With the increasing importance of sustainability to consumers, regulators are taking action against businesses who make misleading environmental claims when marketing their products. This blog sets out details of regulation of environmental claims in advertising, and some top tips to avoid falling foul of these rules.
Supporting environmentally-friendly businesses has become very important to consumers. According to a joint study by IBM and the National Retail Federation, 57% of all consumers are willing to change their purchasing habits to reduce their negative environmental impact. There is a financial incentive for businesses to market products as environmentally-friendly, and it is important that they do not take advantage of this by making fraudulent or misleading claims.
Environmental claims in advertising are the subject of regulation by both the Competitions and Markets Authority ("CMA"), and the Advertising Standards Authority ("ASA").
The CMA and consumer protection legislation
At the end of last year, the CMA launched an investigation into how to protect consumers from vague, false or misleading environmental claims. While it has not yet taken a view on whether consumer protection law is broken by such claims, it is due to publish guidance on this in the summer.
There are several pieces of legislation that false or misleading environmental claims may fall foul of.
The Consumer Protection from Unfair Trading Regulations 2008 prohibit unfair practices, such as businesses providing false information to customers or omitting or concealing important information.
The Consumer Rights Act 2015 requires goods to match the description given by the seller. If goods are not environmentally-friendly despite claims they are, the sellers may have broken the law.
The ASA and the Codes
The Advertising Standards Authority regulates advertising in the UK and administers the UK Code of Non-Broadcast Advertising, Sales Promotion and Direct Marketing (the "CAP Code") and the UK Code of Broadcast Advertising (the "BCAP Code") (together, the "Codes").
The Codes are not legally binding and the ASA has no legal powers of enforcement. However, where a business doesn't comply with the Codes or the ASA's subsequent recommendation, the ASA may use its influence to encourage media platforms to drop the adverts, and refer the business to regulators like Ofcom and the National Trading Standards Board. In addition, ASA decisions are public so can cause reputational damage.
The Codes contain general rules applicable to all marketing, such as the requirement of "substantiation" (that businesses must hold documentary evidence to prove their claims). The Codes also contain rules specifically regarding environmental claims in advertising.
Broadly, they are that:
- environmental claims must be clear and not misleading;
- absolute claims require a very high degree of substantiation, while relative claims can be justified by demonstrating that one product has a total environmental benefit compared to another;
- a claim cannot be presented as universally accepted if informed opinion is significantly divided; and
- it is misleading to make a claim that is not actually unique or noteworthy within the industry (like highlighting the absence of a harmful ingredient which is not used because it is illegal).
Five points to consider before making environmental claims
Before making an environmental claim to advertise your business or products or services, you should:
1. Stick to the facts: Ensure that your environmental claims are truthful and not misleading. Do not exaggerate or treat opinion like fact.
2. Be ready to substantiate: You may be called upon by the ASA to prove that your claim is true. You should keep documentary evidence to back it up.
3. Limit absolute claims: It is much harder to substantiate an absolute claim like "environmentally friendly" than it is a relative claim, like "environmentally friendlier than the old formula".
4. Be aware of scientific opinion: As scientists investigate climate change, scientific opinion on best practice will evolve. Ensure your environmental claims are based on up-to-date information, and be careful if basing claims on new developments where there is no scientific consensus.
5. Err on the side of caution: Anyone can complain about your advertisement to the ASA for free. This makes it an easy and accessible tool for environmental campaigners to take action. If you have any doubt about an environmental claim in your marketing, take advice before running it.
How can we help?
As sustainability and environmentally-friendly products become more important to consumers, marketing about this will become more closely-regulated by the CMA and ASA. If you require advice on compliance with CMA guidance and the Codes, please do not hesitate to get in touch with us or your usual Brodies contact.