As consumer awareness has grown around the potential impact on the environment of the products and services we use, so has demand for more sustainable goods and services. The commercial opportunity that this presents – and the temptation to differentiate a brand or product as “green”, “eco-friendly”, or “sustainable” – can be significant, but does not come without associated risks.
Across all sectors, regulatory scrutiny of “greenwashing” is intensifying. As noted in our previous blog post, on 20 September 2021, the UK Competition and Markets Authority (CMA) published its Green Claims Code, providing guidance for businesses making environmental claims.
The CMA has since announced that it has commenced its first review of compliance with the Green Claims Code, focusing on the fashion retail sector (interestingly, the Dutch consumer regulator also selected fashion for its first sector-specific investigation, see here). The CMA’s review is intended to determine whether businesses are complying with the Green Claims Code (and consumer protection laws more generally), and it will take appropriate action against businesses it considers are greenwashing. In the coming months, the CMA plans to look at other sectors “where consumers appear most concerned about misleading claims”, including “travel and transport, and fast-moving consumer goods (food and beverages, beauty products and cleaning products)”, though the anticipated timing for those further reviews is currently unknown. The CMA may take enforcement action against breaches of consumer law at any time, including before its sectoral reviews are completed.
ASA Green Claims Guidance and recent rulings
The UK Advertising Standards Authority (ASA) also has greenwashing squarely in its sights. On 9 December 2021, following a review of existing regulation and guidance, the Committee of Advertising Practice (CAP) and Committee of Broadcast Advertising Practice (BCAP) jointly published guidance on misleading environmental claims and social responsibility (the Guidance). The Guidance consolidates the ASA’s position by bringing together the relevant existing rules of the CAP and BCAP Codes (together, the Advertising Codes) relating to environmental claims and includes detailed examples of approaches that are likely to be problematic. It is intended to help advertisers interpret the Advertising Codes specifically as they relate to “green” or “socially responsible” claims.
The ASA may regard claims as misleading in the absence of adequate substantiation. The Guidance emphasises that:
- Absolute environmental claims (such as “green” or “environmentally friendly”) must be supported by a high level of substantiation. The more specific a claim, the more specific the supporting substantiation will need to be. For example, in a recent ruling against Oatly, the ASA upheld complaints against the claim that “Oatly generates 73% less CO2e vs. milk”. Oatly had substantiated the claim only in respect of Oatly Barista Edition, by comparison to whole cow’s milk, which Oatly considered to be the most appropriate comparator due to its fat content. The ASA considered that the claim was not sufficiently clear or qualified (i.e. consumers would understand it to mean that all Oatly products generated 73% less CO2e compared to any type of cow’s milk), and that it had “expected to see evidence relating to the CO2e produced for all Oatly products and types of cows’ milk”.
- Relative claims (e.g. “greener” or “environmentally friendlier”) must be supported by verifiable evidence that proves the stated environmental benefit over comparable products. The Advertising Codes note that such claims may be justified “if the advertised product provides a total environmental benefit over that of the marketer's previous product or competitor products and the basis of the comparison is clear.”
- Claims based on future projections should be clear, based on accurate data and, if relevant, suitably qualified (e.g. by making clear a claim is site-specific, or based only on projections rather than historical data).
Product lifecycle considerations
The Guidance notes that “General claims about the environmental credentials of products or services are likely to be interpreted as claims about the product’s entire lifecycle, from manufacture to disposal” (emphasis added).
The Advertising Codes already require marketers to “base environmental claims on the full life cycle of the advertised product” unless stated otherwise. In October 2021, the ASA upheld a complaint against Alpro’s claim that its almond milk products were “good for the planet”, on the basis that insufficient context for the claim had been provided, leaving its meaning ambiguous. The ASA also noted, as a secondary point, that Alpro’s environmental impact lifecycle analysis did not assess the environmental impact of the products over their entire lifecycle, for example by omitting transport, packaging and retail.
The Advertising Codes also provide that “claims based only on part of an advertised product or service’s life cycle must not mislead consumers about the product or service’s total environmental impact.” For example, a claim that an electric car is “zero emissions” may be acceptable if it is made clear that the claim relates to driving only (see 2017 ruling against BMW).
Environmental benefit / adverse effects
The Guidance notes that “even where claims can be substantiated or are technically correct, ads must take care not to mislead consumers about the environmental benefit of a product or service.” In particular, the Advertising Codes provide that marketing communications must not:
- highlight the absence of an environmentally damaging ingredient if it is not ordinarily found in products of that type;
- highlight an environmental benefit that results from a legal obligation in respect of all such products; or
- imply that the formulation has changed to improve the product in the way claimed.
Although it was not decided on the basis of these rules, the Guidance gives the example that a claim that a product features “70% less plastic” may be misleading if it relates only to the packaging of a refill pouch required to refill a normal plastic container, and omits to mention that the refill pouches themselves are not widely recyclable (see 2019 ruling against Dettol).
The Advertising Codes provide that “Marketing communications must be prepared with a sense of responsibility to consumers and to society”. Although no environmental claim-specific equivalent rules exist, the Guidance provides some examples of marketing messages which the ASA considers would fall within scope of this provision. These include:
- trivialising consumer behaviour likely to result in harmful pollution or excessive waste;
- encouraging or condoning non-recycling of recyclable packaging;
- encouraging or condoning consumers to disregard the harmful environmental impact of their actions; or
- encouraging or condoning littering.
The Guidance suggests the ASA may be willing to interpret the social responsibility rules expansively, which could be particularly problematic for advertisements in certain sectors. For example, whilst the ASA’s investigation into Ryanair’s “low CO2 emissions airline” claims was decided on the basis of substantiation, could the Guidance pave the way for complaints about airline advertising to be decided on issues of social responsibility?
The ASA has cautioned that, where evidence exists of misleading or socially irresponsible advertising that concerns the environment, it intends to take a “stricter interpretation” under the Advertising Codes.
We have already started to see evidence of this in recent decisions. For example, the ASA recently upheld a complaint that a Lipton ice tea advertisement was misleading on the basis that the overall impression given was that all parts of the bottle were made from recycled materials. The advertisement’s headline claim, “DELICIOUSLY REFRESHING, 100% RECYCLED*”, was accompanied by small print that clarified “*Bottle made from recycled plastic, excludes cap and label”. Rules 3.9 and 3.10 of the CAP Code provide, respectively, that “Marketing communications must state significant limitations and qualifications. Qualifications may clarify but must not contradict the claims that they qualify” and “Qualifications must be presented clearly.” However, the ASA considered that this qualification was insufficient to counter the overall impression that all parts of the bottle were made entirely from recycled materials.
The ASA has indicated that its next steps will involve further consumer perception research, including on “carbon neutral” and “net zero” claims, followed by specific enquiries into the compliance of claims made in respect of (i) waste – e.g. “recyclable”, “biodegradable”/ “compostable” and “plastic alternative”, and (ii) food sustainability issues (including meat and dairy in particular). Depending on the outcome of those enquiries, the ASA may publish further issue-specific guidance for industry.
We are also expecting the CMA to shortly publish advice to the UK Government on how it considers competition and consumer protection regimes might better support the UK’s net zero and sustainability goals. One of the issues the CMA is considering is whether improvements in the consistency of environmental information requirements and terminology, may help support sustainable consumer consumption. It will be interesting to see the CMA’s proposals - watch this space!