If there is a potential unique selling point or premium that can be added to a product, companies will want to take advantage of it. The temptation to include claims about a product's environmental credentials may be one such way to boost sales, but as most people know, these can be misleading or false. That's greenwashing.
according to Report published by Changing Markets Foundation in 2023“greenwashing” is rampant throughout the food industry, and the aforementioned “attractiveness” may be one of the main reasons for it.
What is the Green Claim Code?
Adding a label to your products that indicates your company's or company's environmental credentials is currently voluntary, and while there are no plans to make environmental labels mandatory in the UK, it seems possible that the EU may take that step in the future.
The UK Government has published guidance on the use of Competition and Markets Authority (CMA) green claims. green claim code. The Green Claims Code is closely linked to the general advertising and marketing requirements for all types of claims and requires companies to be transparent, open and accurate about their claims regarding environmental certification. There are 13 statements in the code that companies must adhere to, but one that I think is particularly important is that there is current and reliable evidence that green claims are true.
Currently, this requirement is not fully defined and comprehensive, as there is no defined methodology for gathering and presenting evidence, and there are various environmental certifications, all with different requirements.
The Food Data Transparency Partnership, a collaboration between the private sector and government, aims to standardize methodologies and data sources for reporting Scope 3 emissions in the food industry and, most importantly, establish a mandatory methodology for voluntary ecolabelling. We are working on this. If the latter is published and implemented, it is likely to feed into green claims provisions and the CMA's decision-making, increasing certainty for consumers, businesses and the CMA itself.
Digital Marketing, Competition and Consumer Bill Explained
At present, it is difficult to comply with green claim regulations. For example, a slight change in wording on a product can be the difference between something being clear, misleading, or untrue. This is especially important given that false claims carry heavier penalties than misleading claims. The CMA, as well as local weights and measures authorities and trading standards, investigates companies and traders who make claims about their business or products where there is reasonable suspicion that the claims are misleading or false. have authority. It is a criminal offense to make misleading claims about a product and you may be subject to prosecution for any such offence. The CMA also has the power to go to court and apply for an enforcement order preventing the company from pursuing a claim. The CMA currently does not have the power to impose financial penalties or serve enforcement notices on its own.
Investigations and decisions carried out by the CMA are made in accordance with consumer law and the CMA's own guidance. The Digital Marketing, Competition and Consumer Bill, currently going through Parliament, will dramatically change this legal landscape.
The bill, which is currently being drafted, will give the CMA wide-ranging powers to police breaches of consumer law, including environmental claims. These include powers to issue fines and enforcement notices. The CMA followed guidance during the investigation and the green claims provisions will essentially be enforced using new powers on top of the CMA's current powers. Chief among the powers are new fines, as the CMA will no longer have to apply to the court for an order. The CMA can impose fines of up to £300,000 or 10% of gross turnover, whichever is higher.
The CMA has the power to accept prior undertakings from companies under investigation to cease conduct that breaches consumer law, before any fines are paid and final notices are served.
The proposed bill still has some time to pass, so there is scope for further amendments and changes before the bill becomes law. However, the penalties proposed under this bill are significant and could serve as a strong deterrent to companies making unsubstantiated green claims, or even making green claims at all. there is.
Giving regulatory bodies the power to impose penalties, typically imposing penalties so large that they would only be confirmed and handed down by a court in other circumstances, creates a system that is susceptible to abuse. This problem should be alleviated by making the appeals process a true tribunal where costs can be recovered if successful, as currently proposed.
The most serious crimes involving false or misleading claims can be prosecuted. If a premium is charged for green claims, you may be subject to Proceeds of Crime legislation. This could mean that, in addition to any fines handed down by the court, any money obtained as a result of the illegal labeling or false claims may have to be surrendered at sentencing.
ESSENTIALS TO REMEMBER
Given these impending changes to the law, companies would be wise to review the environmental claims they currently make.
There are two common mistakes to avoid. One is to make general statements like “carbon neutral'' or “more sustainable than other products on the market,'' as these are very difficult to prove. The second mistake is the lack of clear, detailed, and up-to-date evidence to support the claims.
Finally, when making or considering making an environmental claim, please follow the Green Claims Code and, if in doubt, contact a food regulatory professional who can assist.
