Businesses have until the New Year to make sure “green” claims – including throughout supply chains – are legal, a UK watchdog has warned.
The Competition and Markets Authority (CMA) said it would carry out a full review of misleading environmental claims early next year and it was ready to take action against offending firms.
The CMA has published the Green Claims Code to help businesses ensure they are communicating green credentials in a way that complies with the law.
The guidance makes it clear responsibility for green claims could be with a manufacturer, a retailer or another party in the supply chain.
The CMA said firms making green claims “must not omit or hide important information” and “must consider the full life cycle of the product”.
Factors to consider include a product’s component parts, how and where it was manufactured, transportation, use, disposal, waste by-products, as well as environmental consequences.
Businesses may have to consider getting evidence from their supply chain about green claims.
The code said: “Where one business manufactures or supplies products to another, whether for resale or incorporation into other products, both businesses may be liable for claims and may have to substantiate them. Businesses should make sure they can do so. That may mean ensuring they obtain evidence from others in the supply chain.”
The CMA said it was mulling which sectors to prioritise in its review, but textiles and fashion, travel, food, beauty and cleaning products were where consumers seemed to have most concerns about greenwashing.
However, any sector could become a priority and the CMA warned it was prepared to take action before the formal review if there was clear evidence of breaches of consumer law.
The CMA also highlighted its research on the impact of green marketing on consumers, which found 40% of green claims made online could be misleading, suggesting that thousands of businesses could be breaking the law.
CMA chief executive Andrea Coscelli said the authority was concerned that too many businesses were falsely taking credit for being green, while genuinely eco-friendly firms failed to get recognition.
“The Green Claims Code has been written for all businesses, from fashion giants and supermarket chains to local shops,” said Coscelli. “Any business that fails to comply with the law risks damaging its reputation with customers, and could face action from the CMA.”
Greg Hands, minister of state for energy and clean growth, said green commitment claims from businesses had to be transparent.
“Government is also currently reviewing green energy tariffs to ensure consumers can be confident they are choosing companies that make a conscious choice to invest in renewable energy,” he added.