4th October 2021
Back in June 2021 we explained that greenwashing (that is, the practice of making exaggerated claims about a business’ environmental credentials and the sustainability of its products, services and environmental impact) could expose businesses to breaches of consumer protection legislation. We reported on guidance published by the Competition and Markets Authority (CMA), then still in draft, intended to help businesses to ensure that their environmental claims are genuine.
The CMA has now published finalised guidance, in the form of the Green Claims Code, which centres on the following 6 principles:
The CMA has also confirmed that, as of the start of 2022, it will carry out a full review of misleading claims, made both on- and off-line, and will take action against offending businesses . The CMA is considering which sectors to prioritise, but these could include textiles and fashion, travel and transport and fast-moving consumer goods (such as products within the food, drink, beauty and cleaning markets).
Consumer protection from greenwashing is, however, also a priority for financial services regulators.
Sustainable investment is currently one of the fastest growing areas within the European funds market, with more than half of the money invested in Europe last year reportedly  going into ‘sustainable’ funds totalling some £1trillion. Whilst Europe’s Sustainable Finance Disclosure Regulation has not been transposed into UK law post-Brexit, the Financial Conduct Authority (FCA) has, in its 2021-22 Business Plan; in its findings following the consumer study on sustainable investing; and in guidance annexed to the FCA’s July 2021 letter to authorised fund managers , made clear its sustainability focus and its commitment to the provision of clear and accurate information to consumers when it comes to green claims.
As well as the demonstrable shift in regulatory focus, pressure is mounting on businesses in all sectors to clean up their act by virtue of the trend towards ‘green litigation’ – that is, complaints and claims brought for a whole host of environmental/climate-related reasons (see our earlier briefing). Walker Morris has, in just the last few months, highlighted claims that have been prosecuted as a result of sustainability target failings, insufficient climate-related disclosures, misleading green credentials and inaccuracies in environmental warranties . In addition, commentators are now suggesting that the recent high profile instances of greenwashing whistleblowing at investment management firms DWS Group and BlackRock are likely to prompt a wave of financial services miss-selling claims based on exaggerated green credentials.
For a whole host of reasons, therefore, businesses in all sectors are urged to take action to ensure that green claims made in any and all sales, marketing, promotional, pre-contractual and contractual materials and communications are accurate and can be substantiated.
Businesses should now urgently familiarise themselves with the CMA’s Green Claims Code and the FCA’s July 2021 guidance. In addition, there are some practical pointers which should help businesses to minimise the risk of greenwashing or committing consumer protection breaches generally:
Walker Morris’ Regulatory and Commercial Dispute Resolution teams can help businesses with the drafting or updating of appropriate policies and procedures to guard against greenwashing; with the provision of staff training on consumer protection, misrepresentation and/or specific greenwashing issues; 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 environmental, social, governance (ESG) agenda. We will also continue to monitor and report on any further legal and regulatory developments in this key area.
Please do not hesitate to contact us for further advice or assistance.
 Enforcement action can include civil and criminal liability (including unlimited fines and even imprisonment in some cases), as well as consumer redress scheme remedies. Reputational consequences can also, of course, be devastating.
 Daily Telegraph, 18 September 2021, Association of the Luxembourg Fund Industry
 The principles addressed in this guidance are likely to be of value across a variety of roles and sectors, i.e. not only to authorised fund managers
 Walker Morris has published briefings just within the last few months on recent cases involving of all of these types of green claim.