Greenwashing is not new, nor is regulation designed to protect consumers from companies' misleading environmental claims. Businesses that advertise in the U.K. have had to comply with rules around environmental claims for decades, and it is more than 13 years since the advertising watchdog ordered Shell to pull an ad that used flowers floating from refinery chimneys to promote a carbon capture and utilization project.
In recent years obviously false or egregiously overstated environmental claims have become a relatively rare occurrence, as companies and their advertising agencies have responded to the reputational damage that results from trying to rebrand demonstrably polluting activities as environmentally friendly. But there is compelling evidence that as the green economy has expanded, greenwashing in advertising, branding and labeling has become more sophisticated and as such presents a bigger threat than ever before to consumers, emerging green markets and the wider net-zero transition.
For example, as awareness of the climate emergency has grown, oil and gas giants have continued to run ad campaigns that gloss over their exploration and extraction activity and instead promote their clean energy ventures and newly enshrined climate goals. These campaigns typically make no false claims, and many would argue that they serve to raise awareness of clean technologies and climate action. But the fossil fuel industry's many critics insist they serve to launder the oil and gas industry's reputation and distract from its continued investment in polluting infrastructure.
Meanwhile, soaring demand for planet-friendly products and services has led to an explosion in new types of "green" goods, from plant-based sausages and e-scooters to carbon offset schemes and heat pumps, each one touting its environmental and sustainability credentials.
But as with any new market, regulators and consumers are struggling to distinguish between credible claims and those that willfully or accidentally overstate the environmental credentials of fledgling products or services. A major review of hundreds of websites around the world commissioned by the U.K.'s Competition and Markets Authority (CMA) last November concluded that a huge 40 percent of environmental claims made online by companies are "potentially misleading" to consumers.
While the influx of new products on the market is undeniably a welcome development and one that will play a role in putting the U.K. on track to meet climate goals, there are understandable fears that a simultaneous surge of "greenwash" could drive sales of environmentally harmful products and services, undercut companies whose green claims are accredited and credible, and damage consumer understanding of — and confidence in — the products, services and technologies that would allow them to contribute to the net-zero transition.
In a cautionary tale for other brands promoting zero-emission product lines, Hyundai Motors UK in June was ordered to pull an advert for its hydrogen fuel cell car that declared the vehicle was "so beautifully clean, it purified the air as it goes." While the Hyundai Nexo does use a system to filter gases and dust from air headed towards its fuel cell and does not produce tailpipe emissions, the Advertising Standards Authority (ASA) still ruled against the advert, arguing it misled customers because it failed to highlight the particulate pollution released from brakes and tires.
A major review of hundreds of websites around the world ... concluded that a huge 40% of environmental claims made online by companies are 'potentially misleading' to consumers.
Hyundai is not the first company to be rapped by the watchdog for its over-generous assessment of its "sustainable" product, nor will it likely be the last. There is evidence to suggest that companies should gear up for a flurry of anti-greenwashing activity over the coming months as regulators increasingly turn their attention to stemming the tide of false or overstated green claims. The ASA, the advertising sector's self-regulatory body, is in the midst of a major program of work dedicated to climate and environment that will see it review and refresh its existing rules and guidance related to environmental claims and step up its proactive monitoring of green claims by firms. This initiative comes as the government's competition authority, the CMA, works to finalize new guidance for businesses across the U.K. making green claims that is likely to significantly strengthen the current guidelines.
The guidance, expected to be published in September after an ongoing consultation on a draft version concludes this summer, is unequivocal on the point that misleading environmental claims are a breach of U.K. consumer protection legislation. As such, companies that do not comply ultimately could face enforcement action from the CMA.
Cecilia Parker Aranha, project director for CMA's green claims consultation, explains to BusinessGreen that greenwashing is not just a threat to consumers, but to the entire green economy. "We want businesses to get it right because we don't want consumers to be misled," she says. "We also want to help support the businesses that are doing the right thing, and we want to give them the confidence to make the claims about their products when they are true. We don't want them being harmed by an unlevel playing field."
The famous neon billboard at Piccadilly Circus in London.
While the CMA does not intend to enforce its new guidelines until a six-month period of training and awareness building with businesses has been completed, it is worth noting the watchdog has significant powers to crack down on companies that are found to have broken consumer protection legislation.
"Businesses need to need to think carefully about this, because it's having an impact on consumer choice and on consumer trust," Parker Aranha says. "And ultimately, if we're all trying to do the right thing for the climate emergency then making sure that you are not misleading consumers, and you are not greenwashing, is going to be very important for the for the coming years."
