Following ASA rulings against Nike, Lacoste and Superdry over misleading sustainability claims, Katrina Anderson, principal associate at national law firm Mills & Reeve, explores how online retailers and brands can remain compliant in the regulatory battle against ‘greenwashing’.
As environmental sustainability rises up the agenda for consumers and regulators alike, businesses face an increasingly complex landscape of green claims.
The Competition and Markets Authority (CMA) and Advertising Standards Authority (ASA) have been cracking down on greenwashing since the introduction of the Green Claims Code in September 2021. Now, the Digital Markets, Competition and Consumers Act 2024 (DMCCA) has increased the threat even further.
What’s more, high-profile investigations and guidance highlight the fact that online retail faces particular scrutiny.
Understanding the regulatory framework
In the UK, consumers are protected from misleading environmental claims by general consumer protection under the DMCCA and business-to-business protection in the Business Protection from Misleading Marketing Regulations 2008. The UK advertising codes (CAP and BCAP) also govern the use of green claims in advertising.
While the Green Claims Code itself is not legally binding, it helps businesses understand practical expectations for compliance. Since 2021, both the CMA and ASA have proactively enforced the Code, publishing many illustrative decisions about how it should be applied in practice.
The catalyst for this regulatory focus was a major 2021 Europe-wide review by a coalition of European consumer protection regulators led by the CMA, which found that 40% of green claims made online could be misleading. This review, part of an international sweep of websites across sectors like fashion, cosmetics and food, revealed tactics including vague language, unsubstantiated claims and misleading imagery.
What qualifies as an ‘environmental claim’?
According to the CMA, an environmental claim is any (implicit or explicit) claim “which suggests that a product, service, process, brand or business is better for the environment.” This includes claims that suggest or create the impression that a product or service has a positive environmental impact, no impact on the environment, is less damaging than a previous version, or is less damaging than competing products.
When unsubstantiated, these claims can mislead the average consumer or, importantly, consumers who are particularly motivated by environmental factors. Crucially, the CMA’s guidance recognises this group as potentially vulnerable to misleading claims.
Why retail is in the spotlight
In January 2022, only months after launching the Green Claims Code, the CMA opened a review of environmental claims in the (primarily online) fashion sector. By July 2022, investigations into ASOS, Boohoo and George at Asda were underway.
These investigations led to formal undertakings signed in March 2024, under which the brands agreed to use only accurate and clear green claims. This included commitments not to make misleading environmental claims, to be clear when claims rely on consumer action, and to provide clear and accessible criteria for products sold as part of specific ranges.
The six core principles
In addition to this practical guidance, the Green Claims Code introduced six core principles that businesses should follow:
- Claims must be truthful and accurate: Environmental claims must be honest and reflect the true environmental impact without inflating facts or leaving consumers with false impressions.
- Claims must be clear and unambiguous: Environmental claims should be easily understood and not confusing. Technical language should be avoided, and visual components matter too.
- Claims must not omit or hide important relevant information: Important information must be visible on all environmental claims, allowing consumers to make informed decisions.
- Comparisons must be fair and meaningful: Comparative environmental claims must be based on current information and compare equivalent products only.
- Claims must consider the full life cycle: Businesses need to consider the impact for the entire lifecycle of the product, from production to disposal, and the impact of the wider business.
- Claims must be substantiated: Businesses must have robust evidence backing environmental claims before making them. This could include laboratory tests or surveys, but increasingly the expectation is for a full lifecycle analysis.
Recent examples of pitfalls to avoid
Recent ASA rulings against Lacoste, Nike and Superdry illustrate critical mistakes retailers should avoid. All three brands used the word “sustainable” in Google ads without clear qualification and were unable to provide the ASA evidence that their entire range across its entire life cycle would have no detrimental impact on the environment, which is the standard required for unqualified sustainability claims.
The ASA acknowledged Google ads have character limitations but stated that “sustainable” is a “broad, general and absolute” term requiring a high degree of substantiation.
Other common issues that come up in retail ads and on retail website include grouping products into collections or ranges without clearly stating criteria, potentially misleading claims about a product’s composition, and using broad terms without explanation.
The consequences of non-compliance
Under the DMCCA, the CMA now has significantly enhanced powers.
It can investigate suspected breaches of consumer protection law, require undertakings from businesses to cease or modify offending conduct, issue direct financial penalties of up to 10% of global group turnover, impose directions requiring removal of misleading statements from websites or marketing materials, and act more quickly with a statutory duty of expedition.
Practical steps for compliance
Businesses should use the Code’s practical checklist when considering environmental claims: Do I live up to the claims I am making? Is the claim only true under certain conditions, and are these clear? If vague or general terms have been used, have these been explained? Is the claim comparing like with like? Do I have robust evidence claims are true that I could show a regulator?
Overall, with regulatory scrutiny at higher levels than ever before, retail brands must ensure every environmental claim is accurate, clear, substantiated and considers the full lifecycle impact.
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