Greenwashing: how to avoid the risks of misleading environmental marketing

With increased environmental awareness in the consumer market, and consumers progressively looking for eco-friendly and sustainable products and services, it is not surprising that businesses are looking to take advantage of these market developments and promote the ‘green’ nature of their products or services.

Common examples of this include brands using the following claims when advertising or marketing their products, services or the brand itself: ‘carbon neutral’, ‘net-zero’, ‘eco-friendly’, ‘100% recycled’, ‘100% plastic-free’, ‘sustainable’, to name a few.

Using genuine green credentials as a marketing tool is not illegal. However, advertising regulations are clear that misleading, false or unsubstantiated environmental advertising, typically referred to as “greenwashing”, is prohibited.

What are the advertising rules?

In the UK, the CAP Code and the BCAP Code are the rule books for non-broadcast and broadcast advertising respectively, and advertising is self-regulated and adjudicated on by the Advertising Standard Authority (ASA). Under the codes, businesses must ensure that any marketing materials or advertisements that contain environmental claims comply with a number of requirements. These include ensuring that the meaning of all terms used are clear to consumers, any claims are substantiated and justified, and that such claims do not mislead consumers.

What are the consequences of breaching the advertising rules?

Where the ASA deems that a business has made a misleading or false environmental claim that breaches the relevant code, the business will be asked to amend or remove the advert. The ASA’s rulings are also published on a weekly basis, which inevitably gives rise to the risk of reputational damage, and there have been a number of businesses that have been subject to negative publicity as a result of an ASA ruling. In addition to this, if the business or advertiser fails to comply with the ASA’s request, the matter may be escalated, and the ASA may refer the business to the Trading Standards Authority.

In addition to the above, the Competition & Markets Authority (CMA) is the UK’s competition regulator and can bring court proceedings or take other measures to enforce compliance with consumer protection law.

How can businesses ensure that they do not fall foul of advertising rules?

The CMA has issued guidance, which is similar to CAP that aims to help businesses advertise their products and services correctly, and avoid the risk of breaching consumer protection law. The guidance sets out the following six key principles that businesses should adhere to when making any environmental claims:

• 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

CAP and BCAP have also published advertising guidance, which should be read in conjunction with the CMA guidance and has most recently been updated to address the use of carbon neutral and net zero claims in advertising.

There are, therefore, significant issues to consider when making environmental claims, and ensuring that any claim is unambiguous, fully substantiated and not misleading is key. The rules can be complex and the risk of non-complex can have adverse consequences.