UK CMA publishes guidance on sustainability claims

On 21 May, the UK CMA published draft guidance (the "Guidance") based on the data gathered throughout the market investigation. The full text is available here. The Guidance is designed to help businesses understand and comply with their existing legal obligations under consumer protection law. Ultimately, it also aims to support informed consumer choice. The guidance sets out principles to follow when making sustainability claims. It is also peppered with practical examples which put the principles in context.

Six principles to follow when making sustainability claims in the UK

The Guidance sets out six guiding principles for sustainability claims, which are summarised below. The six principles are comparable to the Dutch ACM’s five rules of thumb (you can find a summary of the Dutch regulation here) but go further with a specific requirement to take into account the full life cycle of a product or service when making the claim. This highlights a potential challenge for businesses having to comply with an array of different national regulations on sustainability claims.

a) Truthful and accurate

Environmental claims should not be factually incorrect, nor should they overstate or exaggerate the sustainability or positive environmental impact of a product. Broad or absolute terms such as ‘green', ‘sustainable’ or ‘eco-friendly’, especially if used without explanation, risks falling short of businesses’ legal obligations unless a business can prove that the product as a whole has a positive environmental impact.

b) Clear and unambiguous

Claims should be phrased in a straightforward manner and be easily understood by consumers. The meaning consumers are likely to take from a claim and the environmental credentials of the product, should match. Vague or general statements are more likely to be misleading.

c) Not omit or hide important information

Omission in itself can be misleading. Sustainability claims should not focus on the positive environmental aspects of a product, where other aspects have a negative impact and consumers could be misled. Businesses should think about the claim they are making and the whole life cycle of the relevant product.

d) Comparisons should be fair and meaningful

This principle is related to the principle that claims must be truthful and accurate and aims to prevent misleading consumers by the way comparative claims are made. Comparisons should enable consumers to make informed choices and should compare like with like.

The Guidance sets out a few rules of thumb for comparative claims:

• They should make clear to consumers what is being compared and how;
• Comparisons should use the same measures;
• They should not omit or hide material information relevant to the comparison; and
• should be capable of being substantiated by transparent and accurate evidence that consumers can verify for themselves.

e) The full life cycle of the product should be considered

All aspects of a product’s environmental impact are important, including its component parts, where it is manufactured, its use and performance, the disposal and/or any waste or by product. Environmental claims should reflect this total life cycle. A claim could itself be true but misleading if it suggests a product is greener than it is by ignoring some other aspects of its life cycle.

f) Claims should be substantiated

Businesses should hold robust and up to date evidence which supports the sustainability claims they are making. When investigating potentially misleading claims, the CMA, other enforcers or even the courts will ask for evidence supporting the claims.

What businesses need to do

The Guidance will apply to UK based business and businesses based outside the UK who are conducting activities in the UK.

When considering sustainability or environmental claims, businesses must:

1. Comply with applicable sector or product specific laws;
2. Comply with existing consumer protection legal obligations;
3. Consider carefully whether they need to change their practices based on the Guidance;
4. Make any changes necessary to comply with law, including (i) stop making false or deceptive statements; (ii) amend claims to ensure they are compliant; (iii) ensure they have the evidence to substantiate sustainability claims; (iv) ensure consumers are given the information they need to make informed choices.

In the event of non-compliance with consumer protection law, the CMA and other bodies such as Trading Standards Services could bring court proceedings. The Advertising Standard Agency could also act against misleading advertisements.

Next steps

The CMA is now seeking views on the draft guidance. Interested parties have until 16 July 2021 to respond to the consultation document. We are then expecting a final version consumer protection law guidance in August/September 2021. The CMA case page is available here.

The draft guidance also complements the CMA’s shorter information sheet on its approach to environmental sustainability agreements published in January 2021 and which is available here.

[1]

Draft guidance on environmental claims on goods and services (publishing.service.gov.uk)