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The greenwashing label is a black mark to be avoided by businesses

Posted: 21st August 2023

Next month, Olivia Jamieson and Joanna Waddell from the CMS specialist Environment Team will be discussing Greenwashing at our 60 Really Useful Minutes session on 13 September.  In this session the CMS team will focus on what greenwashing is and what advertising claims by businesses and organisations could be regarded as greenwashing. They will consider recent decisions by the Advertising Standards Authority (ASA) in relation to greenwashing and consider the enforcement options and recent developments.

An increasingly prominent issue across the corporate landscape, greenwashing still has no UK legal definition but, broadly speaking, can be defined as the act of a business providing customers or investors with misleading or false information about the environmental impact of its products and operations. Companies which position their business and/or products as being more sustainable and ‘greener’, to appeal to consumers and other key audiences, run an increasing risk of legal sanctions.

We regularly see companies stating or implying that their business operations are carbon neutral through press statements, logos, or other corporate symbols. Many businesses also suggest their products create less of an environmental impact than other competitors. Proving this can be an entirely different matter.

With increasing public scrutiny over greenwashing, companies and organisations can incur reputational damage from their actions. The financial consequences of this can be severe through lost trade and, in some extreme cases, fines being imposed following legal proceedings.

While no specific anti-greenwashing laws currently exist within the UK, there is still a significant legal threat to any businesses that falsify or overstate their sustainability credentials. Laws on misleading advertising, which include those prohibiting misrepresentation of a company’s or product’s environmental credentials, that may influence consumer purchasing decisions, can be applied. Any breach of these laws can be prosecuted as a criminal offence.

The ASA enforces the UK Codes of Advertising practice, which not only prohibits misleading adverts but also set out rules on environmental claims emphasising the need for clarity and careful, technical qualification of such claims. While the Code is only guidance and not legally enforceable itself, companies which fall foul of it could be violating consumer law and face an investigation and potential sanctions from the Competition and Markets Authority (CMA). As the UK’s principal body responsible for competition and consumer protection, the CMA does have powers to impose fines, enforcement orders and criminal sanctions.

Next month’s RUM session will look at the issue of greenwashing in further detail, focusing on the potential risks facing companies, where provenance and sustainability credentials lie at the heart of how many companies promote themselves, and the increasing action by ASA and CMA in this area.

It is essential for all businesses to review practices and ensure environmental claims being made through consumer marketing channels are accurate, credible and can be substantiated.

Book your place at our 60 Really Useful Minutes event now – 60 Really Useful Minutes: Greenwashing

Business Comment

Business Comment is the Edinburgh Chamber of Commerce’s bi-monthly magazine. It provides insight on Edinburgh’s vibrant business community, with features on the city’s key sectors, interviews with leading figures and news on new business developments in the capital.
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