Consumer behaviour is undoubtedly moving towards a more ethically and environmentally responsible standpoint. Traders have recognised this and are increasingly using environmentally-friendly, sustainable or ‘green’ claims as a selling point for products and services.
Businesses are, of course, entitled to do so provided that they do not mislead consumers. In September 2021, the Competition & Markets Authority (CMA) published guidance principles entitled The Green Claims Code, to assist businesses to comply with the law in this area.
The CMA has made very clear that the guidance is not legal advice, is not exhaustive and does not in any way reduce the responsibility of businesses to comply with the law.
The core principles
The Green Claims Code sets out six core principles for businesses to abide by:
- 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.
The goal of these principles is to reduce the potential for businesses to mislead consumers and/or breach consumer protection laws, by guiding them as to how such laws apply in practice.
Consumers should not be given a false impression about the green credentials of a product or service. Any caveats or conditions which apply to the claims should be prominently displayed. For example, products should not be generally described as ‘recyclable’ when this applies only to certain elements of them.
Positive environmental impacts of products or services should not be exaggerated or overstated. Businesses should also avoid using overly broad or unclear general statements such as describing products or services as ‘green’, ’sustainable’ or ‘eco-friendly’ unless such terms are explained and the claims are properly substantiated.
A critical eye should be applied to any claims before they are published to ensure they stand up to scrutiny – including asking fundamental questions as to whether the claims are true and can be proven.
Even if true, claims can be misleading if the broader environmental impact of the products or services is inconsistent with the image the business is trying to portray. Businesses cannot cherry-pick certain aspects and omit other information if this will skew consumer perception.
Claims which are, in fact, simply an ordinary feature of the product or service should not be promoted as being a benefit because this is misleading.
If there is relevant information about the claim which cannot fit within the claim itself, this should be easily accessible by consumers via another medium, for example through a website or QR code.
Consequences of failing to comply
The principles do not only apply to traders who have a direct relationship with customers but also to manufacturers, wholesalers, and distributors. Importantly, a retailer can be liable for misleading environmental claims made by manufacturers or wholesalers on product packaging as well as the manufacturers or wholesalers themselves.
The CMA can bring court proceedings against a business which fails to comply with consumer protection law. Consumers can also bring proceedings in certain circumstances.
The CMA will consider which party in the supply chain is best placed to remedy the problem and which party is best placed to provide redress or information to consumers.
Where the claims are made in marketing materials, the Advertising Standards Authority can also take action against the trader and there is considerable scope for brand damage for any trader held to be misleading customers, especially in respect of environmental claims.
In addition to The Green Claims Code, there is likely to be also be wider legislation and sector or product-specific rules and regulations which apply.