Businesses making claims about their sustainability will have to provide more transparency to avoid greenwashing, as new ‘Green Claims’ guidance comes into force in January.
The Competitions & Markets Authority (CMA) has published a Green Claims Code and accompanying guidance, which comes into force in the new year. The Code is designed to help businesses understand and comply with their existing obligations under consumer protection law when making sustainability claims.
As consumer demand for sustainable and ethical business practices has grown in recent years (57% of UK consumers are willing to pay more for environmentally friendly products according to YouGov), more and more companies are making claims about their eco-credentials – presenting their products, services, processes brands or operations as better for the planet than their competitors, and even hiding crucial information to give the impression that they are less harmful or more beneficial to the environment.
However, if these claims are not backed up with evidence, they can be misleading, with many companies either intentionally or accidentally falling foul of the ‘Seven Sins of Greenwashing’.
- Vague claims and unclear language – terms such as ‘eco’ or ‘sustainable’ or reference to ‘natural products’ without adequate explanation or evidence
- Own brand eco logos not associated with accredited third party organisations
- Hiding or omitting certain information (such as a product’s pollution levels) to appear more eco friendly
This is already covered by consumer protection rules set out within the Unfair Trading Regulations 2008 and Business Protection from Misleading Marketing Regulations 2008, which means that the CMA, Advertising Standards Authority and Trading Standards Services can take action against any company making misleading claims.
Environmental claims that do not comply could face penalties from regulatory bodies and even face legal action from consumers themselves, who can bring companies to court for certain breaches of consumer protection law.
Although this is already legally the case, the CMA will be launching a full review into green claims and giving this more focus from January 2022, so it’s essential that you prioritise compliance now.
The CMA is also seeking to increase its powers in the enforcement of consumer protection laws and has established sustainability as one of its strategic objectives.
Who needs to pay attention to the Green Claims Code?
Any business talking about their positive environmental impact in relation to products, services or operations needs to take the Green Claims Code into account. Big brands including Coca-Cola, and even “ethical brand” Oatly have recently faced lawsuits over greenwashing, so regulators are clearly stepping up the pace of action.
The CMA has flagged businesses involved in textiles, fashion, travel, transport and fast-moving consumer goods as priority industries, so it’s likely that their investigations will start here, because these are the sectors where consumers currently appear to be most concerned about misleading eco claims.
Other industries should still prioritise their compliance though as the Green Claims Code may raise more awareness of greenwashing among consumers and could lead to more complaints.
Companies selling “ethical” or “green” investment services are a current focus of the financial services regulator, the Financial Conduct Authority (FCA) so should also be prioritising compliance.
The Green Claims Code applies to UK companies, and those that sell to consumers in the UK, even if you’re not based here.
What happens if the Green Claims Code is breached?
The Green Claims Code is not new legislation, it draws on existing enforcement powers, so your business should already be compliant – but many are not.
The CMA will begin a review of misleading green claims in January 2022, so you should prioritise it now.
Any business found to be in breach of consumer law, including misleading marketing claims, can face civil action or criminal prosecution. Breach of the Green Claims Code could therefore result in criminal liability for directors and other officers of corporate bodies. Consumers also have a civil right of redress which might result in financial liabilities.
Greenwashing can also damage your brand, reputation and sales.
Even if you’re not based in the UK, the Green Claims Code forms part of a broader clamp down on greenwashing, with competition regulators across Europe taking a greater interest in the green economy.
The Dutch Competition Authority published new guidelines for sustainability claims in January 2021 which requires companies to substantiate them with evidence, and the European Commission launched a consultation into overstated environmental information which will likely lead to a new directive as a result.
5 ways to prepare for the new Green Claims Code
1. Conduct a comms audit
To make sure your marketing isn’t greenwashing and de-risk your sustainability communications, you should focus on auditing your existing environmental claims and ensuring they are compliant.
It’s essential that businesses of all sizes, across industries, now audit their existing environmental claims at a brand and product/service level (online and offline), against the CMA’s comprehensive new Green Claims Code regulations.
