UK Environmental Claims Legislative and Regulatory Landscape

As we shift towards a circular economy and a more environmentally conscious consumer, the demand for products that have a lesser or even beneficial impact on the planet has dramatically increased. Whilst this is a change for good, some ‘green claims’ practices have led to  greenwashing and misleading claims.

The authorities have therefore recognised that there is a need for clear guidance and more vigilant enforcement when it comes to environmental claims. At Bloom Regulatory, we’ve seen an increase in not only authority enforcement but also consumer awareness of misleading green claims so it is definitely an important topic for businesses to understand the current landscape.

What is the CMA UK Green Claims Code?

In January of 2021, the Competition and Markets authority (CMA) published the findings of a global review of randomly selected websites initiated by The International Consumer Protection Enforcement Network (ICPEN). The results of this highlighted that 40% of green claims made online could be misleading consumers. The Green Claims Code was then published in September of 2021 by the CMA to help businesses understand and comply with their existing obligations under consumer protection law when making environmental claims. This was written with the intention of supporting businesses during the transition to a low carbon economy whilst also preventing greenwashing.

The UK government defines a green claim as ‘claims that show how a product, service, brand or business provides a benefit or is less harmful to the environment’. Claims that imply no environmental impact are also captured under the Green Claims Code. It is important to remember that a claim can be anything from statements to images, logos and even colours.

The key principles under the CMA Green code are:

• 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
• claims must be substantiated

Whilst most of these are fairly obvious, it increases the burden on businesses to only make claims which are specific and in relation to the full lifecycle of the product so therefore cannot be interpreted by consumers to mean more than what it does. The Code recommends for businesses to assume that consumers are likely to want to know about the overall environmental impact, including how easily a product, and its packaging, can be disposed of or recycled. Claims that include information enabling consumers to make informed decisions about that impact are less likely to be in breach of The Code.

Let’s look at a practical example of this;

a ‘100% recyclable’ claim on a bottle of shampoo must apply to all packaging components; the bottle, the cap and the label.

If the claim only applies to the bottle, then the claim would not be compliant under the Green Claims Code.

An alternative option for this claim would be

‘100% recyclable bottle (not including cap and label)’

as this is truthful and does not hide relevant information. However, we must consider that this could still be seen as dishonest by authorities because it highlights 100% when in fact there are parts of the packaging that are not recyclable.

Often with these claims, the qualification (not including cap and bottle) may not be close to the main claim, linked by an asterisk, and therefore less visible.  As above, consumer inference is also an important factor in determining whether the claim breaches the code and by using 100% within the main claim, a consumer will likely understand this to mean all of the packaging and its components. Therefore, the claim could be deemed misleading.

Misleading green claims can occur primarily through cherry-picking beneficial aspects of a product or service, omitting information, making broad statements and not taking into account the full lifecycle of a product e.g. referring to a product as being ‘natural’ when only the ingredients are naturally derived and the sourcing/ manufacturing process was not natural and the packaging is not made of natural materials.

How is the Green Claims Code enforced?

The CMA is the UK’s primary competition and consumer authority. Their objective is to encourage a competitive market for businesses whilst safeguarding a fair market for consumers. The CMA shares consumer protection law enforcement powers with other bodies, such as Trading Standards Services and sectoral regulators. The CMA can take offenders to court to enforce consumer protection laws.  Penalties include fines and/or imprisonment.

Enforcement actions from the CMA on the Green Claims Code are due to start now so we are currently waiting to see what that looks like in practice.

Whilst the Green Claims Code is owned by the CMA, there are also other authorities in the UK relevant to making environmental claims.

Please note that the UK Consumer Protection legislation is currently being reviewed and once finalised we are expected that the CMA will be given the power to levy civil fines of up to 10% of global turnover for a breach of consumer law.  The UK sanctions will therefore be considerably more significant than those being introduced under the EU's New Deal for Consumers.

Advertising Standards Authority (ASA)

The ASA is the UK’s independent regulator of advertising across all media. They apply the Advertising Codes, which are written by the Committees of Advertising Practice (CAP). Whilst the ASA tend not to focus on product packaging, they enforce claims that appear in any type of media, such as online, social media and print advertising.  The CMA might sometimes refer cases to the ASA to consider, as an alternative to taking enforcement action of its own. Or complaints to the ASA may also come from competitors or members of the public.

We have seen a lot of enforcement from the ASA on physical advertisements regarding misleading environmental claims. One example is a business that implied purchasing their plant-based meat alternatives can make a big difference to the planet however did not have sufficient evidence to show that there was a positive environmental difference to meat equivalents and also had not provided evidence for the full life cycle of the product.  The ASA ruled that the advertisement must not appear again in its current form.

Whilst the ASA does not have financial penalties, they do publish their rulings online and therefore there is a reputational risk should your claims be determined to be misleading. Also failing to comply or implement the right corrective actions may restrict companies’ future advertising campaigns.

Trading standards

The enforcement authorities in the UK for misleading and cosmetic claims are Trading Standards which work for local councils advising on consumer law, investigating complaints and prosecuting traders who break the law. They enforce cosmetics regulations and also unfair trading regulations. If trading standards determine a product to be non-compliant, the brand owner in question may be required to bring the cosmetic product described into conformity or withdraw or recall the product from the market.  Trading Standards can take offenders to court to enforce consumer protection laws.  Penalties include fines and/or imprisonment.

What does this mean for businesses?

Whilst being aware of enforcement is important for companies making green claims, it is not only authorities who determine whether a claim is misleading or not.

Retailers are increasingly taking a stricter approach during their screening process to accept only compliant products. This applies to the product itself and also its advertising. Some retailers may question green claims that they feel are ambiguous and may even go as far as to not accept stock or advertising materials that contain claims determined to be misleading.

Consumers are also becoming more aware of greenwashing in turn creating a more selective shopper.  Consumers are demanding transparency and openness from the brands that they buy from. We saw criticism from shoppers against Kim Kardashian’s refillable skin care line, launched in 2022, for being wasteful due to excess packaging. A video was posted to the brands’ social media page, demonstrating how to refill one of the products which was simply a pack being replaced into another outer layer. The video sparked an online backlash as well as debate surrounding greenwashing in relation to cosmetic companies. This is another example of reputational risk from green claims perceived as dishonest.

Upcoming CMA review

The CMA will be carrying out a review this year of green claims on household essentials including personal care products. More detail of their review can be found HERE. It will be extremely important to make sure you are adhering to the Green Claims Code to avoid being caught under their radar.

The CMA is already investigating greenwashing in the fast fashion industry. Specifically, they have raised concerns over broad, vague statements, criteria used to qualify items into ‘conscious’ ranges and lack of information provided to the consumer. This case is still open however we expect similar criteria to be evaluated during the personal care review.

What should businesses do now?

Businesses should adhere to the 6 key principles of the Green Claims Code and be able to provide information relating to their goods and services that substantiates their claims.

In practice, this means that you should be able to ask yourself each principle in relation to your claim (e.g., is my claim truthful and accurate), and the answer should be yes to each criterion. As well as this, it is important to ensure you have evidence to support all parts of your supply chain being relevant to the claim.

Our 5 top tips for adhering to The Green Claims Code would be…

• Avoid using generic, broad terms that the consumer could interpret to mean many different things e.g. natural, environmentally friendly, eco-
• Be open, honest and transparent.
• Put yourself in the mind of the consumer and ask yourself what you would interpret the claim to mean
• Think about the claim in relation to your entire brand.
• Hold robust evidence for any green claims that relate to all parts of the supply chain and be prepared to defend yourself should you be challenged!