In the latest phase of their investigation into greenwashing claims, last week the UK’s consumer law regulator, the Competition and Markets Authority (the “CMA”), published draft guidance for businesses about “green” claims. The CMA’s intent is that regard is had to the guidance when also making broader sustainability claims. Here is our take on the guidance and what businesses should be looking out for.
There are six broad principles underlying the guidance which broadly restate the position that already exists in the UK and across the EU. The one principle that is more interesting is principle five, addressing overall impact – an area where there is a gap in the law and which is open to much wider interpretation. The proposed principles are that environmental claims:
- must be truthful and accurate: businesses must live up to the claims they make about their products, services, brands and activities
- must be clear and unambiguous: the meaning that a consumer is likely to take from a product’s messaging and the credentials of that product should match
- must not omit or hide important information: claims must not prevent someone from making an informed choice because of the information they leave out
- must only make fair and meaningful comparisons: any products compared should meet the same needs or be intended for the same purpose
- must consider the full life cycle of the product: when making claims, businesses must consider the total impact of a product or service. Claims can be misleading where they don’t reflect the overall impact or where they focus on one aspect of it but not another
- must be substantiated: businesses should be able to back up their claims with robust, credible and up to date evidence
In addition to its draft guidance, the CMA also published a literature review, which found (amongst other things) that:
- over 50% of UK consumers take environmental considerations into account
- consumers are increasingly interested in products which minimise harm to, or have a positive effect on, the environment, but consumers stated position doesn’t always match up with their purchasing practices
- environmental impact is a relevant factor for consumers (albeit generally below price and quality)
The CMA is inviting views on the draft guidance up to 16 July 2021, with a view to issuing final guidance by the end of September 2021. In particular, there is opportunity for businesses to comment on:
- whether the draft guidance covers all important issues, or if anything is missing;
- should the guidance address both B2C and B2B scenarios;
- are there any sectors that should be treated differently;
- appropriateness of the principles identified above;
- other case studies that might be helpful; and
- any further clarification or guidance that might be useful
As set out in our previous article at the launch of this investigation, whilst the CMA has not yet publicly stated its view on whether consumer law may have been broken, it does not commence these sort of investigations without having possible enforcement in mind. The CMA’s provisional view is that guidance to businesses would be the most effective way to improve levels of compliance in environmental claims across consumer markets in the first instance. Following publication of the final guidance, they intend to run a compliance campaign to raise awareness of the guidance and encourage compliance. After publishing the final form guidance, the CMA intends to carry out a compliance review, and states that it will not hesitate to take enforcement action where appropriate. It remains the case that, should the CMA “find evidence of egregious non-compliance, [the CMA] may consider enforcement action at an earlier stage”. In our experience, this will likely be the case even where the guidance (which is not itself legally binding) might step beyond the strict bounds of underlying consumer law.
The guidance will also undoubtedly be a tool used by the Advertising Standards Authority in adjudicating complaints relating to environmental claims going forward.
Over the next two months, businesses need to properly consider whether to engage in this phase of the investigation, with the opportunity to seek to shape future consumer law policy. For any assistance with this or any related issues, please contact the authors or your usual CMS contact.
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