September 30, 2021

UK competition authority focuses on greenwashing

On September 20, 2021, the UK Competition and Markets Authority launched the Green Claims Code (the Code), which provides guidance to help businesses comply with the law when making claims that their products or services minimize prejudice to, or have benefits for, the environment, or are less damaging to the environment than their competitors.  The Code is part of a wider CMA initiative, launched in November 2020, to curtail the practice of greenwashing —  making misleading claims of environmentally sound and sustainable conduct.

The Code turns on six principles of consumer law:  that claims must (1) be truthful and accurate; (2) be clear and unambiguous; (3) be substantiated; (4) not omit or hide important and relevant information; (5) consider the full life cycle of the product or service; and (6) to the extent they compare different products or services, set out those comparisons in a fair and meaningful way.  These principles have a legal basis in the Consumer Protection from Unfair Trading Regulations 2008 and the Business Protection from Misleading Marketing Regulations 2008, as well as sector-specific regulations. 

The CMA’s guidance is intended primarily for businesses — including manufacturers, wholesalers, distributors and retailers — that direct environmental claims (as defined in the introduction to the Green ClaimsCode) to consumers; the Code also applies to online marketplaces that market themselves as specialists in the sale of environmentally friendly product as well as businesses marketing to other businesses, and should be followed by organizations that produce codes of practice or certification programs.

The CMA intends to allow companies a “bedding-in” period to acclimate to the new requirements; thereafter, beginning in 2022, the CMA will commence a sector-by-sector review of misleading environmental claims, but it does not preclude taking enforcement action before the formal review begins where there is clear evidence of breach.  The CMA and other consumer protection authorities have the authority to bring court proceedings for violations of the law, and in some instances consumers have the right to take legal action against businesses suspected of violating the consumer protection laws.

CMA press release | Green Claims Code