CMA to review the "Green Claims Code" which sets out guidance for businesses making environmental claims

UK- ADVERTISING AND MARKETING (AND OTHERS)

January 2022

In September 2021, the CMA released the Green Claims Code, which sets out new guidance for businesses marketing goods and services as environmentally-friendly. This follows the CMA's investigation into misleading environmental claims, and increasing attention across Europe on sustainability claims. The CMA plans to begin reviewing misleading green claims in early 2022.

Key date(s)

• 2 November 2020 – Competition and Markets Authority ("CMA") launches consultation into misleading environmental claims.
• 16 July 2021 – CMA consultation on misleading environmental claims closes.
• 20 September 2021 – CMA releases guidance for businesses making environmental claims, entitled the "Green Claims Code" (the "Guidance").
• 10 January 2022 – CMA commences review of compliance of "green claims" with consumer law.

Status

• In November 2020, the CMA launched a consultation into goods and services marketed as "eco-friendly". As part of this, the CMA led an analysis of 500 randomly selected websites and found that 40% of such websites could be misleading consumers by using tactics such as:
  • unsubstantiated use of terms such as "eco" or "sustainable" or reference to "natural" products;
  • own brand logos and labels not associated with an accredited organisation; and
  • hiding or omitting certain information, such as a product's pollution levels, to appear more eco-friendly.
• The CMA's new Guidance, which arrives in the run up to COP26, is another sign of increasing efforts to regulate sustainability claims across Europe. For example, the European Parliament has adopted a resolution calling for new standards for green claims and a legislative proposal for a new regulation substantiating such claims, which is expected to be adopted by the Commission in mid-December 2021.
• Following an initial bedding-in period, the CMA is carrying out a full review of misleading green claims, both on and offline, starting in January 2022, prioritising certain sectors (e.g. textiles and fashion, travel and transport, and fast-moving consumer goods).

 What it hopes to achieve 

• The Guidance helps businesses to understand and comply with their existing obligations under consumer protection law when making environmental claims. This safeguards consumers from misleading claims and protects genuinely "green" businesses from unfair competition, while also incentivising businesses to invest in the environmental performance of their products.
• Further, the Guidance and consultation also sits in parallel with the CMA's call for inputs ("CFI") launched in September 2021 in response to the Government's request for advice on how the UK's competition and consumer regimes could better support its net zero and sustainability goals.

Who does it impact? 

• The Guidance affects businesses and advertisers which market products using "green claims" (sometimes called "environmental claims" or "eco-friendly claims") which show how a product, service brand or business provides a benefit or is less harmful to the environment. Green claims may be explicit or implicit and appear in advertisements, marketing material and branding (including trading names), or packaging. All aspects of a claim may be relevant (e.g. explanations of claims, colours, pictures, logos used, or overall presentation).
• Further, the Guidance covers "green claims" marketing to both consumers and to businesses. In particular, the CMA released a "Green Claims Code for Shoppers" to help consumers identify genuine environmental claims.

Key points 

1. Six principles for businesses making green claims

• • The Guidance sets out six principles which reflect the requirements of existing consumer protection law in the context of environmental claims. Businesses are required to ensure their claims:
    • are truthful and accurate;
    • are clear and unambiguous;
    • do not omit or hide important information;
    • compare goods or services in a fair and meaningful way;
    • consider the full life cycle of the product or service; and
    • are substantiated.

2. Relationship with other regulation and guidance

• • The Guidance covers requirements from general consumer protection law including the Consumer Protection from Unfair Trading Regulations 2008 and Business Protection from Misleading Market Regulations 2008. It does not cover sector or product specific requirements and businesses need to ensure compliance with such rules separately. The six principles are intended to be consistent with the CAP and BCAP Codes enforced by the Advertising Standards Authority ("ASA").

3. Consequences of non-compliance with consumer protection law

• • The CMA clarifies that failure to comply with consumer protection law could result in the CMA or other bodies (e.g. Trading Standards Services) bringing court proceedings or requirements to pay redress to harmed consumers. The ASA may also take action against misleading advertisements breaching the CAP or BCAP Codes.

This blog post provides an overview of a key recent or upcoming development in digital regulation in the UK or EU as part of our horizon scanning timeline which can be found below.

Contacts

VIEW DIGITAL AND REGULATION TIMELINE  +