The UK’s competition watchdog has today given British businesses a deadline of the end of the year to resolve any misleading green marketing claims – so-called “greenwashing” – to avoid regulatory action.
At the beginning of 2022, the UK’s Competition and Markets Authority (CMA) will carry out a full review of the environmental declarations made by companies and will take action against offending firms.
Currently, the top priority industries that the CMA will investigate first are those where consumers have the most concern – namely fashion, travel, food and beverages, beauty products and cleaning products.
“We’re concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms don’t get the recognition they deserve,” said Andrea Coscelli, Chief Executive of the CMA.
“Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA,” he added.
To aid businesses in communicating their green credentials without misleading customers, the CMA also released a “Green Claims Code” that focuses on six principles based on existing consumer law.
This includes guidelines that firms making green boasts “must not omit or hide important information” and “must consider the full life cycle of the product”.
Feeling the green pressure
With businesses under more pressure than ever from consumers, shareholders and activists to ensure that their products, operations and investments do not damage the environment, sustainability has become a top marketing priority.
But this is accompanied by widespread concern over false claims and “greenwashing” to improve the appearance of ESG credentials.
“Awareness has never been greater, but there are clearly some who have sought to turn that awareness and demand to their advantage, and not always legitimately,” said Geraint Lloyd-Taylor, marketing and advertising partner at law firm Lewis Silkin.
“Time is running out for any business that has been relying on vague, exaggerated – let alone invented – environmental claims to promote their products or services,” he added.
Today’s announcement comes after the CMA launched an investigation into the impact of green marketing on consumers last year, in which it found that 40 per cent of green claims made online could be misleading.
“Millions of UK households are rightly choosing to switch to green products as they look to reduce their carbon footprint. But it’s only right that this commitment is backed up by transparent claims from businesses,” said Greg Hands, minister of state for energy and clean growth.
He added that the government is also currently conducting a review of the UK’s green energy tarrifs, “to ensure consumers can be confident they are choosing companies that make a conscious choice to invest in renewable energy.”
As well as consumer-facing industries, asset managers and banks have also come under pressure to prioritise ESG investing, but risk making the same overstated claims.
Recent research from data agency iResearch Services showed that more than half of financial services professionals in the UK believe the practice of greenwashing is rife within the financial industry.
As well as the CMA’s announcement today, the UK Treasury launched a new expert advisory group in June called the Green Technical Advisory Group (GTAG) in an effort to deliver the government’s “Green Taxonomy”, a framework for judging how environmentally friendly investments are.