With the upcoming COP26 conference in Glasgow and recent publication of the UN’s report on climate change, there is a renewed focus on environmental issues. In light of this increased attention, the Competition and Markets Authority (CMA) recently published its Green Claims Code and associated guidance for businesses who are intending to make environmental claims.
As more people are conscious of trying to buy ‘green’, this guidance has been issued to help businesses avoid misleading consumers in relation to their environmental advertising claims. Environmental claims include those that state a particular product, service, process, brand or business is better for the environment, such as advertising a service as carbon neutral or claiming that a product is eco-friendly or recyclable.
Further to publishing the Green Claims Code, the CMA also announced that it will carry out a full review of misleading green claims (commonly known as ‘greenwashing’) at the start of 2022 and those in breach of the rules could face action from the CMA.
The existing law
Whilst the Green Claims Code does not introduce new rules, it makes it easier to understand the law in the context of green claims. However, it is important to note that the Green Claims Code is not a substitute for the existing law in this area.
In terms of consumer protection law, this is set out in the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs), which prohibit unfair commercial practices. These unfair commercial under the CPRs practices are:
- The list of ‘blacklisted’ commercial practices which are considered unfair in all circumstances (Schedule 1 CPRs).
- General prohibition – 1) if a commercial practice goes against honest market practice or the general principle of good faith and 2) this materially distorts, or is likely to materially distort the economic behaviour of the average consumer (Regulation 3 (3) CPRs).
- False or misleading practice that causes, or is likely to cause, the average consumer to take a transactional decision he would not have taken otherwise (Regulation 5 (2) CPRs).
- Failure to comply with a code of conduct and causes, or is likely to cause, the average consumer to take a transactional decision he would not have taken otherwise (Regulation 5 (3) (b) CPRs).
- Misleading omission regarding material information. Material information is the information that a consumer needs to take an informed decision (according to the context). A misleading omission is a commercial practice where: material information is omitted; hidden; unclear, unintelligible, ambiguous or untimely; or if the commercial intent is not identified (Regulation 6 CPRs).
- Aggressive practices that significantly impair or likely to significantly impair the average consumer’s freedom of choice or conduct through the use of harassment, coercion or undue influence (Regulation 7 CPRs).
Business protection law is also relevant and the applicable rules are found in the Business Protection from Misleading Marketing Regulations 2008 (the BPRs). The BPRs are similar to the CPRs (they prohibit advertising that is misleading) but apply to relationships between businesses.
Furthermore, it is important to check if there is any relevant sector-specific guidance that may apply. Certain areas such as automotive, cleaning products and household appliances have their own rules in relation to environmental claims.
Green Claims Code
By way of summary, the Green Claims Code sets out 6 key principles along with further explanation and commentary to help businesses comply with the law. The principles are:
- Claims must be truthful and accurate.
- Claims must be clear and unambiguous.
- Claims must not omit or hide relevant information.
- Comparisons must be fair and meaningful.
- Claims must consider the full life cycle of the product.
- Claims must be substantiated.
You will also need to comply with the UK Advertising Codes monitored by the UK’s independent advertising regulator, The Advertising Standard Authority (the ASA). The Committee of Advertising Practice (CAP) is the sister organisation of the ASA and is responsible for writing the Advertising Codes:
- For non-broadcast claims (such as advertisements in newspapers, magazines, emails, public posters and online advertisements), you will need to follow the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing; and
- If you are planning on making broadcast claims (radio and television services licensed by Ofcom), you will need to comply with the UK Code of Broadcast Advertising.
There are sanctions that can be imposed for breaching the applicable rules on environmental advertising. These include criminal sanctions punishable by an unlimited fine and/or imprisonment for up to two years as well as civil proceedings which may lead to enforcement orders such as issuing refunds to consumers. A business may also suffer reputational risks and may have to withdraw the advertisement.
This is an area that will continue to develop as businesses strive to become more environmentally friendly and attempt to differentiate themselves from their competitors. It is likely the Government will formulate policies following COP26 and both the CMA and ASA are carrying out reviews of environmental claims which are expected to lead to further guidance and closer scrutiny of claims that are made.
If you need assistance with a proposed environmental advertising claim, or would like more information, contact our specialist corporate and commercial lawyers on 01753 889995 or email firstname.lastname@example.org.