The authors wish to thank Eben Kurtz for his contributions to this post.
In the first few months of 2023, the UK Regulator – the Competition and Markets Authority (“CMA”) – continues to be active in cracking down on misleading green claims, this time targeting the fast-moving consumer goods industry (“FMCG”).
At the end of January, the CMA announced that it is investigating FMCG for the use of green claims in labelling, advertising and marketing material. In particular, the CMA is concerned with “broad eco-statements“, misleading claims about the recyclability of a product and brands labelling themselves as “sustainable.” A wide range of products potentially fall within the remit of the investigation, with the CMA describing FMCG as “essential items used by people on a daily basis and repurchased regularly, such as food and drink, cleaning products, toiletries, and personal care items.”
The FMCG investigation follows the CMA’s investigation into the fashion retail industry (discussed here) and makes up part of the CMA’s broader investigation into misleading environmental claims generally. This continued CMA activity aligns with its Annual Plan consultation 2023 to 2024, which highlights that supporting “an effective transition to net zero” is a key focus area, as well as its plan to address “possible greenwashing“.
However, tackling greenwashing is not only high on the CMA’s agenda, the Advertising Standards Authority (“ASA“) is simultaneously pursuing misleading green claims.
As part of the ASA’s Climate Change and the Environment project referenced in our previous blog, in December 2022 the Committees of Advertising Practice (“CAP”) Executive provided further advice in relation to advertisers using general “green” claims in misleading or harmful ways. In particular, the advice refers to Section 11 of the CAP Code, which governs environmental claims, ensuring that companies justify such claims with robust evidence.
When advertising a product as “green”, the ASA’s advice is that companies should ensure the claim is clear and not misleading, related to the “full life cycle” of the product unless stated otherwise, and supported by a high level of substantiation.
Advertisers are reminded to not mislead consumers by omitting material information.
The most recent ASA ruling considers claims made by a bank that it was “aiming to provide up to $1 trillion in financing globally to help clients transition to net zero” and “helping to plant 2 million trees”, which while accurate in isolation, were held to be misleading as the bank was simultaneously contributing to carbon dioxide and greenhouse gas emissions, and neglected to include this information. The bank was found to be in breach of rules 3.1, 3.3 (misleading advertising) and 11.1 (environmental claims) of the CAP Code and had to remove the advert in its current form.
It is important to note that environmental claims remain under close scrutiny from the main UK regulators. The CMA are continuing to pursue misleading green claims and the ASA is reviewing its rules meaning further guidance may be issued in due course. But a key takeaway at this juncture is that advertisers must be as precise as possible when making green statements – even though a statement may be correct in isolation, if the wider authentic context is not conveyed, there is a risk an accusation of greenwashing could be upheld.
Squire Patton Boggs has an international team focussing on the Advertising, Media and Brands sector. Please also note our recent blog on misleading “hot air” ads and the response given by the ASA. We have recently delivered a webinar focusing on the rise of ESG, in particular looking at greenwashing and substantiating claims. Recordings of all four webinars in our series focussed on the sector are available online.