Advertising sustainable products in the UK is about to undergo a fundamental change that all luxury businesses trading in the UK need to be aware of. The Green Claims Code – due to be published in August or September 2021 – will render ‘greenwashed’ brands and products both a reputational and financial risk. Luxury brands who want to feedback on these proposals have until 16 July 2021 to do so.
Historically, the vast majority of complaints about malpractice in advertising have been dealt with under the largely voluntary scheme operated by the Advertising Standards Authority (ASA), which has relatively limited powers. Whilst that is likely to continue, publication of the Green Claims Code draft guidance is a reminder that the CMA (Competition Markets Authority) recognises the increasing significance of environmental issues for consumers when making purchasing decisions and is willing to use its profile and resources to target what it regards as bad or misleading behaviour.
Luxury businesses will therefore need to take extra care that their ‘green’ claims can be substantiated, given the possibility that they will come under increased scrutiny from the regulator and consumers alike. Any attempt to promote goods or services through the use of inaccurate or misleading claims as to their eco-friendly credentials will carry a significantly higher reputational risk, as well as the risk of the CMA potentially exercising its statutory powers against businesses which do not cooperate. Compliance with the latest guidance should not be taken lightly.
The CMA has invited interested parties to respond by 16 July 2021 to a consultation document and Positive Luxury will take feedback to them that represents the complexities of the luxury industry. If your brand would like to have its voice heard, please contact us using the email address at the end of this article.
Green Claims Principles
Marketing should take into account Government guidance including the Code published by DEFRA and BIS here. We have summarised the key principles of them for you below:
- Claims must be truthful and accurate
Claims should not mislead consumers by giving an inaccurate impression, even if they are factually correct. They should only give consumers the impression that a product or service is as green and sustainable as it really is.
- Claims should be clear and unambiguous
Claims must be worded in a transparent and easily understandable way, without confusing consumers or giving the impression that a product or service is better for the environment than it is. The meaning consumers are likely to take from a claim and the actual environmental impact of the product or service need to match.
- Claims should not omit or hide important information
Claims made by businesses should not omit or hide information necessary for consumers to make informed choices.
- Comparisons should be fair and meaningful
Comparisons should enable consumers to make informed choices about competing products and services and should not benefit one particular product or brand to the detriment of another if the comparison is inaccurate or false. They should be based on clear and objective information and compare like with like.
- Claims should take into account the full life cycle of the product
When making broad and general environmental claims businesses should consider the effect of the total life cycle of a product or service, taking into account factors such as its component parts, how and where it is manufactured or carried out, its use or performance, disposal of the product and waste by-products. Where claims are based on a specific part of a product or service’s life cycle it should be made clear which aspect they refer to and consumers should not be misled about the total environmental impact.
- Claims should be substantiated
Businesses should have robust, credible and up-to-date evidence to support their claims. They will need to be in a position to provide that evidence when under investigation for potentially misleading claims.
Simply put, ‘greenwashing’ – where a business makes environmental claims about their products or services in breach of the CAP Code – will no longer be tolerated in the UK. If the ASA finds that you have ‘greenwashed’ a product or service, they may request that you change or withdraw the advert, disqualify you from media awards or ask the CAP to inform its members of the breach, which may result in the CAP refusing to give you advertising space, pay you commission or allow membership of a trade association.
Because the ASA publishes its findings online, you may also suffer reputational and sales consequences, as shareholders and consumers are increasingly conscious of green issues. In exceptional circumstances, the ASA may refer the matter to the National Trading Standards Board, who, in conjunction with local authorities’ trading standards, can take enforcement action against you, including civil sanctions and prosecution for continued breaches of consumer law.
- Get your facts right. Do not exaggerate the environmental benefits of your product.
- Back up advertising claims with documentary evidence
- Do not present claims as being universally accepted if the science is inconclusive
- Do not use pseudo-science or terms that are not generally understood by your readers
- Avoid sweeping and absolute claims such as ‘environmentally friendly’ or ‘wholly biodegradable’
- Only say something is ‘locally’ produced if it is. Shipping goods from abroad or the other end of the country does not make them ‘locally sourced’
Have your voice heard
The CMA has invited interested parties to respond by 16 July 2021 to a consultation document on the draft guidance which specifically requests their input on the following:
- Whether the guidance covers all the important consumer protection law issues related to making environmental claims;
- Whether the guidance ought to apply to B2B, as well as B2C, relationships;
- Whether any sectors should be given special treatment;
- Whether the six principles included in the guidance are the right ones to help businesses comply with consumer protection law;
- Whether any aspects of the guidance require further explanation; and whether the guidance is sufficiently clear and helpful for the intended audience.
As mentioned, Positive Luxury will take feedback to the CMA that represents the complexities of the luxury industry. If your brand would like to have its voice heard, please contact us before Friday July 16, 2021 at firstname.lastname@example.org with your feedback.