Reed Smith In-depth

Living a green life and buying environmentally sound products has become a priority with consumers, and companies are responding by striving to produce eco-friendly products or services. Manufacturers are increasingly paying attention to source raw materials from green suppliers and to ensure that their products are transported by eco-friendly means. In this context, transportation companies and shipping lines are adapting their offering to meet this increasing demand for more environmental-friendly means of transportation.

Some companies have been tempted to claim that they are doing more for the environment than they actually are.

This practice of making misleading environmental claims (so-called “greenwashing”) carries increasing risk in Europe, as the European Commission (EU Commission) as well as national consumer protection and/or competition authorities (including the UK Competition and Markets Authority) are more committed than ever to fight it.

The present alert aims to provide clear and practical guidance on what is allowed in this context.

From a competition perspective, greenwashing can raise risk, including where a company claims that its products / services are greener than its competitors’ and in doing so, denigrates competitors’ products / services, or where competing companies use an environmental claim as a screen to engage in anti-competitive collaboration.

What is an environmental claim?

Environmental claims include claims that suggest that a product or service:

  • Has a positive environmental impact or no impact on the environment
  • Is less damaging to the environment than a previous version of the same product or service
  • Is less damaging to the environment than competing products or services

Environmental claims are part of sustainability claims, and the same principles apply to the latter. Sustainability claims include claims relating to the environment and climate change, biodiversity, animal welfare, workers’ welfare or corporate social responsibility.

Screening of websites for misleading claims

Earlier this year, the EU Commission and national authorities carried out an extensive cross-sector sweep of websites1 to identify instances of greenwashing. Their findings2 revealed just how extensive the practice of greenwashing is:

  • In 42 per cent of cases, the claims were exaggerated, false or deceptive
  • In 37 per cent of cases, claims included vague and general statements, using words such as “eco-friendly” or “sustainable” with no substantiation
  • In 59 per cent of cases, there was no easily accessible evidence to support the claim
  • In more than 50 per cent of cases, the company could not provide sufficient information for consumers to assess the accuracy of the “green” claim