Regulators and advertising watchdogs are entering a new phase in the fight against greenwashing, with the use of terms like carbon neutral and net zero now set to attract greater scrutiny.
Greenwashing – the act of making unsubstantiated or misleading claims to give the impression that an organisation or its products are more environmentally sustainable than they really are – has become a major issue in recent years.
Almost a third of UK consumers now say they expect green claims from businesses to be ‘exaggerated’ and only 23 per cent take them at face value, according to a survey of over 1,500 people published earlier this year.
Clampdown by regulators
In 2021, the UK Competition and Markets Authority (CMA) launched the Green Claims Code to help businesses avoid greenwash by following six key principles.
The regulator has the power to investigate companies that can then face litigation and fines. Under proposed powers expected to come into force in 2024, companies found to be breaching consumer law – including misleading green claims – could face civil penalties of up to 10 per cent of global turnover, while individuals could face fines of up to £300,000.
The CMA initially focused its efforts on the fashion sector and is currently investigating green claims by Asos, Boohoo and George at Asda. It plans to target the FMCG sector next, while also carrying out work into potential misleading practices in the green heating and insulation sector.
Companies are also being held to account by the Advertising Standards Authority (ASA), the UK’s advertising watchdog. The ASA has so far banned ad campaigns from the likes of HSBC, Lufthansa, Etihad, Shell, Hyundai and even brands known for sustainability such as Unilever, Innocent Drinks and Oatly.
Smaller businesses are not exempt from the ASA’s scrutiny. Recent examples of enforcement action include an electric scooter hire firm, an artificial grass company and a supplier of ‘eco-coffins’.
Say goodbye to offset-based green claims?
In May, the European Parliament voted in support of new measures to combat greenwashing in the EU, which experts say could effectively ban the use of common terms like ‘eco’, ‘environmentally friendly’ and ‘natural’ if the claim is not supported by substantive evidence.
Most notably, the Parliament voted in support of a ban on specific green claims such as ‘carbon neutral’ when they are made on the basis of purchasing carbon offsets – a common and increasingly controversial practice.
A similar move is also on the cards in the UK. The Guardian recently reported that the ASA is planning stricter enforcement around terms such as carbon neutral and net zero where the claim is based on offsets, unless the business can demonstrate “they are really effective”.
Jonny White, senior business director at ad agency AMV BBDO, told The Guardian: “The era of unspecific claims such as ‘environmentally friendly’ is over. Misleading environmental claims are under the microscope from advertising regulators, consumer watchdogs and even governments. The risks of getting it wrong are huge, with brands being shamed publicly when they are guilty of misleading the public.”
Updated guidance published the Committees of Advertising Practice (CAP) – which writes the advertising codes the ASA follows – provides further detail on how businesses can make credible green claims with or without offsets.