The CMA's draft guidance states that to be compliant with U.K. law, firms must ensure all their environmental statements are truthful and accurate; clear and unambiguous; include all relevant information and do not omit key details; consider the full lifecycle of a product; and be substantiated by robust, credible and up-to-date evidence. Any comparisons between two products, meanwhile, should be fair and meaningful. Firms have until mid-July to give their feedback on the framework, which the CMA expects to finalize in the autumn.
While none of the guidance's headline recommendations is particularly surprising, the watchdog's focus on the issue should not be understated. As mentioned, advertisers have long been forced to comply with environmental claims regulation in the advertising code, but the CMA's new guidance applies to not just marketing activity but also packaging design, labeling and naming of products. It expands the scope of the rules for making environmental claims for not just before a consumer enters into a contract, but during and after a sale is made, and they are designed to, in many instances, protect businesses that purchase from other businesses, not just end consumers.
Miles Lockwood, director of complains and investigations at the ASA, which worked with the CMA on the guidance, tells BusinessGreen the watchdog's new framework offers a holistic approach to tackling corporate greenwashing that complements the advertising regulator's on-going efforts. "It's fantastic the CMA attention is turning to this area," he says. "It dovetails and complements the work that we've been doing for many years, and enables us to take a more 360 approach to some of these issues."
The CMA's guidance will not change the regulatory landscape for advertisers, Lockwood says, noting the guidance ultimately draws from the same consumer protection law that informs the ASA's rules. But he notes the project sends an important signal to the market at a critical moment for the net zero transition. "We've already got rules around advertising, which the CMA obviously has regard to," he says. "But a lot of this stuff leaks out from areas other than advertising, and our remit only goes so far. They are now gearing up to tackle misleading greenwashing from other angles, be that packaging or business practices. It's a good development and it sends a signal now to business that this really matters."
UK advertisers have long been forced to comply with environmental claims regulation in the advertising code, but the CMA's new guidance applies to not just marketing activity but also packaging design, labeling and naming of products.
The guidance also has been applauded by businesses and industry groups across various sectors, including food and fashion, with Executive Director Martin Kersh of the Food Packaging Association arguing the framework will benefit firms going the extra mile to check their environmental claims. "Applying these principles will help to overcome what amounts to environmental fraud — greenwashing being too mild a phrase — and create a level playing field for those businesses who pay large sums of money to have all claims tested by independent organisations," he said.
Kersh said the Food Packaging Association wanted to see enforcement measures introduced as soon as possible. "We applaud the CMA for providing the guidance but would like to see enforcement from day one so businesses know they will be punished for side-stepping the guidance."
But the CMA is banking on the guidance itself being an effective way to crack down on the volume of false environmental claims and plans to take enforcement action only after carrying out an awareness campaign, although it has conceded it will consider urgent enforcement action in particularly egregious cases.
Parker Aranha emphasizes that there is a precedent of guidance itself catalyzing widespread compliance, pointing to the CMA's guidance on refunds at the beginning of the pandemic as an example. "We've learned from work in other sectors that there will be a significant proportion of businesses who want to and who are trying to do the right thing," she says. "We hope by giving them a guide, they'll be able to shift and make the changes that they that they need to make without any further intervention. That then allows you then to target your energy on the areas where the shifts aren't happening."
That said, Parker Aranha concedes the CMA will be taking on cases "sooner rather than later," noting that the "compliance review" stage of the project, where it will contact business for evidence that backs their claims, could take many years. "This will mean asking companies for the evidence that their claims are substantiated," she explains. "We will also look at how things are presented, and how consumers are understanding the claims that are being made. So even if something is technically backed up by evidence, if it is phrased in such a way that a consumer is taking a different interpretation of it, then there might still be a problem."
Most companies challenged by the CMA are likely to agree to undertakings — be it taking down an ad, redesigning packaging, changing internal processes — before any court action is taken, she says.
The CMA's decision to step up its fight against greenwash comes as the advertising watchdog is in the midst of its own program of work that could increase scrutiny of environmental claims from a different angle.
The ASA's Climate and Environment Project — initially scheduled for last year but delayed due to COVID — will see the agency look at legislation being developed by the U.K. and other governments on green claims before deciding whether the advertising code rules need to be "tightened up," Lockwood explains. This also will include a gap analysis of the U.K.'s advertising regulation against regulatory regimes in other countries — an exercise that will look closely at tough new rules introduced by French advertising regulator ARPP in the wake of demands from the nation's Climate Assembly for tougher advertising standards.
