The environmental credentials of goods and services form an increasingly important aspect of the buying choices of consumers and businesses. Allegations of “greenwashing” can have a significant impact on business reputation and perceived integrity. However, the impact of greenwashing can extend well beyond reputational harm.
What is greenwashing?
A number of sectors have adopted their own definition of greenwashing, however in general terms, it is the act of misleading third parties by overstating the positive environmental impact of a product, service, brand, or business. It is likely to include practices such as:
- Claiming to be certified to an environmental standard when that is not the case;
- Claiming that a product is eco-friendly when that cannot be substantiated; and
- Failing to point out negative environmental impacts of a product.
What are the legal implications?
The fact that the practices listed above are either misleading or don’t give the whole picture means that they are all likely to breach current legislation.
- Where businesses are dealing with consumers, they may breach rules within the Consumer Protection from Unfair Trading Regulations (CPUT), shortly to be replaced by the Digital Markets, Competition and Consumers Act 2024 (DMCCA).
- Where businesses are dealing with other businesses, they may breach obligations owed under the Business Protection from Misleading Marketing Regulations 2008 (BPRs).
These regulations may be enforced by the Consumer and Markets Authority and Local Authority Trading Standards Teams. The DMCCA will introduce considerably increased enforcement powers which include significant fines of up to 10% of global turnover for certain breaches of consumer law. Businesses may also be at risk of civil claims from customers depending on the circumstances.
How can businesses comply?
The CMA has produced a “Green Claims Code” available here, which is designed to help businesses understand and comply with their obligations when making environmental claims in the course of selling goods and services. It is not legally binding although organisations that comply with it should be better placed to defend themselves in the event of claims under the CPUT, the DMCCA or the BPRs.
In broad terms, the principles that underpin the Green Claims Code require businesses to ensure that their environmental claims comply with the following principles:
- Be truthful and accurate. Goods and services must live up to claims made and contain correct information. Claims must not state or imply things that are not true or overstate the positive environmental impact of products.
- Be clear and unambiguous. Claims must not be vague, so as to have a number of different meanings or give a more favourable impression than is accurate.
- Do not omit or hide important information. ”Cherry picking” of information can be misleading, as can claims not saying anything at all about environmental impacts.
- If you compare goods or services with others, do so in a fair and meaningful way. Consider the full life cycle of the product or service, so, when saying that something is “greener” than other products, it must be comparing “like for like”.
- Substantiate claims. Ensure they are backed up by robust and credible evidence.
It is worth bearing in mind that environmental claims can extend beyond clear statements about environmental credentials. Terminology such “green”, “sustainable”, and “eco” can in itself be an environmental claim, as can selective omissions. Care is needed to ensure that the principles are carefully complied with, and the Green Claims Code provides further detail on compliance with each of these principles.
If you would like to discuss any of the issues raised in this article, please contact our Commercial team at corporate@stephens-scown.co.uk.