UK CMA to explore misleading environmental claims

Out-Law News | 04 Nov 2020 | 10:41 am | 2 min. read

The UK’s Competitions and Markets Authority (CMA) is beginning a project aimed at better understanding how consumer protection legislation can be used to tackle false or misleading environmental claims.

The project will focus on how claims about the environmental impact of products and services are made, and whether these claims are supported by evidence. The CMA will also look at whether environmental claims influence consumers’ behaviour when purchasing goods and services, and whether they are misled by an absence of information about the environmental impact of products and services.

The CMA said it would produce guidance for businesses on how they could be transparent in the way that they market goods and services in relation to any claims made about environmental impact. It may also provide advice to government on the issues, and will publish the research to inform public debate.

The regulator said it hoped the project would contribute to its commitment in its annual business plan to support the move towards a low-carbon economy.

Announcing the project, the CMA said it had not yet reached a view as to whether consumer protection law had been broken because of misleading environmental claims. However, the CMA warned that if it did find evidence of law-breaking in this regard, it could take enforcement action.

Consumer protection expert Angelique Bret of Pinsent Masons, the law firm behind Out-Law, said: “This is another example of the CMA increasingly using its consumer protection powers to gather information and investigate misleading advertising, which can amount to a breach of the Consumer Protection from Unfair Trading Regulations.

“The CMA can use the threat of taking formal enforcement action (against certain parties) if it is unable to secure voluntary undertakings to make certain changes, or its guidance is not adhered to,” Bret said.

The CMA has launched a series of online questionnaires to find out what factors influence purchasing decisions, how businesses ensure any environmental claims are compliant with UK law, and if there is any existing research or information in this area. The call for information is open until 14 December 2020, and the CMA said it planned to publish guidance in summer 2021.

The CMA is also co-leading a related project together with the Dutch Authority for Consumer and Markets. Run under the auspices of the International Consumer Protection Enforcement Network, the project will produce guidance for businesses that could help to set consistent global expectations on the truthfulness of environmental claims.

According to a recent study of 1,500 UK consumers between the ages of 16-44, seven in 10 respondents said they would be more likely to purchase a product which included details of its sustainability and positive environmental impact.

Advertising law expert Iain Connor of Pinsent Masons said the CMA’s work would support existing powers held by the Advertising Standards Authority (ASA) to regulate the use of environmental claims used to woo consumers.

The ASA enforces two sets of codes, the CAP Code and BCAP Code, covering non-broadcast and broadcast advertising respectively, to ensure that all claims can be substantiated. In order to comply with the CAP and BCAP codes advertisers must ensure that their claims are unambiguous and clear for consumers to understand. 

“The CMA's work will dovetail nicely with the work of the ASA. Advertising in the UK is self-regulated and while generally regarded a success, the ASA has limited sanctions available to it meaning that there are enforcement gaps which the CMA may try to fill when claims are made which overstep the mark,” Tingle said.