Out-Law Analysis | 02 Nov 2020 | 5:02 pm | 4 min. read
The need to be aware of compliance obligations is becoming more important as consumers are becoming increasingly conscientious around climate change and sustainability. Environmental considerations will often directly impact their purchasing decisions.
According to a study of 1,500 UK consumers between the ages of 16-44 carried out by a product information firm, seven in 10 respondents said they would be more likely to purchase a product which included details of its sustainability and positive environmental impact.
During a period of economic uncertainty, businesses can be tempted to try and stand out in a crowded marketplace by highlighting the 'green' nature of their products or processes in advertising. The consumer study found that a quarter of consumers see advertising as the measure of a product's positive environmental impact, with 17% looking to influencers as reinforcement of those credentials.
Using green credentials as a marketing tool is entirely legitimate, provided those credentials are genuine, and can be shown to be so. UK advertising regulations seek to prohibit unfounded or ambiguous green claims, known as 'greenwashing'.
Advertising is self-regulated in the UK and adjudicated on by the Advertising Standards Authority (ASA) with reference to advertising codes; the CAP code and BCAP code which cover non-broadcast and broadcast advertising respectively.
Typically, the ASA will investigate adverts as a result of a consumer or competitor complaint. However, the ASA may also choose to investigate an advert which it considers to be in breach of the code. A regulator-initiated investigation is more likely in circumstances where the subject matter of the advertisement is sensitive, such as adverts relating to Covid-19.
Advertisements in relation to environmental claims may also be of interest to the ASA. Once the ASA has investigated an advert, if the matter is not resolved informally, it is ruled on by the ASA Council.
In the event that the ASA Council decides that an advert is in breach of the relevant code, the advertiser will be asked to amend or remove the advert. These rulings are published on a weekly basis. If an advertiser fails to comply with the ASA's request, the ASA may escalate the matter by referring the advertiser to Trading Standards.
The advertising of green claims is a tricky business and advertisers need to be very aware of the rules and, just as importantly, how the ASA Council applies them in reality.
The main emphasis of the rules, contained in the CAP and BCAP codes, is broadly to ensure that advertisers make claims that are unambiguous and clear for consumers to understand; and make claims that are fully substantiated.
Making a green claim can be difficult. For example, there are several aspects of the CAP code which an advertiser would need to take into account when selling a t-shirt with a claim such as “Sustainable cotton: helping you reduce your carbon footprint for a better tomorrow”.
The advertiser would need to substantiate the claim 'sustainable cotton', and make sure the substantiation was sufficiently robust and objective, and covered the whole life-cycle of the product from manufacture to disposal. The cotton may be 'sustainably sourced' and the advertiser may hold good evidence to that effect, but that would not necessarily make the cotton itself sustainable when factoring in other aspects such as dying and transportation.
The claim that the t-shirt helped reduce a consumer’s carbon footprint would also need to be substantiated. If the advertiser intended to compare the product against other t-shirts which use cotton from unsustainable sources, any comparison would need to be stated in the advert to make the claim clear to consumers.
The key to advertising regulation compliance is substantiation; if you can provide evidence to support the green claims you are making, then you have a basis to make them. Advertisers will need to possess robust or fulsome evidence, particularly in relation to broader claims about 'sustainability' or similar. Better still, independent third-party evidence to verify claims can be extremely useful.
Advertisers should also beware specific rules for claims relating to carbon offsetting; for example, the ASA has stated that it will only accept calculation methodologies such as the Greenhouse Gas Protocol developed by the World Resources Institute and the World Business Council for Sustainable Development.
On the issue of the efficacy of substantiation, the European Commission has recently published a proposal for new legislation which could require advertisers to use approved methodologies for calculating the environmental impact of certain products and services. This could be a significant change for some advertisers who may have been relying on internal evidence and methodologies to substantiate claims to date. A proposal is expected in early 2021.
Going forward, green claims are likely to come under increased scrutiny by advertising regulators as more businesses begin to recognise the value they can unlock by appealing to consumers in this way. There is likely to be significantly greater use of 'comparative advertising', where one business compares the green credentials of its products, favourably, with those of its competitor. This is an entirely legitimate way of advertising.
However, given that such advertising will frequently be challenged by the competitor against whom the comparison is made, advertisers need to ensure that not only are they complying with the specific advertising rules relating to green claims, but also to the rules related to comparative advertising and trade mark law.
Another related concern for small and medium enterprises and start-ups in this space is that the increased scrutiny may not just come from regulators. Some investors have indicated they will only invest in providers of green technology that are able to provide scientific evidence to substantive their green claims.
To minimise risk, businesses should seek advice on whether any proposed green advertising is legally and regulatory compliant. This should be sought at an early stage of the marketing development process.
Provided that green claims are made accurately and can be supported by robust evidence, they are a valuable marketing tool to differentiate products and services. Many consumers are now actively looking for greener alternatives and this will be a continuing trend.
Advertising law expert Huw Cookson of Pinsent Masons, the law firm behind Out-Law, contributed to this article. The issues around green advertising were discussed by IP law experts at Pinsent Masons in a recent webinar: 'Going Green: Leveraging IP for Commercial Success'.
01 Apr 2020