The Competition and Markets Authority (CMA) has published a new 'Green Claims Code' to ensure businesses are not misleading consumers about their environmental credentials.
Companies will have until the end of the year to comply with the new rules, which make clear that firms making green claims “must not omit or hide important information”, and “must consider the full life cycle” of their products.
The CMA will consider which sectors to prioritise before a full review of potential 'greenwashing' at the start of 2022, and said that it “stands ready to take action against offending firms”.
Consumers currently appear most concerned about misleading claims in the textiles and fashion, travel and transport, and fast-moving consumer goods industries, however, any sector could come under the regulator's focus.
This comes after an international study earlier this year found that 40% of green claims made online could be misleading and breaking consumer law.
“We’re concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms don’t get the recognition they deserve,” said Andrea Coscelli, chief executive of the CMA.
“The Green Claims Code has been written for all businesses – from fashion giants and supermarket chains to local shops. Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA.”
The code has been published following an extensive consultation with businesses of all sizes, as well as consumer groups, and focuses on six principles which are based on existing consumer law.
It comes after the CMA announced last year that it was investigating the impact of green marketing on consumers, and explained how demand for green products and services could incentivise some businesses to make misleading, vague or false claims about the sustainability of what they sell.
In 2019, UK consumers spent £41bn on ethical goods and services – almost four times as much as what they spent two decades ago.
Minister of state for energy and clean growth, Greg Hands, said: “Millions of UK households are rightly choosing to switch to green products as they look to reduce their carbon footprint. But it’s only right that this commitment is backed up by transparent claims from businesses.
“The competition regulator’s new code will help to ensure this with advice on how best to communicate and understand environmental claims.
“Government is also currently reviewing green energy tariffs to ensure consumers can be confident they are choosing companies that make a conscious choice to invest in renewable energy.”
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