CMA consults on environmental claims guidance for businesses
The Competition and Markets Authority (CMA) has set out its views on the types of misleading environmental claims made about products that could break the law.
Last year, the CMA announced that it was investigating the impact of green marketing on consumers, in line with its annual plan commitment. As part of this, the CMA recently led on an analysis of websites – alongside other global authorities – which found that 40% of green claims made online could be misleading.
The CMA is now seeking views on draft guidance for businesses about ‘green’ claims. This is based on a careful review of how these claims are being made and how people respond to them. It explains the best way for businesses to communicate their green credentials, while reducing the risk of misleading customers. This direction comes at a time when more than half of UK consumers take environmental considerations into account when buying products.
In particular, the proposed guidance sets out six principles that environmental claims should follow. They:
- Must be truthful and accurate: Businesses must live up to the claims they make about their products, services, brands and activities.
- Must be clear and unambiguous: The meaning that a consumer is likely to take from a product’s messaging and the credentials of that product should match.
- Must not omit or hide important information: Claims must not prevent someone from making an informed choice because of the information they leave out.
- Must only make fair and meaningful comparisons: Any products compared should meet the same needs or be intended for the same purpose.
- Must consider the full life cycle of the product: When making claims, businesses must consider the total impact of a product or service. Claims can be misleading where they don’t reflect the overall impact or where they focus on one aspect of it but not another.
- Must be substantiated: Businesses should be able to back up their claims with robust, credible and up to date evidence.
Andrea Coscelli, Chief Executive of the CMA, said: “Whether it’s buying clothes, cosmetics or cleaning products, more people than ever are trying to make choices which are better for the environment. 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. We’re seeking views on our draft guidance, which clearly sets out what we propose businesses should do, to reduce the risk of misleading their customers. People must be able to trust the claims they see, and businesses must be able to back them up.”
In 2019, UK consumers spent £41 billion a year on ethical goods and services – almost 4 times as much as people spent two decades ago. Based on its own research and evidence from other enforcers, the Competition and Markets Authority (CMA) is concerned that this surge in demand for green products and services could incentivise some businesses to make misleading, vague or false claims about the sustainability or environmental impact of the things they sell.
The CMA is inviting views on its guidance and is particularly keen to hear from anyone who buys or sells products which claim to be eco-friendly, including whether any further information is needed to help companies comply with the law.
The consultation will run until 16 July 2021, with the aim of publishing the final guidance by the end of September 2021. More information can be found on the CMA’s Misleading environmental claims web page.