Too good to be true? CMA to examine environmental credentials of fast moving consumer goods in latest 'greenwashing' investigation
On 26 January 2023, the Competition and Markets Authority (CMA) announced the details of its next ‘greenwashing’ investigation. Focused on the Fast Moving Consumer Goods (FMCG) sector, worth over £130 billion in the UK annually, this new review will include food and drink, cleaning products and toiletries; all products typically considered ‘essential’ and purchased regularly by consumers.
This investigation is part of an ongoing effort to tackle ‘greenwashing’ by the CMA. After the launch of its public consultation on green claims in 2020, the regulator provided a guide to businesses in its 2021 ‘Green Claims Code’ (for more information see our earlier Perspective here). Based on key provisions in the Consumer Protection from Unfair Trading Regulations 2008, this provides companies with clear guidance and examples for marketing the green credentials of their goods and services.
We note that the CMA began its review into misleading green claims in January 2022 with firms in the fashion and textiles sector, in particular by focusing on both online and offline statements for misleading information or important omissions. As part of this wider sector review, an investigation into the green claims of three fashion brands commenced in July 2022, and these firms continue to be investigated.
Now that the FMCG sector has been selected as the next area of focus, the green credentials of relevant businesses will be assessed to ensure compliance with consumer protection law. According to recent research, environmental claims in this industry are widespread: 91% of dishwasher items and 100% of toilet products are currently marketed as ‘green’ or ‘ecofriendly’.
CMA Chief Executive Officer Sarah Cardell has explained that they are “concerned many shoppers are being misled and potentially even paying a premium for products that aren’t what they seem, especially at a time when the cost of living continues to rise”.
The CMA has given some examples of potential non-compliant behaviour in this FMCG sector, including the following.
Making vague and broad ‘eco-statements’: The CMA has emphasised that companies must not describe their products using terms like ‘sustainable’ or ‘better for the environment’ with no clear evidence.
Providing misleading information about materials and recycling: Where companies claim a product is made using recycled materials, or can be recycled, these statements need to be accurate.
Incorrectly branding entire ranges as ‘sustainable’: If a whole range is advertised as eco-friendly, the CMA have stated that this claim is likely to be a generalisation that overlooks any differences in the materials and manufacturing processes of individual products.
While no view has yet been reached on whether particular breaches of consumer protection law have occurred in the FMCG sector, the CMA has repeatedly outlined its broader commitment to accelerate the transition to a net zero economy in its Annual Plans and strategic planning. In a recent speech to the Scottish Competition Forum, Sarah Cardell described climate-focused work as the “priority” for the CMA over the next three years. As such, if any concerning practices are identified, the regulator will consider directing its resources into formal investigations relating to these specific companies.
For businesses in the FMCG sector, this is a warning to ensure all their green credentials are compliant. Crucially, however, other industries are not exempt; while travel and transport has been identified as the next focus area, the CMA has promised to investigate any sector where it identifies “significant concerns”.
In the meantime, anyone with concerns about the environmental claims practice of an FMCG company can report these by emailing the following address: email@example.com.
With special thanks to co-author Eleanor Dodd.