UK Competition and Markets Authority to probe misleading sustainability claims

On 2 November 2020, the UK Competition and Markets Authority (the CMA) launched an examination into how products and services claiming to be ‘eco-friendly’ are being marketed, and whether consumers could be misled when purchasing such goods and services.

Given the ever increasing demand for sustainable goods and services, the CMA is concerned that businesses may be incentivised to make false or misleading claims about the environmental impact of their products or services, for example by exaggerating their green credentials (a practice referred to as ‘greenwashing’), or falsely implying that their products are environmentally friendly through their packaging or logos.  

The CMA is therefore looking at how consumer protection legislation – primarily the Consumer Protection from Unfair Trading Regulations 2008, which contain a general prohibition against unfair commercial practices and specific prohibitions against misleading actions or misleading omissions – could be used to address false or misleading environmental claims. 

As part of its examination the CMA is focusing on:

• how claims about the environmental impact of products and services are made;
• whether such claims are supported by evidence;
• whether such claims influence people’s behaviour when purchasing goods and services; and
• whether consumers are misled by an absence of information about the environmental impact of products and services, for example, where a product is highly polluting or non-recyclable.

The CMA has singled out a number of industries where, in its view, consumers may be especially concerned about misleading claims, including textiles and fashion, travel and transport, food and beverages, beauty products and cleaning products.  It has invited those active in these sectors, and the general public, to submit their views.

While the CMA has not at this stage reached any view as to whether consumer protection law has been broken, it says that it will take appropriate action if it does find evidence that businesses are misleading consumers by greenwashing their products or services.

CMA and ACM leading the charge

All of this comes at a time when businesses’ approaches to sustainability are under greater scrutiny around the world.  In response to the growing number of products and services being marketed as environmentally friendly, we are seeing regulators and NGOs increasingly focus on greenwashing and sustainability claims.

Although we have seen other European regulators looking to address these issues, the CMA and the Netherlands Consumer and Markets Authority (the ACM) appear to be leading the charge.

In September, the ACM published draft Guidelines on Sustainability Claims which offer companies and consumers practical guidance on what types of claims could be misleading or incorrect, and how to avoid greenwashing (read our blog on these Guidelines here).  The ACM’s Guidelines may well serve as a template for the CMA, since it also intends to publish guidance for business (and consumers) on sustainability claims next summer.

The CMA and ACM have also joined forces as part of a project with the International Consumer Protection and Enforcement Network (ICPEN).  From 9 to 20 November 2020, the CMA will co-ordinate a sweep of randomly selected websites with ICPEN members, with the goal of identifying misleading environmental claims globally.  The project also intends to produce guidance for businesses with a view to setting global expectations on the veracity of environmental claims. This also sends a strong signal – no doubt intentionally – that the CMA will continue to work alongside other European regulators on consumer protection matters, even though the UK has left the European Union.