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7th October, 2022 by Robert Starr
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.
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.
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.
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 in the food and drink sector have already fallen foul of ASA greenwashing rulings including:
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 [javascript protected email address].
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To contact us, please fill out this form and we will get back in touch as soon as possible. Your personal data will be processed in accordance with our privacy policy which can be found here.