CMA puts spotlight on "green" marketing claims

Following the launch in November 2020 of its investigation into potentially misleading environmental claims targeting consumers, the Competition and Markets Authority (CMA) has published draft consumer protection law guidance aimed at all businesses making such claims.

The CMA's draft guidance follows a six-month investigation into "green" claims, which aimed to better understand what consumers expect from eco-friendly products and how these claims influence their purchasing decisions. With the increased popularity of environmentally friendly products comes an increased risk of "greenwashing", whereby brands may exaggerate their environmental credentials in order to promote their businesses and boost sales.

Whilst the CMA's draft guidance broadly restates the existing position under UK consumer protection law (see textbox below), its main value is in the various practical examples it provides of claims that it considers misleading. These relate to issues including:

Use of terms such as "recyclable", "compostable" or "biodegradable" (and other claims about the durability or disposability of a product or its packaging)
Claims such as "Trusted eco holiday provider" (implying membership of an independently assessed quality assurance scheme)
Whether a product is "organic" or "sustainably produced"
Claims about carbon neutrality.

Noting that there is often limited space on packaging or promotional material, the CMA suggests that businesses could in some cases avoid claims being regarded as misleading by providing additional information on a website or via a QR code link. However, it warns against highlighting positive information about a product's environmental impact whilst ignoring negative impacts, such as production, transportation or disposal costs, arguing that such an approach may give consumers the impression that a product is "greener" than it actually is. Businesses are therefore urged to consider whether the overall impression being given to the consumer reflects the full environmental impact of the product or service (over its entire life-cycle/duration).

        The principles
    
Claims must be truthful and accurate

Claims should be clear and unambiguous

Claims should not omit or hide important information

Comparisons should be fair and meaningful

Claims should take into account the full life cycle of the product

Claims should be substantiated

Key takeaways

Historically, the vast majority of complaints about malpractice in advertising have been dealt with under the largely voluntary regime operated by Advertising Standards Authority, which is generally well regarded but has relatively limited powers. Whilst that is likely to continue, publication of the draft guidance is a timely reminder that the CMA recognises the increasing significance of environmental issues for consumers when making purchasing decisions and is willing to use its greater profile and resources to target what it regards as bad behaviour. As is exemplified by its recent decision to take software provider Norton to court, the CMA is also taking an increasingly tough line in relation to businesses which it considers to have acted inappropriately in the course of its investigations.

Businesses will therefore need to take extra care that their "green" claims can be substantiated, given the possibility that they will come under increased scrutiny from the regulator and consumers alike. Any attempt to promote goods or services through the use of inaccurate or misleading claims as to their eco-friendly credentials will carry a significantly higher reputational risk, as well as the risk of the CMA potentially exercising its statutory powers against businesses which do not cooperate. Compliance with the latest guidance should not be taken lightly.

The CMA has invited interested parties to respond by 16 July 2021 to a consultation document on the draft guidance which specifically requests their input on the following:

Whether the guidance covers all the important consumer protection law issues related to making environmental claims;
Whether the guidance ought to apply to B2B, as well as B2C, relationships;
Whether any sectors should be given special treatment;
Whether the six principles included in the guidance are the right ones to help businesses comply with consumer protection law;
Whether any aspects of the guidance require further explanation; and
Whether the guidance is sufficiently clear and helpful for the intended audience.

The final guidance is set to be published in August or September 2021.

For more information on the draft guidance, responding to the consultation and any related issues, please get in touch with the authors or your usual Travers Smith contact.