With London Climate Action Week on the go, now is a great time to take stock of recent regulator action in the world of green claims. Whilst it's easy to dismiss advertising and marketing in amongst the seriousness of the climate change emergency, the claims which are communicated by companies have a material impact on consumer choices, and consumer choices in turn drive development and change. Even if consumers, do not always appear to fully understand what terms like "carbon neutral" actually mean.
This was underlined in October 2022 – the ASA published the results of its research into consumer understanding of specific claims related to the environment. Notably its research showed that "carbon neutral" and "net zero" were the most common claims encountered by consumers, however there was little consensus as to their meaning. Participants in the study interpreted "carbon neutral" claims as implying that an absolute reduction in carbon emissions had occurred or would do so. The role of offsetting in claims was not well understood and the potential for consumers to be misled flagged by the ASA (more on that research here).
Nevertheless, if everyone works together, consumer choice can be a force for good.
Competition and Markets Authority (CMA) action
The CMA's guidance on "Making environmental claims on goods and services" ("The Green Claims Code") is nearly two years old. It sets out the CMA's interpretation of the law against misleading advertising and provides detailed examples of what it considers to be a non-compliant claim, showcasing problematic claims which mislead by action or omission. It has ongoing investigations into three fashion brands and earlier this year announced that it would be looking into claims on fast moving consumer goods. FMCG includes food and other household goods and it's safe to say the results of these investigations will have an impact across the sector. It's certainly the case that companies are applying extra scrutiny to claims to ensure the CMA does not. However, this is much less scrutiny than the same law will provide as the EU works to update the Unfair Commercial Practices Directive to outlaw various environmental claims – including claiming carbon neutrality based on offsetting alone. This together with a Green Claims Directive and other sector specific measure such as the sustainable food systems proposals will mean that the EU will have a more onerous regulatory regime in the near future.
The UK may no longer be part of the EU, but it looks like regulators are similarly concerned there, given that the proposed Directive on Green claims specifically pulls out carbon neutral claims based on offsetting as being "The methodologies underpinning offsets vary widely and are not always transparent, accurate, or consistent ... These factors result in offset credits of low environmental integrity and credibility that mislead consumers when they are relied upon in explicit environmental claims". (See more on the proposed Directive here). The changes to the Unfair Commercial Practices Directive make it even more stark: it will be an automatically banned practice to claim “based on carbon offsetting, that a product has a neutral, reduced, compensated or positive greenhouse gas emissions’ impact on the environment”. These changes should be watched carefully.
New guidance from the Committees of Advertising Practice updated to reflect the ASA's current approach
On a positive note for businesses new B/CAP guidance explicitly states the Committees "do not intend the guidance to prevent marketers from making environmental claims about their products or services", this is mirrored by ASA commentary that "Impactful and informative green claims benefit consumers because they enable them to make more responsible choices."
It is important to note that the guidance solidifies the position that the ASA will be looking at environmental claims in the context of the business's overall activities. This "whole business" approach makes environmental claims even more challenging than before and means that marketing teams must ensure that regulatory and legal teams are involved from claim inception, rather than at the end of the journey. What you don't say is fast become as important as what you do. This point has been loud and clear in the ASA rulings in recent weeks which has seen underlying claims being found to be true, but the overall impression given by the ad was found to be misleading as it did not make clear that the advertiser had also some poorer environmental credentials. The guidance only obliquely references these major ASA rulings, but we've covered these previously in updates highlighting that contextualising environmental claim is key. See our notes on energy company rulings here, and water supplier rulings here.
