Greenwashing And Consumer Protection: What Businesses Need To Know

• Published date: 24 June 2021
• Subject Matter: Environment, Consumer Protection, Litigation, Mediation & Arbitration, Environmental Law, Consumer Trading & Unfair Trading, Arbitration & Dispute Resolution, Dodd-Frank, Consumer Protection Act
• Law Firm: Walker Morris
• Author: Gwendoline Davies and Nick McQueen

Businesses which make claims about their 'green' credentials in order to promote products or services need to ensure, more than ever before, that they do not fall foul of consumer legislation. Gwendoline Davies and Nick McQueen explain and offer practical advice.

Greenwashing and Consumer Protection: What do businesses need to know?

As part of its investigation into 'greenwashing' ¹ at the end of last year, the Competition and Markets Authority (CMA) co-ordinated a global review of randomly-selected websites and discovered that some 40% of green claims made by businesses could be misleading customers.

The CMA has now published draft consumer protection guidance for all businesses making claims about their green credentials. Whilst the draft guidance itself is not legally binding, the consumer protection legislation (the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs)) that lies behind it is.

In addition, whilst the CMA has so far indicated that merely providing guidance is an effective way to improve compliance, it is important for businesses to note that the CMA ² has significant enforcement powers, and that breach of the CPRs can attract both civil and criminal liability. Reputational consequences can also, of course, be devastating; as can the risk of litigation being brought by or on behalf of consumers individually or as a collective action.

The CMA's (and, in fact, the wider business world's) current focus on ESG, compliance and consumer protection generally is likely to result in increased scrutiny of businesses' online and 'real world' sales and marketing practices when it comes to environmental credentials claims.

Practical advice: What can businesses do?

The 6 principles set out in the CMA's draft guidance should help to guard against the risk of greenwashing/breaching the CPRs:

1. Green claims made must be truthful and accurate
2. Claims should be clear and unambiguous
3. Claims should not omit or hide important information
4. Any comparative claims made should be fair and meaningful (that is, comparisons with other businesses/products/services must compare like with like, and the basis and measure/metrics of any comparison should be made clear)
5. Claims made should consider the full life cycle of a product/service/business (that is, a complete picture of the total environmental impact must be given: taking into account, for example, supply chain issues, business processes and waste/disposal; and, crucially, not focusing on only one or...