The greenwashing label is a black mark to be avoided by businesses -
An increasingly prominent issue across the corporate landscape, greenwashing still has no UK legal definition but, broadly speaking, can be defined as the act of a business providing customers or investors with misleading or false information about the environmental impact of its products and operations. Companies which position their business and/or products as being more sustainable and ‘greener’, to appeal to consumers and other key audiences, run an increasing risk of legal sanctions.
We regularly see companies stating or implying that their business operations are carbon neutral through press statements, logos, or other corporate symbols. Many businesses also suggest their products create less of an environmental impact than other competitors. Proving this can be an entirely different matter.
With increasing public scrutiny over greenwashing, we are seeing a growing number of companies and organisations incur reputational damage from their actions. The financial consequences of this can be severe through lost trade and, in some extreme cases, fines being imposed following legal proceedings.
While no legal definition of greenwashing and no specific anti-greenwashing laws currently exist within the UK, there is still a significant legal threat to any businesses that falsify or overstate their sustainability credentials. Laws on misleading advertising, which include those prohibiting misrepresentation of a company’s or product’s environmental credentials, that may influence consumer purchasing decisions, can be applied. Any breach of these laws can be prosecuted as a criminal offence.
The ASA also enforces the UK Codes of Advertising practice, which not only prohibits misleading adverts but also covers specific rules on environmental claims emphasising the need for clarity and careful, technical qualification of such claims. Those companies failing to comply with these standards will not only be required to remove their advertisements, but could also face fines and be liable for further damages and costs.
The Advertising Code sets out six key principles covering environmental claims stating they must be truthful and accurate; clear and unambiguous; ensure they do not omit or hide important information; present fair and meaningful comparisons; consider the full lifecycle of the product being advertised; and be substantiated.
While the Code is only guidance and not legally enforceable itself, companies which fall foul of it could be violating consumer law and face an investigation and potential sanctions from the Competition and Markets Authority (CMA). As the UK’s principal body responsible for competition and consumer protection, the CMA does have powers to impose fines, enforcement orders and criminal sanctions.
Next month’s CMS webinar will look at the issue of greenwashing in further detail, focusing on the potential risks facing the food and drink sector, where provenance and sustainability credentials lie at the heart of how many companies promote themselves, and the ASA’s increasing enforcement in this area.
It is essential – not only for food and drink businesses but also those involved in other fast moving consumer goods as well as fashion and travel sector companies - to review practices and ensure environmental claims being made through consumer marketing channels are credible and compliant.
The CMS Food labelling, Advertising Claims and Greenwashing seminar is on 8 June. See our website for more details.
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