Brodies examines the regulatory approach to enforcement against environmental marketing claims and the increased scrutiny businesses face when making such claims in their advertisements.
In September 2023, KPMG reported that over 54% of UK consumers are prepared to boycott brands over misleading environmental claims. This regulatory focus on environmental claims is shared by the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA). The ASA in particular has shown a heightened sensitivity for taking enforcement action against non-compliant advertisers. As such, companies should be aware of this rigorous enforcement climate and ensure that all marketing statements – including those on product labels – demonstrate compliance with the regulatory codes and latest guidance.
Green claims vs greenwashing
Environmental marketing claims, also known as ‘green claims’, refer to statements or representations made by businesses about the environmental attributes of their products, services or overall business practices. The aim of these claims is to convey to consumers that a brand or product has a favourable environmental impact. However, a growing problem is the risk that brands can stray into the territory of ‘greenwashing’ – a deceptive form of marketing whereby businesses make false or misleading claims about the environmental benefits of their products, services or practices. This may be done by exaggerating, embellishing or omitting details in their marketing statements or by using vague or unsupported claims.
While greenwashing can happen intentionally, it can be unintentional, and businesses that do not fully understand the boundaries of compliant advertising thresholds are more susceptible to producing non-compliant marketing materials.
An overview of the regulatory framework
A key element of regulating environmental claims is the ASA’s assessment of complaints, which can be made by the public and from within industry, meaning anyone can make a complaint against an advert. There is no quantitative number of complaints required before the ASA will assess a potential infringement and so, in principle, a single complaint can prompt an ASA investigation. This accessibility makes complaints an attractive tool for environmental campaigners (individuals or groups) and the general public.
If a complaint is upheld but the advertiser doesn’t amend or withdraw its advert, the case is referred for ASA enforcement. Most companies are prepared to amend any infringements if an investigation upholds the initial complaint. However, the ASA retains a host of enforcement powers at its disposal. For example, it can refer the matter to Trading Standards, withdraw advertising privileges and publish its rulings, which (ordinarily) serves as a compliance incentive for most businesses given the perceived negative publicity generated by an adverse ASA ruling.
Regulatory guidance – The Green Code
The CMA published guidance on environmental claims (Green Code) in 2021, which encapsulates the core principles of the UK Code of Non-broadcast Advertising (CAP Code) and applies those principles through the lens of environmental claims. The Green Code sets out six principles which state environmental claims must:
- be truthful and accurate;
- be clear;
- not omit relevant information that consumers need to make informed choices;
- compare goods/services in a fair and meaningful way;
- consider the full lifecycle of a product/service; and
- be substantiated and backed up with evidence.
ASA guidance
Full lifecycle claims
In June 2023, the ASA issued specific guidance on the substantiation requirements that businesses must meet when presenting environmental claims. This guidance focuses on the requirements of ‘full lifecycle analysis’ testing and provides examples that mandate this analysis. For example, claims that a product is good for the environment, environmentally friendly or contains less plastic must be supported with a full lifecycle analysis that shows the various manufacturing and production stages and the findings must be consistent with the claims made for the product.
Green disposal claims
Furthermore, in November 2023, the ASA published new guidance on ‘green disposal claims’, which refers to claims that a product is ‘recycled’, ‘recyclable’, ‘biodegradable’ or ‘compostable’. This guidance was intended to better inform both consumers and businesses on the use and meaning of terminology in the context of disposal claims on product labels and marketing statements. Additionally, it highlights the regulatory expectation that businesses will educate consumers where there is confusion. The ASA has also said that from April 2024, it will proactively investigate potentially concerning green disposal claims and look for adverts that misuse the aforementioned terms.
Enforcement trends
From an analysis of the ASA’s rulings against Pepsi Lipton, Aqua Pura, HSBC, TIER Operations, Innocent and Alpro, we see a trend in the types of environmental claims on the ASA’s radar. These include but are not limited to:
- advertisements containing recycled and non-recycled materials (as there must be a distinction between recycled and non-recycled elements);
- claims subject to qualifications (as any qualifications must be apparent and obvious to consumers);
- claims that overstate the environmental impact; and
- advertisements that lack substantiation, ie that fail to report on the full lifecycle from the manufacturing stage to disposal.
Navigating the path to compliance – substantiation and terminology
Companies must be capable of substantiating environmental claims with reference to the full lifecycle of a product. Also, companies should be mindful of the latest ASA guidance focusing on the use of ‘disposal claims’ terminology such as; ‘recyclable’, ‘compostable’ and ‘biodegradable’. Inappropriate or inaccurate use of such terms may amount to misleading advertising.
The increase in environmental-specific guidance, combined with the heightened sensitivity to enforcement action means that businesses must show an awareness of the regulatory requirements and should exercise caution when preparing marketing statements either on products directly or through advertisements.