With the impact of climate change increasingly evident, it is no wonder that many consumers are endeavouring to make more environmentally conscious decisions in their day-to-day lives.

Consumers’ focus to become more environmentally friendly often centralises around changes to their purchases of small, everyday goods such as food, toiletries and other household essentials.

In order to support and facilitate consumers in making more environmentally conscious purchases, transparency on the sustainability of the goods they are purchasing is vital. However, there are reports that certain products have been incorrectly marketed as green or environmentally-friendly – figures disclosed by the Competition and Markets Authority (CMA) suggest that this includes up to 91% of all dishwashing items and 100% of toilet products[1].

Examples of such issues include: the use of vague and broad eco-statements such as ‘sustainable’ or ‘better for the environment’ with no supporting evidence; misleading claims about the use of recycled or natural materials in a product; and how recyclable products are.

Misinformation as to the environmental-friendliness of goods, such as the examples outlined, have been found to mislead consumers; with the concern that these sorts of practices lead to consumers making decisions that they may not have made had they had all the facts and are ultimately detrimental to consumers’ efforts towards making net-zero decisions and combating climate change.

It is therefore encouraging to see that the CMA plans to continue its investigations of misleading “greenwashing” claims in the FMCG space - only shortly following its enquiry into the fashion industry on the same topic where some of the largest brands were told to “fix-up”. The CMA has also produced the Green Claims Code, which aims to help businesses stay on the right side of the law when it comes to green credentials - helping educate those that are involved in communicating the ‘green’ properties of products they place on the market.

In addition to the moral issues and implications around misleading sustainability claims, such claims also risk interrogation by bodies such as the Advertising Standards Authority, if the claims are made in ads or promotions which fall within their remit, or even falling foul of the Consumer Protection from Unfair Trading Regulations 2008 (CPRs).

The CPRs contain a general prohibition against unfair commercial practices and specific prohibitions against misleading actions and omissions; the consequences of such could result in criminal prosecution by Trading Standards, which may include fines and imprisonment, and in certain cases may lead to civil claims by affected consumers. In both cases, this can also result in lost management time, significant internal and external costs and reputational damage to the brand.  

The Government has also announced that it intends to give the CMA power to enforce certain consumer protection rights directly, which may include an ability to award compensation to consumers and impose fines of up to 10% of global annual turnover for infringements of consumer law, much like the levels of fines that organisations currently face for breach of competition law.

This leaves us with two questions: (1) what repercussions are on the horizon for those brands in the FMCG space that are currently at risk of being found misleading under the CPRs; and (2) will the CMA be recognised in terms of its contributions to climate change, or will its new proposed powers have more bark than bite?

https://www.gov.uk/government/news/cma-to-scrutinise-green-claims-in-sales-of-household-essentials

References

[1] CMA to scrutinise ‘green’ claims in sales of household essentials - GOV.UK (www.gov.uk)