Laws can be improved to protect consumers from greenwashing, says CMA

The Competition and Markets Authority (CMA) has urged the government to standardise some of the most commonly used environmental terms – like ‘carbon neutral’, ‘net-zero’ and ‘recyclable’ – and change consumer law so it’s easier to make sustainable choices.

“The CMA is firmly of the view that more can and should be done with the UK’s competition and consumer policy toolbox to support the UK’s net-zero and sustainability goals,” read a letter to the business secretary, Kwasi Kwarteng.

The recommendations would complement the regulator’s work on environmental claims and help to curb greenwashing.

In the past 18 months the number of environmental claims has risen steeply as businesses tap into the growing market for sustainable products. However, greenwashing has also surged: research by the CMA across 495 websites showed that 40% of the claims being made could be in breach of consumer protection laws.

A new green claims code has been published but the CMA has now suggested a number of ways in which both consumer and competition laws could be enhanced.

For example, there is scope for legislating to require businesses to provide better environmental information to their business customers. A separate piece of legislation on disclosure of environmental impact information would “put beyond doubt the requirement to disclose such information in all circumstances [and] also ensure that more environmentally harmful products could be readily identified in comparison to those which are less harmful”.

The CMA also wants to see misleading and/or unsubstantiated environmental claims added to the list of banned practices under consumer law. The government “may wish to consider introducing separate legislation on supply chain transparency, which could potentially provide a more detailed framework for disclosure and due diligence”, the regulator noted.

However the CMA had “doubts” about whether its remit, and that of consumer protection laws, extended to shifting from over-consumption to sustainable consumption. The government should instead “nudge” consumers towards these products.

The CMA also launched a sustainability taskforce to lead its work in this area. One of its first tasks will be looking into examples of the ‘chilling’ effect competition law could have on sustainability agreements. The regulator said there was insufficient evidence to suggest that competition law prevents firms from acting sustainably; however more clarity about what is, and is not, legal would help firms work towards sustainability goals without worrying that they are breaking the law in the process.

The plan is to shine a light on what businesses can and can’t do under current competition and consumer laws, said CMA general counsel Sarah Cardell. “We want it to be as easy as possible for businesses and, ultimately, shoppers to make choices which are better for the environment,” she added.

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