Supporting the transition to a low carbon economy is one of the CMA’s goals in its 2021–2022 Annual Plan, which includes a commitment to improving its understanding of ‘green’ claims made by sellers to consumers and, where appropriate, making use of its powers to correct false or misleading statements that affect consumers.
In November 2020, in response to the growing number of products and services being marketed as environmentally friendly, the CMA launched a new work programme investigating whether eco-friendly claims used to promote products and services may be misleading consumers.
A global review of randomly selected websites, coordinated by the CMA, found that 40% of green claims made online could be misleading. Practices include making vague claims and use of unclear language including terms such as ‘eco’ or ‘sustainable’ or reference to ‘natural products’ without adequate explanation or evidence of the claims; the use of own brand eco logos and labels not associated with an accredited organisation and hiding or omitting information such as a product’s pollution levels, to appear more eco-friendly.
The CMA has now issued draft guidance for businesses making environmental claims, setting out the best way to communicate their green credentials without the risk of misleading consumers.
The aim of the guidance is to assist businesses in complying with their obligations under consumer protection law when making environmental claims, and to create a level playing field for those businesses whose products or services represent a better choice for the environment. The guidance will apply to all businesses selling goods or services in all sectors of the economy who are making environmental claims aimed at consumers, whether they are manufacturers, wholesalers or retailers.
The CMA is inviting comments from interested parties by 16 July 2021 The consultation is available here.
Environmental claims are described in the draft guidance as claims which suggest that a product, service, brand or business is better for the environment. They include claims that suggest or give the impression that a product or a service has a positive environmental impact or no impact on the environment, is less damaging to the environment than a previous version of the same product or service, or than competing goods or services. Claims can be either explicit or implicit, and appear in adverts, marketing material, branding, on packaging or in other information provided to consumers.
Claims are misleading where a business makes claims about its products or services, or omits or hides information, in order to give the impression that they are less harmful or more beneficial to the environment than they really are.
The draft guidance sets out a range of high-level principles businesses should apply when making environmental claims in order to minimise the risk of misleading consumers in breach of consumer protection law. Each of the principles is explained in detail in the draft guidance and illustrated with a range of practical examples and case studies.
- Claims must be truthful and accurate
Claims should not mislead consumers by giving an inaccurate impression, even if they are factually correct. They should only give consumes the impression that a product or service is as green and sustainable as it really is.
- Claims should be clear and unambiguous
Claims must be worded in a transparent and easily understandable way, without confusing consumers or giving the impression that a product or service is better for the environment than it is. The meaning consumers are likely to take from a claim and the actual environmental impact of the product or service need to match.
- Claims must not omit or hide important relevant information
Claims made by businesses should not omit or hide information necessary for consumers to make informed choices. Consumers can be misled where claims do not say anything about environmental impacts, or where claims focus on just one aspect of a product, service, brand or business.
- Comparisons must be fair and meaningful
Comparisons should enable consumers to make informed choices about competing products and services and should not benefit one particular product or brand to the detriment of another if the comparison is inaccurate or false. They should be based on clear and objective information and compare like with like.
- Claims must consider the full life cycle of the product
When making broad and general environmental claims businesses should consider the effect of the total life cycle of a product or service, taking into account factors such as its component parts, how and where it is manufactured or carried out, its use or performance, disposal of the product and waste by-products. Where claims are based on a specific part of a product or service’s life cycle it should be made clear which aspect they refer to and consumers should not be misled about the total environmental impact.
- Claims must be substantiated
Businesses should have robust, credible and up to date evidence to support their claims. They will need to be in a position to provide that evidence when under investigation for potentially misleading claims.
Relevant legislation and enforcement
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) contain specific prohibitions against misleading claims made or information omitted in advertising and marketing material for products and services available to consumers. Under the CPRs the CMA (or other enforcement body) can seek an enforcement order from the courts against a business in breach of the rules, or accept undertakings from the business concerned to stop the breach. Enforcement orders or undertakings can also require businesses to take additional steps to protect consumers, including a requirement to compensate those harmed by a breach of the legislation.
In addition, the Business Protection from Misleading Marketing Regulations 2008 focus more specifically on the rules relating to the provision of material information and comparative advertising.
Businesses will also need to make sure they comply with any sector-specific legislation or regulatory obligations relevant to their sector.
The CMA’s guidance on environmental claims will not create any legal obligations or change the legislation, but is seen as the most effective way to improve levels of compliance in environmental claims across consumer markets in the first instance. Once the final guidance is adopted the CMA will run a compliance campaign to raise awareness of the guidance and encourage compliance. This will be followed by a compliance review, and the CMA has indicated that at that stage it will not hesitate to take enforcement action where appropriate.