of businesses emphasising their green credentials. In doing so, businesses must be careful that, when making any green claims, they are not misleading consumers by greenwashing.
What is greenwashing?
Greenwashing is the practice of making exaggerated claims about the environmental credentials of a business including the environmental impact or sustainability of products and services it offers.
In recent years, occurrences of greenwashing have increased significantly. Recently the Competition and Markets Authority (CMA) conducted an investigation into greenwashing claims following a raft of consumer concerns and heightened recognition of the issue. It found that from the instances it considered, around 40% of the claims made to consumers could be properly labelled as misleading.
Common greenwashing mistakes include:
- Making claims that products are good for the planet (in other words have a positive environmental effect) or describing products as ‘eco’ (or eco-friendly) where those making the claims could not demonstrate through the entire lifecycle of the production and supply process that the product was in fact eco-friendly or was good for the environment
- Describing products as either ‘sustainable’ or ‘recyclable’ when only parts of their products could be demonstrated as such
- Use of unfair comparisons by describing products as ‘greener’ but without any clear evidence of what it was being compared against
In September 2021, the CMA produced guidance to help businesses comply with their legal obligations in relation to environmental claims. What has come to be referred to as the Green Claims Code (the Code) aims to protect consumers from being misled but also protects compliant businesses from unfair competition by ensuring a level playing field. Though it is only guidance and therefore not legally binding, the consumer protection laws that lie behind the Code can be enforced through both civil and criminal means. It is therefore important that businesses comply with the Code.
The Code is founded on six key principles:
- Claims must be truthful and accurate – they must not mislead consumers by giving an inaccurate impression even if the claims are factually correct
- Claims must be clear and unambiguous – vague or general statements of environmental benefit can confuse consumers and are more likely to be misleading
- Claims must not hide or omit relevant information – thought should be given to the overall presentation of the product as well as the whole life cycle of the relevant product
- Comparisons must be fair and meaningful – they cannot say or imply that something is greener if it is not. Further, products compared should meet the same needs and be intended for the same purpose
- Claims must consider the entire lifecycle of the product – for example stating a product has a 33% lower carbon footprint but then in the small print excluding transportation is likely to mislead consumers
- Claims must be substantiated – given that they must be truthful and accurate, businesses should retain evidence to support and prove their claims.
Enforcement action can be taken against businesses for failure to comply with the Code and/or as a consequence, consumer protection laws. The CMA has a range of enforcement powers at its disposal including the requirement for businesses to provide binding undertakings; enforcement orders; and introduction of enhanced consumer protection measures. In addition, the CMA can refer matters on to Trading Standards officers to investigate and prosecute any alleged criminal breaches of, for example, the Consumer Protection from Unfair Trading Regulations 2008 which could result in unlimited fines and imprisonment.
In addition to, or as an alternative to, other enforcement measures, the Advertising Standards Agency (ASA) can rule on greenwashing claims appearing in promotional material. It has the power to demand removal or amendment of any marketing claims that are in contravention of the Code. ASA rulings are published on their website and can cause significant reputational harm, particularly when picked up on by local or national press.
Many household names have already fallen foul of ASA greenwashing rulings including one recently for Tesco which made national headlines. The ASA banned TV, radio and press adverts for Tesco’s plant-based products which, in broad terms, claimed that they were better for the planet. The ASA ruling deemed that this claim was not substantiated. It accepted that, in general terms, a plant-based diet could help consumers reduce their overall environmental impact. However, in the context of the plant-based burgers (around which the adverts were based) Tesco did not have knowledge of the full life cycle of the product’s complex production processes and could not therefore demonstrate its product had a lesser environmental impact than a meat-based alternative.
To reduce the prospect of adverse publicity and legal action over potentially misleading consumers, it is essential that businesses and their marketing teams carefully consider the Code before making any green claim. The CMA has made it clear that greenwashing will not be tolerated and has even gone so far as to threaten naming and shaming serial offenders.
For more information from Howes Percival’s Regulatory team, contact Robert Starr on 01604 222122 or at firstname.lastname@example.org