22nd June 2021
Businesses which make claims about their ‘green’ credentials in order to promote products or services need to ensure, more than ever before, that they do not fall foul of consumer legislation. Gwendoline Davies and Nick McQueen explain and offer practical advice.
As part of its investigation into ‘greenwashing’  at the end of last year, the Competition and Markets Authority (CMA) co-ordinated a global review of randomly-selected websites and discovered that some 40% of green claims made by businesses could be misleading customers.
The CMA has now published draft consumer protection guidance for all businesses making claims about their green credentials. Whilst the draft guidance itself is not legally binding, the consumer protection legislation (the Consumer Protection from Unfair Trading Regulations 2008 (the CPRs)) that lies behind it is.
In addition, whilst the CMA has so far indicated that merely providing guidance is an effective way to improve compliance, it is important for businesses to note that the CMA  has significant enforcement powers, and that breach of the CPRs can attract both civil and criminal liability. Reputational consequences can also, of course, be devastating; as can the risk of litigation being brought by or on behalf of consumers individually or as a collective action.
The CMA’s (and, in fact, the wider business world’s) current focus on ESG, compliance and consumer protection generally is likely to result in increased scrutiny of businesses’ online and ‘real world’ sales and marketing practices when it comes to environmental credentials claims.
The 6 principles set out in the CMA’s draft guidance should help to guard against the risk of greenwashing/breaching the CPRs:
Businesses may, in particular, wish to familiarise themselves with sections 3 and 4 of the CMA’s draft guidance, as these contain helpful explanatory information, along with several worked examples and case studies from different business- and sector- types, of how the above principles can be applied in practice.
There are, however, some additional practical steps which businesses can take to help minimise the risk of greenwashing or committing consumer protection breaches generally:
The CMA has, alongside its draft guidance, launched a consultation which invites businesses to offer views on whether the draft guidance is clear, helpful and sufficient; whether any particular sectors should be given special treatment; whether the guidance should apply to business-to-business relationships as well as to business-to-consumer; and so on. The consultation is open for responses until 5 pm on 16 July 2021.
Walker Morris will monitor and report on any further developments in this area, but in the meantime we can help businesses with the drafting or updating of appropriate policies and procedures to guard against greenwashing; with the provision of CPRs and/or specific greenwashing training; with the strategic dispute resolution response to any greenwashing or other consumer protection complaint or allegation made against a business; or with wider commercial or dispute resolution advice in the context of the ESG agenda.
Please contact Gwendoline Davies or Nick McQueen for any further advice or assistance.
 That is, the practice of making claims (often exaggerated) about a business’ environmental credentials and the sustainability of its products, services and environmental impact
 and potentially also other bodies such as the Advertising Standards Authority and Trading Standards