The UK Competition and Markets Authority (CMA) has published draft guidance for businesses making 'green' claims about their products. The guidance follows an analysis of websites carried out by the CMA alongside other national competition authorities that found that 40% of 'green' claims made online could be misleading.
In addition to existing requirements under the CAP and BCAP Codes for advertisements, businesses looking to make environmental claims about their products will therefore now also need to consider the implications of the CMA's guidance and increased interest in this area.
The CMA is inviting comments on its draft guidance, which follows a call for views issued last year (which we discussed here). The CMA is particularly interested in whether any further information is needed to help businesses comply with the law when promoting the 'green' credentials of their products. The consultation is running until 16 July 2021 and can be accessed here.
The CMA aims to publish final guidance by the end of September 2021.
The guidance
In the draft guidance, the CMA sets out its views on the types of 'green' claims made by businesses about their products that are likely to be misleading and therefore breach consumer law.
The guidance then goes on to establish six principles that such claims should follow in order to remain on the right side of the law. Specifically, claims should:
- be truthful and accurate
- be clear and unambiguous (a consumer's likely understanding of a product's messaging must match the product's actual credentials)
- not omit or hide important information
- make only fair and meaningful comparisons (any products that are compared should meet the same needs / be intended for the same purpose)
- consider the full life cycle of the product (claims should reflect the total impact of a product/service)
- be substantiated (requiring robust, credible and up-to-date evidence)
The guidance also contains a list of questions that businesses should ask themselves before making 'green' claims to ensure that they do not mislead consumers. For example, the CMA advises businesses to consider whether they are claiming environmental benefits that are in fact required by law, as this could mislead consumers into thinking a product is more eco-friendly than competing products where this is not necessarily the case.
The CMA's six principles build on the existing requirements under the CAP and BCAP Codes for advertisements, particularly in relation to making comparative adverts (Rule 3 of the CAP Code and Rule 3 of the BCAP Code) and environmental claims (Rule 11 of the CAP Code and Rule 9 of the BCAP Code).
Comment
The CMA is evidently taking its commitment to support the move towards a low carbon economy (as set out in its 2020-2021 Annual Plan) seriously, having already this year published guidance on sustainability initiatives and having launched a market study into EV charge points.
Specifically as regards 'green' claims, the CMA has stressed the importance of its proposed new guidance, explaining that more than half of UK consumers now take environmental considerations into account when buying products. In the words of Andrea Coscelli, Chief Executive of the CMA:
"Many businesses are already doing the right thing by being clear and upfront about how green a product really is, but that’s not always the case. We’re concerned that people are paying extra for so-called ‘eco-friendly’ products and those businesses which are genuinely investing in going green aren’t getting the recognition they deserve."
As businesses seek to comply with the CMA's new guidance, it is particularly important that they appreciate the complexity and high evidentiary threshold for substantiating and evidencing environmental claims. Failure to do so may result in investigation by the CMA and the UK's Advertising Standards Authority, as we discuss here.