The Competition and Markets Authority (CMA)-the UK’s primary competition and consumer authority- has published detailed guidance for businesses making environmental claims about their “goods, services, processes or brands”.
This guidance is intended for all businesses in the UK- including businesses in Northern Ireland- and for any businesses abroad selling to UK consumers. While this guidance is not directly relevant for companies based in Europe who do not sell to consumers in the UK, it may be interesting to consider from a corporate responsibility point of view.
It outlines and explains certain principles to help businesses comply with general laws that exist to protect consumers from false or misleading statements about the environmental impact of a product or service. But the CMA notes that this “is not intended to be a one-stop shop for business guidance across any particular sector where specific requirements also apply.”
According to the principles outlined, if businesses make environmental claims, they must not only be “truthful” by providing information that is technically correct, but also “accurate” about the impact of their product or service as a whole, taking into account its entire life cycle. This means that businesses must not overpromise or give any inaccurate impressions that a product or service is better for the environment than it actually is. Any caveats must be clearly stated and readily available to the consumer but, again, these must be reasonable and not contradict any claims made initially.
For example, the CMA says that “businesses must not claim, or otherwise give the impression, that a product is ‘recyclable’ if it is not, or if only parts of it are and others are not, preventing recycling”. Businesses should not only offer the information that makes a product look environmentally friendly or sustainable when other features of that same product or actions of the business may be harming the environment. The guidance notes that “businesses should not focus claims on a minor part of what they do, if their main or core business produces significant negative effects.”
Claims and instructions must avoid being vague and difficult to understand by being “clear and unambiguous”. Businesses should only discuss goals to be more environmentally friendly in the future if they have demonstratable plans to reach these aims. Even if this is the case, claims about a company’s aims to make a positive environmental impact should be in accordance with their efforts and distinguished from a specific product’s actual impact.
The guidance outlines that no information should be hidden or downplayed to make a product seem better than it is. All information possible regarding the impact of a product should be readily available to the consumer before they decide on a product or service.
Any comparisons with other products should be fair and informative. Claims made should also be “substantiated”, not “omit or hide important or relevant information”, and “consider the full life cycle of the product or service”.
The guidance is concerned with claims that will reach and influence consumers, “even if the claims are made by a manufacturer, wholesaler or distributor which does not have direct contact with a consumer”. Claims are not only considered to be explicit statements but also implicit messaging that can appear anywhere from packaging to advertisements.
The CMA differentiates between specific environmental claims and broader sustainability claims, stating that although this guidance is primarily aimed for the former, it should also be taken into consideration in relation to the latter.
Although the guidance is primarily concerned with claims targeted at consumers, it also applies to those aimed at other businesses, especially small businesses who may be disproportionately affected by misleading information. “The legal framework regulating business-to-business marketing is less comprehensive than for business-to-consumer commercial practices,” the CMA notes. “It prohibits misleading advertising and misleading comparative advertising…[but] it does not prohibit other commercial practices which may mislead by act or omission.”