Crackdown on greenwashing

While consumers shift their support behind businesses with powerful eco-conscious initiatives, businesses are working on such programmes to retain existing customers and attract a new generation of environmentally aware ones.

Many companies whose desire for change is genuine are ramping up their sustainability efforts to clean up the planet, deliver products that are responsibly sourced and support the reuse, repair and recycling of products to minimise waste.

The businesses that are serious about the cause are adopting the four pillars of sustainability – human, social, economic and environmental – as a guide for setting targets. Their corporate vision is often powered by innovation, inclusivity, fairness and transparency.

Damaging effects

But there is growing concern over the increase in greenwashing by businesses that are keen to cash in on the movement. They wish to reap the benefits but without the legwork, commitment or genuine motive.

Greenwashing can have damaging effects on consumers and investors, as false claims can mislead stakeholders into making honest decisions where the output is not what it’s marketed to be. This in turn hampers the efforts of businesses that are genuinely on a mission to save the planet and inspire social change.

The Competition and Markets Authority (CMA) found that 40% of claims made online could be misleading – for example, incorrect use of terminology such as ‘recyclable packaging’ and ‘natural ingredients’. It has stated that there will be repercussions for businesses guilty of greenwashing under powers granted to the regulator, which include penalties.

Consumer protection

The CMA’s Green Claims Code helps both businesses and suppliers to identify greenwashing. The regulator has also issued guidance on environmental claims on goods and services to help businesses comply with their consumer protection law obligations.

This provides clarity on what businesses must consider when making environmental claims and focuses on six principles based on existing consumer law:

• Claims must be truthful and accurate.
• Claims must be clear, unambiguous, transparent and straightforward, so as not to confuse customers.
• Claims must not omit or hide important information, as what you don’t say can also mislead customers.
• Comparisons must be fair, meaningful and like for like.
• In making the claim, you must consider the full lifecycle of the product or service.
• Claims must be substantiated and able to be tested against scientific or other evidence.

‘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,’ says Andrea Coscelli, chief executive of the CMA.

‘The Green Claims Code has been written for all businesses. Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA.’