CMA issues guidance to companies and warning that it is getting tough on "greenwashing"
CMA issues guidance to companies and warning that it is getting tough on “greenwashing”
In June we released an update regarding the UK's competition and consumer law regulator, the Competition & Markets Authority (CMA), issuing draft consumer protection law guidance following its investigation into misleading environmental claims, a process known as "greenwashing".
On 20 September 2021 the CMA published its final guidance for those making environmental claims with the purpose of helping businesses understand and comply with their existing obligations under consumer protection law in order to avoid greenwashing.
The guidance is largely focused around and enshrines the six core principles previously set out in the draft guidance:
Claims must be truthful and accurate
Claims must be clear and unambiguous
Claims must not omit or hide important information
Comparisons must be fair and meaningful
Claims must consider the full life cycle of the product or service
Claims must be substantiated
The CMA believes that following the six principles will help businesses understand how to communicate their green credentials while reducing the risk of misleading consumers and has provided several case studies to demonstrate this.
Fundamentally, the finalised guidance applies to all commercial practices, which can include various dimensions of a trader's behaviour, including but not limited to how it markets its products, services, processes or brand. The CMA has emphasised that the guidance will also apply in situations where claims are made by a manufacturer, wholesaler or distributor who does not have direct contact with a consumer. The guidance further extends, albeit in a more limited scope, to businesses marketing to other businesses.
Alongside the guidance, the CMA has published a Green Claims Code on its microsite where businesses can check the compliance of their green claims.
In January 2022 the CMA will begin a review of misleading green claims, both on and offline, meaning that businesses have until the New Year to ensure that their environmental claims comply with the law. In addition to ensuring the veracity of the green claims by companies, the CMA also reminds those making green claims to ensure that they meet their own sector specific requirements. Notably, if non-compliance is found the CMA has the power to take enforcement action where appropriate, even before the formal review begins.
It is understood that the CMA will prioritise which sectors to review in the coming months. Although these sectors have not yet been confirmed, it has been suggested that industries where consumers appear most concerned about misleading claims, namely textiles and fashion, travel and transport, and fast-moving consumer goods (food and beverages, beauty products and cleaning products) will be the first to be assessed. However, any sector where the CMA finds significant concerns could ultimately become a priority.