Over the past few years, the UK regulators concerned with combating ‘greenwashing’ - i.e., the Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) - have been very active in stamping out vague and misleading environmental claims. Their work is just beginning and we are going to be seeing many more investigations in the months and years ahead.
Now, it seems the EU is keen to be seen as the toughest market in town, as it plans stronger rules and greater enforcement against greenwashing claims.
Following the UK's disappointing Eurovision performance, one might have hoped they could let the UK keep the dubious honour of having the toughest rules/enforcement when it comes to misleading green claims, but alas it seems as though that crown is going to be taken from us, too.
You can find more information here, but one headline-grabbing development is that European legislators are proposing introducing a ban on claims such as ‘CO2 neutral’ or ‘carbon neutral’ if and to the extent they are based on carbon offsetting schemes.
Carbon offsetting schemes, and claims made based on those schemes, have been heavily criticised by environmental groups as they might leave consumers with a misleading impression that companies are causing less harm to the environment than they really are. Carbon offsetting is different from carbon reduction, where a company actively reduces its carbon emissions rather as opposed to simply offsetting them by purchasing credits or taking part in other offsetting schemes.
This move by the European Parliament took many by surprise as it was not included in the European Commission’s draft proposal, tabled last year.
Meanwhile, in the UK, the ASA has identified “carbon neutral” and “net zero” claims in advertising as a priority area for research. This is due to the apparent lack of consumer understanding of those claims, the increasing prevalence of those claims, and their potential to mislead consumers.
The ASA is concerned that consumers assume ‘carbon neutral’ claims imply an absolute reduction in carbon emissions has taken place or would take place, and that when the potential role of offsetting was revealed to the individuals the ASA surveyed, apparently consumers felt they had been misled.
When it comes to ‘carbon neutral’, ‘net zero’ and similar claims, in its latest guidance (published in February 2023), the ASA already takes the position that “Marketers should ensure that they include accurate information about whether (and the degree to which) they are actively reducing carbon emissions or are basing claims on offsetting, to ensure that consumers do not wrongly assume that products or their manufacture generate no or few emissions.”
It also states that marketers should “Avoid using unqualified ‘carbon neutral’, ‘net zero’ or similar claims” and that “information explaining the basis for these claims helps consumers’ understanding, and such information should therefore not be omitted.”
The ASA will conduct further research in this area this year, but it will be looking very closely at these latest developments in the EU. If a de facto (or actual) ban on the use of these terms is introduced in the EU when they are based on carbon offsetting rather than carbon reduction, it is entirely possible the UK regulators will follow suit.
Will the CAP Codes and consumer law be updated in the UK?
In practice, rather than go to the trouble of introducing new rules in the UK, if the ASA’s research shows that consumers are being misled by these claims, the ASA might simply issue new guidance then interpret the existing rules in a stricter way, thereby introducing a de facto ban on those claims in the UK to the extent they rely wholly or mainly on carbon offsetting rather than carbon reduction. The CMA might follow suit.
Staying whiter than white
During this period of rapid change when it comes to green claims, and while the regulators across the UK and Europe seem to be in a race to set the bar higher and higher, marketers need to stay abreast of the latest developments and be careful not to place too much store in carbon neutral and net zero claims, if those are based on carbon offsetting to a significant extent.
At present in the UK, those claims can be made, provided they make clear they are clear about the part carbon offsetting plays (in addition to carbon reduction), and provided it’s clear which carbon offsetting scheme is being used. However, the ASA is keeping that approach under review and could raise the bar to match the EU at any time.
In some ways having a consistent approach across the EU and UK simplifies things for UK-based marketers, but of course having such a high bar makes it incredibly difficult for companies to make such claims at all. One problem with this is that if it becomes too difficult or too risky for companies to talk about the positive measures they are implementing to reduce their impact on the environment, some companies may not bother implementing those positive measures in the first place.