The UK watchdog to start investigating brands for "Greenwashing" - Boodle Hatfield

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04 Jun 2021

The UK watchdog to start investigating brands for “Greenwashing”

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One of the fastest growing trends in the luxury brand space in the last decade has been the growth of the 'green' or 'eco-friendly' company. This includes the emergence of companies whose core existence is sustainability, such as fashion brands creating clothes and high-end sportswear from ocean plastic waste. Some estimate that the UK market for sustainable products reached a value of £41 billion in 2019. This is thought to have accelerated even more last year due to the pandemic sparking a further shift towards more sustainable consumer practices.

Given this rapid growth, it is unsurprising that the UK's competition watchdog has turned its attention towards investigating whether brands are 'greenwashing'.

So what is greenwashing? Investopedia sums it up neatly as "the process of conveying a false impression or providing misleading information about how a company's products are more environmentally sound."

The UK’s Competition and Markets Authority (CMA) has now published draft guidance on deceptive environmental claims. Interested parties are invited to respond to certain questions posed by the CMA (which can be found here) by 5pm on 16 July 2021.

The final guidance is then expected to be published in August / September 2021, and will set out principles designed to help businesses comply with the law.

The CMA'S chief executive said in a recent statement "Our role is to make sure that consumers can trust the claims they see on products for sale and don't fork out extra for items falsely presented as eco-friendly". Interestingly, this was not driven by consumer complaints. Rather, it was supposedly driven by the Government's commitment to becoming net-zero carbon by 2050. The CMA will be focussing on three key industries; textiles and fashion, travel and transport and food and beauty products.

Brands will have to be increasingly careful about what they say in relation to their green credentials. And the guidance (should) have the effect of encouraging businesses to invest more in the environmental performance of their products, perhaps driving even more value into the sustainable sector.

Exactly what constitutes 'greenwashing' is however quite difficult to define and may be open to some interpretation. For example; what if a designer claims they have increased the average use of recycled materials in their clothes by 500% but in reality only increased it from 1% to 5%? How this comes to be interpreted will be a point to watch.

It should not be forgotten that this could become an opportunity for many brands, as much as it might be a challenge. Demonstrating compliance shows you have achieved a verifiable standard. Brands that are genuinely committed to being 'green' should not have much to worry about.

“We’re all using the same language to describe sustainability on a massive spectrum,” says Amendi co-founder Corey Spencer. “The brands genuinely committed to sustainability can’t compete in that space.”

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