Increased public concern about environmental issues (for example, climate change and plastic in the oceans) means that consumers are more likely than ever before to consider the potential impact of a product on the planet when making purchasing decisions.  Some businesses may be tempted to accentuate their environmental credentials to reflect the mood and maintain or increase their market share.  Greenwashing is the practice of making false, misleading or unproven claims about the environmental benefits or attributes of a business, service or product, explains Rob Biddlecombe of Brabners.

Legal Liabilities

Greenwashing can lead potentially to significant legal liabilities. The Consumer Protection from Unfair Trading Regulations 2008 prohibit unfair commercial practices aimed at consumers, which is wide enough to include greenwashing. Similarly, the Business Protection from Misleading Marketing Regulations 2008 prohibit greenwashing claims aimed at businesses. Breaching either set of regulations constitutes an offence for which the maximum penalty is an unlimited fine and/or two years imprisonment.  In addition, where an offence is committed under either set of regulations by a company or other body corporate with the consent or connivance of a director, manager, secretary or other similar officer (or is attributable to their neglect), that individual will be personally liable as well. 

The UK’s Competition and Markets Authority (CMA) has become increasingly active in relation to alleged greenwashing and, in January 2023, announced that it would be reviewing green claims made in the Fast Moving Consumer Goods sector (including beverages).

In addition to the regulations, however, greenwashing could lead to claims for damages brought by customers for misrepresentation.  

The Green Claims Code

To assist businesses in understanding and complying with their obligations under the law when making green claims, the CMA has published the Green Claims Code.  At the core of the code lie six principles:

1. Claims must be truthful and accurate

Claims must contain correct information and be true. However, claims can also be misleading if what they say is factually correct, but the impression that they give about the environmental impact, cost or benefit of a product, service, process, brand or business is deceptive.

2. Claims must be clear and unambiguous 

Claims should be worded in a way that is transparent and straightforward so that consumers can easily understand them. They should not be presented in ways that are liable to cause confusion or give the impression that a product, service, brand or business is better for the environment than it actually is.

3. Claims must not omit or hide important relevant information 

These sorts of omissions can occur where claims focus on one environmental aspect of a product, service, brand or business but not another, or where they say nothing at all.  

4. Comparisons must be fair and meaningful 

Comparisons should be based on clear, up to date and objective information. They should not benefit one product or brand to the detriment of another if the comparison is inaccurate or false.

5. Claims must consider the full life cycle of the product or service

All aspects of the environmental impact of a product or service over its life cycle are relevant, including its components, manufacture, production, use, performance and disposal.

6. Claims must be substantiated 

This final principle overlaps with that relating to comparisons. Businesses should be able to back up their claims with robust, credible, relevant and up to date evidence.

Advertising

The Advertising Standards Authority (ASA) regulates broadcast and non-broadcast advertising through codes of practice that contain specific rules relating to green claims, including that:

• The basis of claims must be clear – unqualified claims could mislead if they omit significant information;
• The meaning of all terms used in marketing communications must be clear to consumers;
• Absolute claims must be supported by a high level of substantiation;
• Claims must be based on the full life cycle of the advertised product, unless the marketing communication states otherwise, and must make clear the limits of the life cycle; and
• It must not be suggested that claims are universally accepted if a significant division of informed or scientific opinion exists.  

Although the ASA does not have the power to prosecute or fine, it may, for example, require that adverts are withdrawn or that adverts do not re-appear in their current form, which can be expensive and embarrassing if a business has invested a significant sum of money on a campaign.  

Key Takeaways

Whilst the Green Claims Code is not law itself, following it may constitute good basic evidence of compliance with regulations.  Whilst there is clearly overlap between them, care should be taken to ensure that any green claims satisfy meet the requirements of the Green Claims Code and the ASA’s rules.  Both of them set high standards and claims, for example, that containers are “100% recyclable” or that ingredients are “sustainably-sourced” may not be justifiable.  Instead, we may start to see more humility and candour in green claims with businesses acknowledging their environmental flaws whilst trying to persuade prospective customers of the steps they are taking to improve.