Greenwashing, the Green Claims Code & the DMCC Act 2024
First coined by environmentalist Jay Westerveld in 1980s he used greenwashing in reference to a hotel policy claiming to reuse towels to ‘save the environment’ whilst being less than open about it saving on the laundry bill. Using consumers’ environmental sensibilities to influence their decisions and encourage behaviour is now commonly known as greenwashing.
Misleading statements
While there is currently no legal definition of greenwashing in the UK, the term broadly describes misleading statements made about the environmental performance or impact of a business, product or service to influence consumer behaviour. This might include misleading statements made in marketing material, annual reports and filings, stakeholder communications and other public statements. Greenwashing and the associated terminology is something that all marketers, business owners and those with C-suite influence should both be aware of.
Greenwashing Legislation and Regulation
On 23rd May 2024, the Digital Markets, Competition and Consumers (DMCC) Bill came into UK law, creating a new ante digital competition regime equivalent to the EU Digital Markets Act. This is important to marketers, as under the new Act, the Competition & Markets Authority (CMA) has been awarded new powers to enforce consumer protection law including the ability to determine when consumer protection law has been breached, without having to resort to court proceedings.
Environmental claims are governed by regulatory codes contained within the CMA’s Green Claims Code and the Advertising Standards Authority (ASA)’s CAP Code (rule 11). It would be prudent to be aware of these rulings when creating marketing content, especially when extoling sustainability credentials.
The Green Claims Code
In its role to protect consumers, the CMA has opened numerous investigations in recent years, particularly in misleading green claims or greenwashing. The Green Claims Code has 6 overarching principles governing communications:
be truthful and accurate
be clear and unambiguous
not omit or hide important information
be substantiated
consider the product or service's full life cycle
comparisons must be fair and meaningful
Claims need substantiation
Businesses should also be wary of using broad claims such as 'green', 'sustainable', 'environmentally friendly' and 'eco' which are generally interpreted as absolute claims that indicate a business, product or service has no negative environmental impact across its full lifecycle from manufacture to disposal. These claims require substantiation, which unless a business has robust documentary evidence, are likely to be deemed misleading and in breach as in the recently documented Etihad Airways ruling.
And to not fall foul of omission, as in the case of HSBC bank, where the ASA ruled that claims to ‘provide up to $1 trillion in financing and investment to helps clients transition to net zero’ in HSBC’s billboard advertising was misleading because it omitted significant information about their contribution to CO2 and GHG emissions through its financing of oil and gas production.
Mike Lockwood
Director of Complaints & Investigations, ASA
Be wary of grand green gestures
For consumers, it’s important to be wary of symbolic environmental gestures such as Apple’s announcement to stop shipping ear buds and wall chargers with the release of the iPhone 12 in 2020. Purportedly to cut down on e-waste. Not only did it play into the hands of critics who cited Apple’s main source of e-waste as planned product obsolescence (designing devices with intentional short lifespans or which are irreparable) but an EU ruling in 2022 requiring phone manufacturers to adopt a common charging connection by December 2024 to save consumers money and cut waste has resulted in reverse product differentiation by Apple who have reluctantly complied despite claims that the ruling ‘stifles innovation’. Interesting that Apple was reportedly collecting licensing fees from third parties that make accessories utilising the Lightning port through the Apple’s Made for iPhone (MFi) program) all this time. And it does raise the question of the validity of the propriety Lightning charger in the first place, if not to tie consumers into the brand that has product obsolescence as part of its practice. It rather overshadows the e-waste argument behind not shipping earbuds and chargers back in 2020.
Greenwashing terms
So with the new DMCC Act 2024 in place, a few terms to help you navigate the language around greenwashing and keep your business on the straight and narrow when it comes to Environmental & Social Governance (ESG). As a rule of thumb, make sure that any green claims can be properly substantiated before shouting them from the rooftops, keep your communications within ASA rulings.
Other key takeouts marketers should know
If you are a marketer with influence or involved with decision-making around marketings 4 Ps (price, place, product & promotion), the new legislation impacts the following:
1.subscription contracts
Businesses will be obliged to notify consumers before a free trial or a low-cost introductory offer comes to an end and ensure consumers are able to exit a contract in a straightforward and timely manner, affecting the (frustrating) practice of auto-renewing subscriptions.
2. drip pricing
Businesses will have to set out the total, all-inclusive cost of products at the outset of an online transaction, instead of promoting the initial price with additional fees being revealed (dripped) later at checkout – this is a prohibited, unfair practice under the new law.
3. fake reviews
The commercial practice of fake consumer reviews will be deemed unfair if it results in a consumer making a transaction that would otherwise not have been made because of a misleading action or omission.
So brush up on your legislation, know your greenwashing terminology and keep your communications full, fair and transparent. And feel free to download and share the greenwashing infographic below.
