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Expert Insights

11 April 2022

Nowhere to hide for greenwashing brands

A recent report conducted by NewClimate Institute confirmed what many had predicted: that companies are routinely exaggerating or misreporting their environmental progress. Further, that the headline climate pledges of 25 of the world’s largest companies in reality only commit to reduce their emissions by an average of 40%; significantly and embarrassingly less than the 100% suggested by their “carbon neutral” and “net zero” claims.  These sort of findings simply cannot be ignored. 

And it seems that they won’t be: The European Commission (EC) recently announced that it will be taking action and has proposed several amendments to the Unfair Commercial Practices Directive (UCPD). Amongst the changes proposed include adding to the list of prohibited unfair commercial practices, otherwise known as ‘the blacklist’, the following:

  • making generic, vague environmental claims where performance cannot be demonstrated;
  • making an environmental claim about the entire product, when it really concerns only a certain aspect of the product; and
  • displaying a voluntary sustainability label which was not based on a third-party verification scheme or established by public authorities.

A further proposal set out by the EC is for the list of product characteristics, about which a trader cannot mislead consumers, to be expanded to cover environmental or social impact, as well as durability and reparability. The changes proposed follow a consultation of over 12,000 consumers, as well as companies, consumer experts and national authorities (this was a serious body of work). The EC has concluded that verifying the reliability of environmental claims on products is seen as the biggest obstacle to consumers to engage in the green transition, and if the NewClimate Institute report tells us anything, an obstacle there certainly is.

This issue is being tackled, however.  In the UK, regulators are cracking down, with many companies now at risk of financial and other penalties. The Advertising Standards Authority (ASA) has found a number of companies in the food and drink sector to have fallen foul of the rules over the past few months and analysis by the Independent has found the number of adverts banned for “greenwashing” has tripled in the past year.  

Amongst the adverts banned was a high-profile marketing campaign by alternative dairy company Oatly, due to misleading environmental claims. One of its claims read, “climate experts say cutting dairy and meat products from our diets is the single biggest lifestyle change we can make to reduce our environmental impact”.

The regulator pointed out that consumers would understand the claim to be a “definitive, objective claim that was based on scientific consensus”, whereas instead it was found to be the opinion of one climate expert. Oatly spokesman Tim Knight said in response: "we're a science-based company and take pride in being precise, but we could have been clearer."

Pepsi Lipton International has also received an adverse ASA ruling against its Lipton Ice Tea for a poster which said, “deliciously refreshing, 100% recycled.” Next to this was an asterisk which included the fine print: “bottle made from recycled plastic, excludes cap and label.” The ASA banned the advert on the basis that the qualification did not adequately counter the overall impression given that the bottle was made from 100% recycled material. Pepsi Lipton International have said in response that they were “simply celebrating the plastic bottle is now made from 100% recycled PET”.

And finally, within the past few weeks, Innocent’s advert showing animated characters encouraging people to “get fixing up the planet” by buying Innocent drinks was also found to have breached the ASA’s rules. The regulator said that because the adverts "implied that purchasing Innocent products was a choice which would have a positive environmental impact when that was not the case", it concluded that they were "misleading." Innocent have said they “would like to work with the ASA and other brands to understand how to align to them to continue the conversation on these important topics.”

What can be gleaned from the latest ASA rulings is that brands are expected to back up their environmental claims with verified data and that unsupported crafty semantics will not be tolerated. It is clearly going to be very difficult to get away with bold generic environmental claims, despite their obvious appeal to marketeers.  Ultimately, however, advertising that has to be withdrawn amidst ASA controversy and in the face of the ever environmentally conscious consumer surely has to be the worst kind of marketing.

Further regulation from the EC and regulators in the UK is inevitable, particularly in the food and drink sector. Already we have seen the Environment Agency launch a project aimed at standardising metrics for environmental performance within this sector to incentivise companies towards greener manufacturing processes and business operations, in tandem with discouraging greenwashing. The Competition and Markets Authority have also put businesses on notice of a full review into misleading environmental claims, with the food and drink sector previously highlighted as a sector where consumers are particularly concerned.    

The message is clear: any environmental claims coming off the production line will be met by a new level of quality control. Consumers and regulators alike have lost patience when it comes to greenwashing and it could be the end of the line for those brands that exaggerate their environmental progress. On the flip side, those brands which have genuine and supported green credentials should grasp the opportunity to be the market leaders of tomorrow.

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