Making ‘green’ claims – what you need to consider
Are you thinking of making a ‘green’ claim when advertising your products and/or services?
Regulators such as the Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) are reviewing ‘green’ claims made by businesses when advertising their products and services. For example, the CMA carried out an investigation into fashion retailers ASOS, Boohoo and George at Asda over their ‘green’ claims. This year, the CMA published undertakings from the retailers, which have committed to promises on how they will make ‘green’ claims moving forward.
If you are thinking of making a ‘green’ claim to highlight environmental merits of your products and/or services, it is important to be on the right side of the rules. B P Collins’ corporate and commercial team discusses the guidance you need to consider when making ‘green’ claims.
What is a ‘green’ claim and what is ‘greenwashing’?
‘Green’ claims are those that state a particular product, service, process, brand or business is better for the environment, such as advertising a service as carbon neutral or claiming that a product is eco-friendly or recyclable. ‘Greenwashing’ is when a business provides misleading information about its environmental merits and credentials.
What does the law and guidance say about ‘green’ claims?
There are no specific laws for ‘green’ claims as a whole and the relevant laws depend on whether you sell to businesses or consumers. It is important to check if there is any relevant sector-specific guidance that may apply. Also, certain areas such as automotive, cleaning products and household appliances have their own rules on ‘green’ claims.
However, the CMA has put together the Green Claims Code, which provides six key principles to help businesses comply with the law:
• Claims must be truthful and accurate
• Claims must be clear and unambiguous
• Claims must not omit or hide relevant information
• Comparisons must be fair and meaningful
• Claims must consider the full life cycle of the product
• Claims must be substantiated.
Whilst the Green Claims Code is helpful guidance, it is not a substitute for the law and other regulations must be considered. In terms of consumer protection law, the relevant rules come from the Consumer Protection and Unfair Trading Regulations 2008 (CPRs), which prohibit unfair commercial practices.
Business protection law is also relevant, and the applicable rules are in the Business Protection from Misleading Marketing Regulations 2008 (the BPRs).
The BPRs are similar to the CPRs but apply to relationships between businesses.
What are the sanctions if you get it wrong?
The sanctions include criminal sanctions punishable by an unlimited fine and/or imprisonment for up to two years as well as civil proceedings. A business may also suffer reputational risks and may have to withdraw greenwashing adverts – for example, in July 2024, the ASA ordered that Wessex Water Services Ltd had to withdraw an advert as it omitted material information about the company’s environmental impact.
For businesses that sell to consumers, the Digital Markets, Communications and Consumer Act 2024 has recently expanded the powers of the CMA. The CMA can now impose fines of up to 10% of a business’s annual turnover or £300,000 for non-compliance (whichever is higher). The CMA can also impose an additional daily penalty for continued non-compliance, require businesses to offer consumers compensation and/or give consumers the option to terminate a contract early.
If you are thinking about making ‘green’ claims when advertising your products and/or services and would like advice as to how the rules may apply to you, you can contact us on [email protected] or call 01753 889995