2. Build bridges between sustainability and marketing – embed your policy and invest in training
The Code requires businesses to provide a lot more sustainability information than they may have been used to in the past. To ensure that all your claims are ‘clear and unambiguous’, you should consider training your marketing team in the basics of sustainability, building bridges between your teams to facilitate open and effective communication, and make sure that your sustainability policy is embedded across your business.
Only a third of UK adults have any confidence explaining what Net Zero is, so don’t assume that your staff have the knowledge, information and confidence to talk about your green claims in a detailed and compliant way. Assess their training needs and invest in the support they need to keep your company compliant.
3. Adapt your comms strategy
The Green Claims Code recommends that sustainability evidence should be made available by a single click-through link. If you currently communicate your credentials with static icons, you’ll need to reconsider your strategy.
It’s also important not to hide important caveats or limitations to your claims. For example, if you claim that packaging is made from “recycled materials” and then take consumers to a webpage that explains only 10% of the materials are recycled, this could be considered misleading.
The Green Claims Code needs to be embedded into your marketing and comms strategy going forward, and you’ll need to find innovative new ways to convey sometimes complex information in an accessible and compliant way. Now is the time to revisit your strategy and consider how you can embrace technology, design and user experience (UX) to make your sustainability a selling point.
4. Embed compliance in your procurement process
You’ll need to communicate your sustainability credentials with your customers clearly, accurately and with evidence – which means you might need to start collecting more data from your suppliers. Ensuring that they are compliant with the Green Claims Code and can give you the information you need should be an essential part of your audit before January, and embedded in your procurement process going forward.
If you work with contractors to deliver your design, marketing and communications, you need to make sure they’re up to speed with the requirements of the Green Claims Code too. Recent research from the Chartered Institute of Marketing revealed that 2 in 5 marketers do not have sustainability qualifications, and 49% are worried about their clients being accused of greenwashing. With this sustainability skills gap in place, it’s important to ensure that anyone you bring into your marketing and communications team has the up-to-date knowledge and experience to deliver compliant and engaging sustainability comms.
5. Forward plan for third party accreditation (if you don’t already have it)
If you don’t already have any relevant third party accreditations (like B Corp status), it’s time to start thinking ahead and building these into your strategy.
The Green Claims Code focuses on providing evidence, and as it becomes the norm for companies to provide more of this, consumer knowledge will become more detailed. Your customers will be looking for proof that you walk the walk, and third party accreditations give you the competitive advantage.
What does this mean for brands that are already sustainable?
If you’re confident that you’ve already got the evidence to support your green claims (and that you’re communicating it in a compliant way), you should still be paying attention to the Green Claims Code and wider crack down against greenwashing across industries.
You’ll need to do a thorough risk assessment to ensure that your communications are compliant, now and in the future when you create new materials.
As all brands begin to provide more detailed information about their sustainability, consumer understanding of these issues and credentials will deepen. You won’t need to work so hard to stand out in a sea of greenwashing, but you will need to adapt your strategy to stay competitive.
As regulators begin to succeed in weeding out inaccurate and dishonest eco claims, transparent brands who walk the walk will benefit from a greater market advantage. Those brands that are doing the work, and have the data to support their communications, will be able to tap into this by telling their story.
Your existing investment in sustainability and ethical business can become a strong commercial advantage if you approach your comms strategy in the right way.
Need to prepare for the Green Claims Code?
Not sure if your comms strategy or team are up to speed? Sian will be running a Green Claims Code training session for members in January 2022.
It will be a live masterclass where you will learn:
How the CMA’s new Green Claims Code affects your marketing
- Easy ways to substantiate your green claims
- Practical strategies to leverage your eco credentials and attract more clients
- How to avoid greenwashing
- How to talk about your sustainability journey confidently, even if you’re not “100% green” yet
Article by Sian Conway-Wood, founder of #EthicalHour and ESG communications strategist helping cause-led organisations create change. Original article published here on LinkedIn on 22nd November 2021.