CN13 - Green Claims Code - CMA warns businesses

On 20 September 2021, the CMA published its Green Claims Code (the "Code"), which contains principles and guidance to help businesses ensure that their environmental claims are compliant with consumer protection law. 

Key takeaways

• Businesses should review the Code and ensure that any environmental claims made as part of their products or services are compliant with consumer protection law.
• The CMA has warned that it will carry out a full review of misleading green claims, both online and offline, at the start of 2022, and "any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA".

Background

The CMA's publication of the Code follows a recent international analysis of websites which found that 40% of green claims made online could be misleading. The CMA has also warned businesses that it will begin a review of compliance in this area under consumer law in January 2022 and that, if there is evidence of non-compliance, the CMA will consider whether further enforcement action is necessary.

The Green Claims Code

The Code notes that consumers are increasingly demanding products and services which minimise harm to, or have a positive effect on, the environment. This has led to a significant increase in the number of businesses, products, and services claiming to meet this demand. Such environmental claims can be explicit, or implicit, and all aspects of a claim can be relevant, such as: the meaning of any terms used; explanations of what is said; the evidence that supports those claims; the information that is not included or is hidden; the colours, pictures and logos used, and the overall presentation.

It is important that these claims do not mislead consumers. The Code therefore sets out a framework for businesses to make environmental claims that help consumers make informed choices. In particular, the Code sets out the following principles, and provides examples and case studies on their application:

• claims must be truthful and accurate;
• claims must be clear and unambiguous;
• claims must not omit or hide important relevant information;
• comparisons must be fair and meaningful;
• claims must consider the full life cycle of the product or service; and
• claims must be substantiated.

As noted in the Code, this guidance is for all businesses which make environmental claims, and it will apply to claims that are ultimately aimed at consumers and also (to a more limited extent) to businesses marketing to other businesses. It will also be of relevance to organisations that produce codes of practice and to third parties that develop certification schemes.

If a business fails to comply with consumer protection law, the CMA (and other bodies, e.g. the Trading Standards Agency) can initiate court proceedings. In addition, in some cases, the business may be required to compensate consumers harmed by the breach, and could also face legal action from consumers.

The Code therefore explains that any business making, or considering making, environmental claims needs to:

• comply with any sector - or product-specific laws that apply to them or their products and services;
• read the Code and ensure they are complying with their consumer protection law obligations;
• consider carefully whether they need to make changes to their practices; and
• make any changes necessary to comply with the law, such as:
  • stopping making false or deceptive statements;
  • amending claims to ensure they are compliant;
  • ensuring they have the evidence to substantiate claims; and
  • ensuring they give consumers the information they need to make informed choices.

Comment

The publication of the Code is part of a wider awareness campaign by the CMA, as well as a continued focus by the CMA on sustainability-related initiatives, both from a consumer protection and competition law perspective.

This includes the CMA's recent consultation on environmental sustainability advice, which seeks views on how competition and consumer regimes can support the UK's Net Zero and sustainability goals; and the CMA's information sheet published on 27 January 2021 which aims to help business and trade associations better understand how competition law applies to sustainability agreements.