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The UK competition watchdog has given companies that make misleading claims about their environmental credentials until the end of the year to stop the practice, known as “greenwashing”.
Too many companies “falsely took the credit for being green” in order to appeal to environmentally conscious consumers, said the Competition and Markets Authority.
The CMA highlighted the upcoming UK-hosted Cop26 climate conference in Glasgow, and urged companies to adhere to new guidelines it released on Wednesday to support global efforts to reduce carbon emissions.
From 2022, the regulator will launch a review of misleading green claims, with sectors such as fashion, transport, beauty industry and food and beverage likely to be subject to special scrutiny .
The CMA began reviewing green claims last year, concluding that up to 40% could be misleading for consumers.
Also in 2020, the Advertising Standards Authority cracked down on several large companies, including airline Ryanair, automaker BMW and oil producer Shell, for greenwashing ads.
The CMA’s work will focus on whether the companies’ claims violate consumer law, with the regulator saying any transgression could result in sanctions even before the review begins.
Its work will build on new guidelines that some have called the “green claims code,” which highlights six principles of behavior that companies should follow when making claims about the environmental impact of their products.
One of the guiding principles of the AMC is that companies “should not omit or hide important information” and “should consider the entire product life cycle”.
Greg Hands, Minister for Energy and Climate Change, said: “Millions of UK households are rightly choosing to switch to green products as they seek to reduce their carbon footprint. But it is normal that this commitment is supported by transparent demands from companies.
“The competition regulator’s new code will help ensure this with guidance on how best to communicate and understand environmental claims.
“The government is also revising green energy tariffs to ensure that consumers can be sure they are choosing companies that make a conscious choice to invest in renewable energy.”
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Andrea Coscelli, director general of CMA, said exaggerating green credentials could be a blatant violation of consumer law, potentially leading to sanctions.
“More people than ever are considering the environmental impact of a product before parting with their hard-earned money,” he said. “We are concerned that too many companies are wrongly taking the credit for being green, while truly eco-friendly companies are not getting the recognition they deserve.
“Any business that does not comply with the law risks damaging its reputation with customers and could face prosecution by the CMA. “
Breaches of applicable consumer protection law can result in a prison sentence of up to two years.
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