Greenwashing – CMA consults on compliance advice for green heating and insulation products

On 13 December 2023 the CMA published a consultation on its draft consumer law compliance advice for businesses that are marketing green heating and insulation products to consumers.  The draft compliance advice is based on the issues identified by the CMA in its May 2023 report on consumer protection in the green heating and insulation sector, which focus on upfront pricing information and claims about product benefits.

Although the compliance advice is focused on the green heating sector, many of the compliance principles will also be relevant to green claims made by businesses in other sectors.  Once adopted, the draft compliance advice will therefore provide helpful guidance on the approach that should be taken by businesses that make green claims for their products or services and will complement the CMA's Green Claims Code.

Legal obligations

Businesses who make green claims have an obligation to ensure they are not in breach of the prohibitions against misleading commercial practices set out in the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).

Providing false or deceptive information about a product and its price will be seen as misleading action if it results in a consumer taking a decision that they would otherwise not have (the transactional decision test). Omitting or hiding information that is necessary for consumers to make informed choices, or presenting it in an unclear way may be a misleading omission.

Breach of the CPRs may result in enforcement action by the CMA, obtaining undertakings from businesses to change the way they operate, or bringing court proceedings to stop infringements and seek compensation on behalf of consumers.  Once the consumer provisions of the Digital Markets, Competition and Consumers Bill take effect (the Bill is currently before Parliament and is expected to receive Royal Assent by spring next year), the CMA will have direct enforcement powers to enforce the CPRs and will be able to impose fines of up to 10% of worldwide annual turnover of the businesses concerned where there is a breach of the legislation.

Presenting price information

Prices seen by consumers should be accurate and give a realistic indication of what they are likely to pay for the product.  Any headline price must be truthful and clear to consumers.  This is more likely to be the case when presenting price information about green heating products by following these principles:

• Accurate: the headline price should be a realistic indication of what people are likely to pay and should include all mandatory fees and charges.  It must also include inevitable costs associated with the product such as those necessary for delivery and installation.
• Comprehensive: charges for enabling works and other products or interventions required for the installation of green heating and insulation products, or to make them function effectively, should be included in the headline price if it is reasonably foreseeable that most consumers will pay for them.
• Transparent: the headline price should be transparent and the consumer should not be misled about the likely cost, for example by using a deceptively low headline price to attract consumers or by including the value of government funding.
• Clear: any important qualifications should be presented clearly and prominently, as close as possible to the headline price so that the consumer can easily see them.  It should be made clear upfront that the headline price is indicative and that a detailed estimate will be provided following customised assessment.
• Post-purchase: consumers should be informed if they are likely to incur further costs after buying a product as a result of owning and using it, so they are aware of the potential ongoing cost implications.
• Access to government funding: suppliers should make it clear that access to funding is subject to the consumer meeting the eligibility criteria and not give the impression that a consumer is automatically eligible.
• Bundling of products and services: where green heating or insulation products are provided along with other products or services in a bundle, the individual price of the aspects of the bundle should be made clear.

Making product claims

Any claims made about the products to consumers must comply with consumer protection legislation which includes not misleading consumers.  Claims about green heating and insulation products are less likely to be misleading if they comply with the following principles:

• Have evidence – if you can't back it up do not say it: claims must be truthful and accurate, supported with up to date documentary evidence that is specific and relevant to the consumer products concerned.  The evidence should be based on credible sources of information, facts and figures as opposed to guesses or guestimates.
• Explain everything the consumer needs to know: claims must be clear and comprehensive and should not omit important information which the consumer needs to understand the claim and make an informed decision.
• Be careful when using 'up to' claims: if using 'up to' claims this should reflect what consumers are likely to achieve.  Promoting the minimum outcome is likely to be more appropriate.
• Be realistic and representative: claims should be based on 'real world' conditions for most consumers and should not be based on very specific or limited circumstances, such as testing in lab conditions or in other countries.  Comparisons must be reasonable, fair and transparent and comparisons should only be made 'like for like'.
• Choose your words carefully: avoid words and statements that oversell the potential benefits and do not suggest certainty if a consumer may not achieve the claimed benefit.  Make sure that any colours, images and logos presented alongside a claim do not exaggerate the potential benefit to the consumer.  Claims should be specific, using simple, easy to understand language (as opposed to jargon or acronyms which could confuse or be difficult to understand).

In its consultation the CMA is seeking feedback on

• The scope of the draft compliance advice and whether it covers the important issues and practices concerning the marketing of green heating and insulation products.
• Whether the principles for businesses to follow on presenting price information and product claims are the right principles.
• Whether the illustrative examples provided in the draft compliance advice are helpful and could be improved.
• Whether there are any aspects of the draft compliance advice that need further clarification.

Responses are invited by 24 January 2024.

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