“Greenwashing” by businesses is firmly in the sights of governments and regulators around the world. If your business is now more alert to your environmental impact and the need to create sustainable systems or if you are claiming credit in bids for your environmental credentials, then you need to be aware of the legalities around what you are claiming and the rules of The Green Claims Code.
With the drive for net zero and the push for sustainability becoming a big factor in bid scoring, here we aim to make sure you have the knowledge to avoid you unwittingly crossing the line.
What is The Green Code?
The CMA surveyed around 500 global websites in 2021 and it found that 40% of them made “green claims” that were potentially misleading. From this they have advised the government that it should pass laws that would prevent misleading or unsubstantiated environmental claims and thankfully, we now have The Green Claims Code.
The code provides guidance on how businesses should ensure that what they say about sustainability and environmental impact is in line with consumer law.
In a nutshell, all claims must:
- Be truthful and accurate
- Be clear and unambiguous
- Not omit or hide important information
- Only make fair and meaningful comparisons
- Consider the full life cycle of the product
- Be substantiated
Environmental claims that don’t meet all these standards should be considered “greenwashing”. It’s just one of the many requirements that businesses are being forced to adhere to. Others include:
- Sustainability Disclosure Requirements – which are being standardised and streamlined in line with “Greening Finance: A Roadmap to Sustainable Investing”, aligning with and going further than the Task Force on Climate-Related Financial Disclosures (TCFD) standards
- Carbon Reduction Plans – under PPN06/21, potential suppliers for central government contracts worth more than £5 million have to have detailed plans showing how they will achieve Net Zero by 2050
- Social value in public procurement – under PPN06/20, bidders for central government – and, from April 2022, NHS – contracts must include provisions for how their work will generate social value, one of the five pillars of which is fighting climate change.
What should my business do?
A “green claim” is any statement to the effect that a product or service is beneficial to the environment or less harmful than alternatives.
With the CMA investigating different sectors’ claims in 2022 and calling for legal penalties for breaching the code, the first thing your business should do is review all your marketing, labelling, investor relations, and sales materials to identify anything that would count as a “green claim”.
Then, for each green claim you find, the CMA has helpfully produced a 13-point checklist to help you determine whether it’s misleading or not:
- Is the claim accurate and clear for all?
- Is there up-to-date, credible evidence to show the green claim is true?
- Does the claim clearly tell the whole story of the product or service?
- Does the claim contain partially correct or incorrect information or information that’s only true under certain conditions?
- Do general claims to be “eco-friendly”, “green”, “sustainable”, etc reflect the whole life cycle of the brand, product, business or service?
- Are any conditions or caveats that relate to the claim set out in a way everyone can understand?
- The claim will not mislead customers or other suppliers
- The claim does not exaggerate any positive environmental impact, or contain anything untrue?
- Is durability or disposability information labelled or explained clearly?
- The claim does not omit or hide information about the environmental impact that customers would need to make informed choices?
- Is information that isn’t provided that nevertheless forms part of the claim easily accessible elsewhere?
- The claim does not present features or benefits that are necessary standard features or legal requirements of that product or service type as environmental benefits?
- Where comparison are used, the basis of comparison is fair, accurate, and clear for all to understand
If you can answer “yes” to all of these questions or statements, then the green claim should be compliant with the Code.
If you can’t, you should:
- Stop making the misleading claim and withdraw any materials that employ it
- Amend the claim to bring it into line
- Ensure that you have sufficient evidence to substantiate what you are claiming
- Make sure that information is provided to consumers so that they can make informed choices
The CMA recommends speaking to your local Trading Standards Service if in any doubt.
Does this apply to B2B marketing?
Yes it does. While regulation of business to business (B2B) marketing is less comprehensive than in business to consumer (B2C) marketing, misleading advertising and misleading comparative advertising is still expressly forbidden.
Consumer-focused marketing goes further by saying that claims that are misleading by virtue of information left out is prohibited. While that’s not explicitly forbidden in B2B, the spirit of what the CMA is asking of businesses is clear – and it’s quite possible that the rules may be changed in future.
The CMA’s guidance says:
“By applying the same high standards in both business-to-business and business-to-consumer engagement, businesses can support trust in the green economy and mitigate the risk of harm to consumers.”
Green claims and public procurement – the next step?
Social value – including action to prevent climate change – is already embedded in a growing range of public procurement regimes. On top of that, bidders for major government contracts have to have clear, step-by-step plans for achieving Net Zero.
And an increasing range of businesses are being required to make public the effects of and risks to the environment posed by their activities – and the strategies they have in place for mitigating them.
Can it be too long before we see companies that can’t back up their green claims excluded from public contracts as well – and those that can, and report clearly and consistently on their activities, given preferred status?