Over the last few years there has been an increased focus on the environmental and ethical impact of our actions and buying decisions, which has resulted in the concept "conscious consumerism" being coined. The Competition and Markets Authority ("CMA") claims that in 2019, UK consumers spent £41 billion a year on ethical goods and services, which is almost 4 times as much as people spent two decades ago. As a result, many businesses have committed to reducing or off-setting their carbon-footprint and embracing ethical ways of providing their goods and services.
For the businesses leading the charge in this area, they have been rewarded with increased profits, positive publicity and consumer loyalty. However, given that eco-friendly and ethical products are in high demand, the CMA is concerned that some businesses may be incentivised to make "misleading, vague or false claims about the sustainability or environmental impact of the things they sell".
As a result, the CMA intends to investigate descriptions and labels used to promote 'eco-friendly' products and services, to determine whether they have the potential to mislead consumers. The investigation will look at a variety of sectors including fashion, travel, transport, food and beverages, beauty products and cleaning products.
The examples provided by the CMA of misleading behaviour include:
- exaggerating the positive environmental impact of a product or service;
- using complex or jargon-heavy language;
- implying that items are eco-friendly through packaging and logos when this is not true; and/or
- failing to provide relevant information about the sustainability of a product or service, e.g. whether it's highly polluting or non-recyclable.
So what does this mean?
The CMA is merely investigating at this stage, and hasn't reached a view on whether consumer law may have been broken. Over the coming months it hopes to gather information from the public, charities, businesses and other organisations in order to determine the impact of eco-friendly marketing on consumers and their buying decisions. The CMA's information gathering will focus on UK marketing practices but will also consider the types of misleading eco-friendly claims being made around the world.
Once information has been gathered, the CMA intends to publish guidance for businesses in the Summer of 2021 on how they can market the environmental credentials of their goods and services fairly and transparently.
Ultimately, we'll need to wait and see what the new guidance from the CMA contains, and how robustly the CMA intends to enforce it. In the meantime, businesses promoting their goods and services as eco-friendly should give careful consideration to their marketing and ensure that they are not engaging in any of the CMA's examples of misleading behaviour (as listed above). Even though the CMA hasn't decided whether or not these behaviours will constitute a breach of consumer law, it has said that if it finds evidence that businesses are making misleading claims about how eco-friendly their products or services are, it could take enforcement action, which is something all businesses will be keen to avoid.
Please get in touch if you'd like to discuss.
Andrea Coscelli, Chief Executive of the CMA, said: Increasing numbers of people are quite rightly concerned about the environment and want to play their part by being greener. Our role is to make sure that consumers can trust the claims they see on products for sale and don’t fork out extra for items falsely presented as eco-friendly. We know that many businesses will be looking for ways to reduce their carbon footprint and we strongly support this, but the claims they make must not mislead consumers in the process. It’s important that people can easily choose between those who are doing the right thing for the environment and those who are not, so that businesses genuinely investing in going green can be properly rewarded by their customers.