"We recognize that, with the developing climate emergency, there are real harms out there," Lockwood says. "There's a real urgency now for all actors, not just advertising, to go further to tackle it. We can't just rest on our laurels, and so we have kicked off this project."
Meanwhile, another strand of the ASA's ongoing climate project will see the regulator step up its proactive monitoring of green claims made by companies. Lockwood explains that the agency is set to step up its efforts to scrape and monitor environmental claims online in a bid to crack down on those that could be misleading. It also could consider launching investigations into fast-evolving areas — for instance, recyclability or net zero claims — where the ASA has no official position, he reveals.
Lockwood predicts that one area where rules might need to be tweaked is on guidance around promoting the net zero targets that are increasingly common across the private sector. "I know we haven't got any current advertising guidance on net zero," he says. "So how does carbon neutral [and] net zero intersect with each other? How can we help advertisers make net zero claims which are accurate and not misleading?"
Lockwood emphasizes the project has been launched to encourage companies to collaborate and work together to take an active role in tackling climate change. "It is not about just punishing advertisers," he says. "We realize this is a really complicated area, and an evolving area as well. We need everybody needs to pull together on this in terms of understanding what the issues are and how to get it right."
The issues at hand are complex, and as such advertisers should not be ashamed to get it wrong, he adds. "These are really complicated areas that advertisers are navigating in terms of the science, for instance around biodegradability," he says, recalling what turned into a hugely in-depth case a couple years ago around dog poo bags. "We all need to help each other. The ASA certainly understands its role in developing guidance, advice and training, and working with advertisers to get it right."
We've learned from work in other sectors that there will be a significant proportion of businesses who want to and who are trying to do the right thing.
Some campaigners have argued the time is nigh for an outright ban on products — such as fossil fuels or SUVs — that have a detrimental impact on the environment, akin to the advertising moratorium on tobacco introduced last century or the government's decision this month to introduce a ban on TV advertising of food that is high in sugar, salt and fat before 9 p.m. But Lockwood insists that such a move lies outside of the ASA's remit and would need to be enforced by legislation. "We just don't have the powers on the consumer protection regime to ban a product which is legally bought and sold," he says.
However, he concedes the ASA soon could be intervening in instances where firms fail to contextualize their green claims within their broader activities. "When a company says, 'Look how green we are; we invest in all these beautiful wind farms,' that might be true on its own merit, but does that tell the whole picture and should the ASA be going further?" Lockwood asks.
Advertising campaigns mounted by fossil fuel companies that emphasise their green investments — be they in experimental algae-based biofuels, clean energy projects or carbon capture and storage demonstrations — have long been decried as deceptive and misleading by campaigners, given that the initiatives featured are just a tiny portion of firms' business activity and thus fail to reflect the reality of companies' climate impact. But the oil and gas industry would counter that if it is restricted from promoting its fast-growing investments in low carbon infrastructure, then it would dilute the business case for projects that can help accelerate the net zero transition.
Working in partnership with the CMA in many cases, the ASA intends to work on boosting awareness of greenwashing among advertisers and the general public. It is working on developing e-learning modules with industry body the Advertising Association, undertaking public awareness campaigns geared at raising the awareness of how to raise a complaint, and launching an effort to explore how signposting around green issues can be folded into the regulator's every day conversations with advertisers, Lockwood says.
Ultimately, Lockwood is optimistic about the CMA's focus on greenwashing, noting that it will galvanize the ASA's climate agenda and help crack down on false green claims. The two agencies are likely to partner and share responsibilities in tackling green claims once the CMA's guidance is finalized, he says. "For instance — and these are just examples — if net zero advertising claims are made, the ASA might want to take the lead on advertising of those claims, while the CMA could look at packaging and business practices," he explains.
While discussions about greenwashing are often focused on the need to punish and expose firms that mislead consumers, it is clear that efforts from both the CMA and ASA to boost awareness and understanding of misleading environmental claims are ultimately designed to help, not harm, businesses by boosting confidence in the green economy and fostering fair competition.
As the climate crisis worsens, firms have a major opportunity to encourage consumers to adopt more sustainable behaviors, educate shoppers on key environmental issues and ensure that individuals and companies use their purchasing power to tackle the climate and nature emergencies. It remains to be seen whether the CMA's new guidance will have the catalyzing effect it hopes to deliver and many campaigners no doubt would like to see policymakers take a more robust line in cracking down on adverts from polluting companies. But the imminent publication of the new guidance on how to avoid greenwashing further highlights how if businesses want to deliver a net-zero transition, they need to bring consumers along with them.
