If you own an eco-friendly business or have a desire to shop more sustainably, this is an exciting time for you. UK’s Competition and Markets Authority has officially launched their Green Claims Code.
To provide some perspective on the origin of this code and why CMA decided to publish it, we must first have a look at some studies. According to a recent review on green claims led by CMA and the Netherlands Authority for Consumers and Markets, 40% of the over 500 websites they reviewed were posting potentially misleading environmental claims. This triggered the regulators to publish for a couple of reasons:
1) protect the consumers from misleading ‘green’ claims so they can make informed choices and
2) to protect legitimate eco-friendly businesses from unfair market competition by creating an equal playing field.
What is the Green Claims Code?
Before we go any further, it is important to define what ‘Green claims’ means. According to Gov.uk, green claims, or environmental claims, are claims ‘which suggest that a product, service, process, brand or business is better for the environment.’ It could also include claims that imply that a product or service:
- has either a positive impact on the environment or no impact at all;
- is not as damaging to the environment than the previous version of the same goods or services; or
- is not as damaging as the goods and services provided by a competitor.
So, how can you ensure any green claims you make do not mislead the consumers? Well, this is where the code comes in. The code essentially sets out a very clear framework for businesses who want to make truthful environmental claims – either about their product/ service, parts of their brand, or their business in general. This is to give consumers the opportunity to make informed choices.
1. Claims must be truthful and accurate. If a business makes an environmental claim about either their product, services, brands, and activities, they must make sure they live up to it. For example, a business should not claim their product is recyclable if:
a) It’s not recyclable at all.
b) Only parts of the product are recyclable and others are not, which could prevent the product from being recycled after use.
2. Claims must be clear and unambiguous. This means that any impression a consumer is likely to take on from the product’s marketing or messaging should match the actual credential of the product. For example, if a piece of clothing has been marketed as being made with ‘organic cotton’, then the majority of the clothing should be made with organic cotton. If only 35% of the clothing was made with organic cotton, this messaging is likely to mislead the consumer.
3. Claims must not omit or hide important information. This means that the consumer must be given the full picture to be able to make an informed choice. For example, if a carton of soup had the messaging of being ‘Nature’s friend – better for the environment’ but only the ingredients of the soup are sustainably farmed and the carton contained non-recyclable plastic, we can see that the branding is misleading. The omission of the packaging’s risks has the potential to mislead consumers, when they could have bought another brand with a carton that was better for the environment.
4. Any comparisons made must be fair and meaningful. So, here the products being compared should meet the same needs or be intended for the same purpose. For example, a claim that compares the CO2 emissions of 2 very similar products should calculate these measurements in the same way for each product.
5. Claims must be substantiated. This means that all claims should be backed up with ‘robust and credible evidence’. The claims cannot be purely subjective or hyperbole. For example, if a company is claiming to be ‘carbon neutral’ or have a ‘carbon neutral’ product, they need to be able to back it up with evidence that:
a) Is based on accepted science or understanding;
b) Subject to independent scrutiny;
c) Up to date;
d) Reflects ‘real world’ conditions;
e) Available to or from others in your supply chain; and
f) Is publicly available.
6. Claims consider the full life cycle of the product or service. When making these claims, businesses will have to consider their overall impact, from creation to disposal.
The scope of the code is very wide. It includes any environmental claims made either in store, online, offline and on product labelling. This also applies to both business-to-consumer (B2C) claims as well as business-to-business (B2B) claims. However, it is important to note that the legal framework for B2C marketing is significantly more comprehensive than the one for B2B. So, it applies to B2B businesses to a lesser degree.
Furthermore, even though the code applies to all businesses who use environmental claims in their messaging/ marketing, the guidance states the areas of priority as “industries where consumers appear more concerned about misleading claims – textiles and fashion, travel and transport, and fast-moving consumer goods (e.g. food and beverages, beauty products and cleaning products)”.
What are the consequences of businesses not adhering to the code?
If a business makes misleading or deceitful environmental claims, it is within CMA and other bodies’ – such as the Trading Standards Services or sector regulators – jurisdiction to bring court proceedings. Andrea Coscelli, the Chief Executive of the CMA, states: “Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA”. Similarly, the Advertising Standards Authority (ASA) can also act against any business who make false green claims in advertising.
The repercussions of breaching Consumer Protection Laws, which is upheld by the code, includes:
1. Making changes to the claim so it’s no longer misleading; or
2. To make payments to any consumers who were harmed by the breach to redress the issue.
How can businesses avoid breaching the code?
Since the scope of the code is so incredibly wide, it is within the best interest of businesses who have made green claims to do the following actions:
2. As soon as possible, organise a thorough audit of all their existing claims to ensure it complies with the code. This even includes visual claims, i.e. the use of the colour green, since even implicit claims are included within the scope of the code. Refer to the six principles above.
3. The audit should also uncover if the evidence is ‘robust, credible and up-to-date’ to be able to substantiate their green claims. If not, make sure to either:
a.) Remove the claims; or
b.) Back up the claims using credible, robust, and up-to-date evidence.
4. They should collaborate with marketing and legal teams consistently to avoid vague or general environmental claims about the product/ service.
5. Finally, they should make sure that going forward, there are correct internal processes to guarantee code compliance.
‘I have made claims about my business being environmentally friendly but I’m not sure I can back it up with robust evidence. What should I do?’
There are many routes you can go down with this. As mentioned above, you can either remove the claims or choose to back it up with evidence. As we all know, a vast majority of the current consumer base care about sustainability and the environment. So, the better option would be to back up the claims with credible evidence.
If you’re wanting to discuss anything relating to carbon neutral, carbon negative, Net Zero, get in touch!
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