UK CMA publishes guidance on sustainability claims
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Senior Associate
UK
I'm a senior associate in our Competition & EU law team in London, advising on UK and EU competition law with a particular focus on distribution and e-commerce.
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Sustainability (or environmental) claims are increasingly part of the purchasing experience for consumers. Such claims can be made in the context of advertising, on product labels and within accompanying product information such as e-newsletters. Sustainability claims will typically state that a product, service, brand or business has a low or positive environmental impact. Indeed, businesses’ environmental credentials are becoming a key aspect on which they compete with a clear shift in consumer behaviour seeking sustainable products. In the last year, the CMA launched a market investigation taking an in-depth look at environmental 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On 21 May, the UK CMA published draft guidance (the "Guidance") based on the data gathered throughout the market investigation.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.
| Practical example:
A product is labelled ‘recyclable’ without further explanation. The claim doesn’t make clear if this relates to the whole product or not, or its packaging. As the claim actually relates solely to the packaging (a minor element of the product), and the remainder is not recyclable, the claim is likely to mislead consumers into thinking that the whole product can be recycled. |
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.
| Practical example:
An organic soup is sold in a carton that says, ‘Nature’s Friend – organic and sustainably farmed.’ The claim about the ingredients is true, but the carton is silent about its composition and disposal. In fact, it contains non-recyclable plastic, which has a negative environmental impact and is hard to dispose of other than in a landfill site or incineration. This omission risks misleading consumers in relation to their choices about buying and disposing of the 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.
|
Practical example: A business makes the claim that an improved product has a ‘lower carbon impact’. This is based on the carbon emissions generated during production dropping by a third. However, in the small print, the business states ‘excluding transportation’. The business has excluded this from their assessment as an external company has been used to transport the goods. Overall, the largest proportion of the product’s carbon impact comes from transportation. So, over the product life cycle, emissions have only decreased slightly and the claim is liable to mislead consumers.[1] |
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:
- Comply with applicable sector or product specific laws;
- Comply with existing consumer protection legal obligations;
- Consider carefully whether they need to change their practices based on the Guidance;
- 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)
