Importance of avoiding making misleading environmental claims

Following the recent 26th UN Climate Change Conference, attention is increasingly focussed on accelerating the goals of reducing climate change and environmental impact.  

With the spotlight on environmental impact and the integrity of business practices, the Competition & Markets Authority (CMA) has published a Green Claims Code aimed at protecting consumers from misleading environmental claims. The Code also intends to protect businesses from unfair competition and to help ensure a level playing field.

Principles

The Code underlines six principles based on consumer law.

Claims on products and services:

1. Must be truthful and accurate
2. Must be clear and unambiguous
3. Must not omit or hide important information
4. Must be fair and meaningful
5. Must consider the full life cycle
6. Must be substantiated.

Following an initial bedding-in period, the CMA will carry out a full review of misleading green claims, both on and offline, at the beginning of 2022. However, where there is clear evidence of breaches of consumer law, the CMA may also take action before the formal review begins early next year.

Application  

The Code potentially impacts any company which claims positive environmental impact in relation to its products or services. Attention is particularly important for businesses involved in fashion, travel, transport and fast-moving consumer goods as the CMA has flagged these industries as priorities. Any other sector where the CMA finds significant concerns could also attract the attention of the CMA and become a priority.

The Code aims to help businesses understand and comply with their existing obligations under consumer protection law when making environmental claims and applies to all commercial practices.

The Code will operate alongside with and not to the exclusion of other applicable rules and regimes. Consequently, businesses should consider whether they are subject to any sector or product specific requirements also.

Civil and criminal enforcement

The Code draws on enforcement powers derived from existing consumer protection rules under the Consumer Protection from Unfair Trading Regulations (CPUT) 2008 and Business Protection from Misleading Marketing Regulations 2008.

The CMA may bring court proceedings in relation to the Code.

Any business found to be in breach of consumer law can face civil action or criminal prosecution.

Breach of CPUT can attract criminal liability, including for directors and other officers of corporate bodies. There is also a direct civil right of redress by consumers against traders who conduct misleading or aggressive practices. If found to be in breach, companies may be required to pay compensation to any consumers harmed as a result of the breach. Naturally a company’s brand, reputation and sales could also suffer damage and be weakened.

Practical tips

Companies potentially affected are recommended to review their current business practices to help ensure compliance with the Code and avoid potentially incurring civil and criminal penalties, and reputational damage for misleading consumers.

Some practical suggestions to help stay on the correct side of the Code, include:

• avoid using broad, general terms, such as ‘green’, ‘eco’ and ‘sustainable’. These claims will be considered to apply to the whole life cycle of the product and must be substantiated with evidence
• avoid blending the environmental goals of the business with specific product claims
• clearly state any conditions/caveats that apply to product claims
• consider implicit claims being made by a product, for example through the use of images and colours on packaging
• avoid claiming as environmental benefits any features or benefits that are necessary standard features or legal requirements of your product and/or services.