“Eco-friendly” claims – CMA investigation launched

United Kingdom

This week the UK’s lead consumer authority (the “CMA”) announced it is examining businesses’ environmental claims over their products and services. This follows recognition of the growing number of such claims and their potential influence on consumers, a point reflected in the CMA annual plan for 2020/21 issued in March this year.

The new investigation is focused on understanding the influence of environmental claims, identifying any false or misleading claims, educating stakeholders and also separately considering any enforcement action.  The main areas of initial focus are:

  • how claims about environmental impact are made;
  • the evidence supporting such claims;
  • the impact of environmental claims on consumer behaviour; and
  • whether consumers are being misled.

Although the CMA has stated that it has not yet reached a view on whether consumer protection law may have been broken, the CMA does not commence these sorts of investigation without having possible enforcement in mind. The outputs of the investigation are therefore likely to include guidance for businesses, advice to government and potential enforcement action against businesses with  the potential threat of unlimited fines.

The first phase of the investigation is a call for information from consumers, businesses and other stakeholders, which closes on 14 December 2020. Questions for businesses are focused principally around:-

  • marketing and ensuring compliance with current consumer law;
  • information about sustainability and durability of products and the ability to repair/upgrade those products;
  • views on behaviour of others in the sector;
  • consumer views;
  • regulatory systems in place and potential improvements; and
  • action that the CMA should be taking.

Businesses need to properly consider whether to engage in the initial phases of the investigation with the potential to shape future consumer policy. There is real opportunity to inform the CMA as to the benefit of environmental claims made, supported by credible evidence at a time when the environmental impacts of products are increasingly under a spotlight, there is a demand for more information, and positive developments have been made in certain areas. Businesses do also need to have one eye on future enforcement, standing-up to the CMA if it adopts an overly aggressive approach towards businesses, seeking to push the boundaries of consumer law.

Scrutiny in the area of environmental claims is by no means restricted to the UK with a range of existing measures in place and recently the Dutch Consumer Authority issued guidelines for consultation on sustainability claims.  

For assistance and advice on this issue please contact the authors or your usual CMS contact.