The UK CMA investigates misleading environmental claims

By Ariane Le Strat, Chloe Birkett

11-2020

In recent years, sustainability credentials have moved from being ‘nice to have’ to an imperative for businesses in the UK, and across the EU. This has led to a wide array of sustainability claims ranging from a genuine ethos behind supply chains to downright misleading advertising. The CMA’s consumer protection arm announced that it will be carrying out a market investigation into how products and services claiming to be 'eco-friendly' are being marketed, and whether consumers are being misled. The CMA’s ultimate aim is to provide guidance for businesses and possibly inform an update of UK consumer protection law.

The CMA’s investigation

In the context of the climate crisis and increasing awareness around sustainability, consumers around the world are actively seeking out sustainable products. This has created a risk of exploitation from businesses looking to capitalise on appearing ‘green’ whilst not necessarily delivering on the promises they are making, a practice referred to as ‘greenwashing’. It has also drowned out genuine sustainability credentials.

On 2 November 2020, the Competition & Markets’ Authority (CMA) launched an investigation into misleading environmental claims, which will be focused on:

  • how claims about the environmental impact of products and services are made;

  • whether such claims are supported by evidence;

  • whether such claims influence people’s behaviour when purchasing such goods and services; and

  • whether consumers are misled by an absence of information about the environmental impact of products and services.

The CMA provided examples of the types of behaviour it will be looking into, including exaggerating the positive environmental impact of a product, using complex or jargon-heavy language and implying that items are eco-friendly through packaging and logos when this is not true.

The CMA’s intention is to publish guidance for businesses in the summer of 2021 to support the transition to a low carbon economy without misleading consumers. One possible outcome of the investigation is that the CMA concludes that consumer protection law has been broken. In particular, the Consumer Protection from Unfair Trading Regulations 2008 already prohibit unfair commercial practices and include specific prohibitions against misleading actions or omissions. These prohibitions are deliberately broad to catch a range of misleading actions and omissions, but the Regulation may eventually be amended to specifically address misleading environmental claims. Other possible outcomes include the imposition of industry-wide transparency and consumer information obligations, an outcome seen in a number of other sectors subjected to similar investigations in recent years.

International collaboration

The CMA will be working in conjunction with its Dutch counterpart, the Authority for Consumer and Markets (ACM). Both authorities appear to be the two standard bearers in Europe on this topic. Indeed, back in July, the ACM published draft guidelines on the antitrust aspects of sustainability agreements (you can read our Dutch colleagues’ article on these guidelines here). It followed up in September with the publication of its own draft guidelines on sustainability claims, which will undoubtedly influence the CMA’s conclusions. This focus on sustainability echoes the European Commission’s Green Deal plan as a key policy goal in the next few years. You can read our Brussels colleagues latest update on the Green Deal in the context of competition law here.

Call for information

The CMA has launched a call for information which closes on 14 December 2020. Consumers, businesses and stakeholders are encouraged to complete surveys to assist the CMA’s investigation. Businesses are invited to respond through this questionnaire.