We are a luxury brand. Our customers really care about the environmental credentials of our products, and of our business as a whole. We have made significant changes recently to reduce our impact on the environment, and we are very proud of this progress.
We want to communicate these changes to our customers through our advertising, website, in-store and even on our products and packaging. We are aware the rules in this area have changed recently, and we don’t want to be accused of greenwashing. What do we need to know?
You are absolutely right to recognise the importance of making changes to minimise the environmental impact of your products and business (including your supply chain). It is something all businesses have been considering and accelerating over recent months and will inerasably address their minds and take meaningful action to address over the coming months and years. Consumers, shareholders, and even employees increasingly expect and demand it.
You are also right to be alive to the recent changes in this area. The new guidance that has been introduced in recent weeks tells us the main UK regulators are looking very closely at environmental (otherwise known as ‘green claims’), which means you will need to take care with any environmental claims to ensure they comply with the high standards now expected by UK regulators.
What is a green claim? Many consumers choose to buy products they think will be less harmful to the environment. Green claims are claims that show how a product, service, or business benefits the environment or is at least less harmful to the environment.
Why is this news? Two important UK regulators, the Competition and Markets Authority (CMA) and Advertising Standards Authority (ASA), recently announced they are taking a renewed interest in green claims, with a focus on untrue, ambiguous, unsupported, and cherry-picked claims.
The CMA is particularly concerned because it found that around 40% of online green claims are potentially misleading, based on their own random sampling exercise.
The underlying rules in this area aren’t new – they come from consumer protection regulations and advertising rules. But while the ASA has been actively investigating claims made in advertising for some time and taking action where necessary, the CMA has been conspicuously absent. This is about to change. The CMA announced it will start to actively enforce the consumer protection rules in early 2022.
It has certain sectors in its sights, including textiles and fashion, travel and transport, and fast-moving consumer goods – so many luxury brands will be near the top of the CMA’s list when it comes to enforcement.
To help businesses get their house in order ahead of its enforcement activity, the CMA introduced the new Green Claims Code. The Code covers green claims on company websites, in store, on product labelling, packaging and brochures, advertising and even in product names.
The goal is to ensure consumers receive reliable information and can make informed decisions about the products and services they buy.
So, what does it say? The Green Claims Code is very detailed but helpfully includes six overarching principles. These are that all environmental claims must:
- be truthful and accurate
- be clear and unambiguous
- not omit or hide important relevant information
- if they make comparisons, ensure they are fair and meaningful
- consider the full life cycle of the product or service
- be substantiated.
The Code contains various specific examples that the CMA considers to be misleading. For example, packaging that contains the prominent claim ‘Reduced plastic packaging’ is likely to be misleading if the reduction in plastic is negligible and the reduction has been achieved through changes in the manufacturing process that have resulted in a net increase in environmental harm caused by the product, such as moving production abroad to a more polluting factory and significantly increasing the carbon footprint of the product. So, if even technically true, a claim might be misleading in the round.
The CMA is keen to stress that it does not want to discourage businesses from making legitimate green claims, but it will be on the lookout for those claims that are too broad, such as describing a product or business as ‘environmentally friendly’ unless that is linked to a more specific (and substantiated) claim, and the product and business really are environmentally friendly in the round, when taking account of the product’s full life cycle including manufacture, distribution, sale, use, and disposal. If there are problematic areas when viewing the full life cycle, it might still be possible to make a specific environmental claim about a particular beneficial attribute (e.g. plastic-free packaging), but the consumer shouldn’t be left with an overall misleading impression by creating the impression that buying the product itself is ‘good for the environment’ if that is not the case.
What about the Advertising Standards Authority? The ASA is concerned with advertising and marketing (including websites and social media claims). The ASA will also be ramping up enforcement in relation to green claims made in advertising and marketing in the coming months. It will publish updated guidance for advertisers soon and will launch a series of inquiries focusing on various priority sectors, including aviation, automotive, waste, heating, and animal-based foods. This doesn’t preclude luxury brands, but, other than in relation to the luxury aviation, automotive, and food sectors, it seems that luxury brands are more at risk from the CMA than ASA at present.
What happens if I don’t comply with the rules? It depends on which regulator comes knocking on your door.
If a business does not comply with consumer protection law and does not cooperate with the CMA or Trading Standards, the business (and in some cases senior individuals within the business) could be prosecuted. In practice, most investigations will not reach that stage.
When it comes to advertising, marketing, and areas within the ASA’s remit, the ASA does not have the power to seek prosecutions for breaches of the advertising codes but can drum up negative publicity and prohibit a business from repeating a claim in advertising and marketing that the ASA has found to be misleading. In some instances, the ASA can also refer businesses to Trading Standards, the CMA or another appropriate regulator if the ASA’s own powers are not sufficient to deal with an uncooperative advertiser.
Want to join The Collective, and contribute to the debate?
Email us at: The.Collective@lewissilkin.com