What The CMA's Latest Green Claims Guidance Means For Businesses

Businesses making environmental claims about their products or services will need to pay closer attention to compliance at every stage of the supply chain following new guidance from the UK's Competition and Markets Authority (CMA). The CMA's updated consumer protection guidance takes a broader, end-to-end view of how environmental claims are developed, substantiated and communicated, making clear that responsibility may extend well beyond the business that ultimately markets the product.

What amounts to an environmental claim?

The CMA makes clear that “making” an environmental claim is not limited to the words used. It includes what a business says, how it presents the message, and whether key information has been left out. In practice, that captures statements on websites, in advertising, branding, packaging and product labels, as well as logos and imagery that may suggest an environmental benefit.

It also extends to omissions, particularly where important qualifying information is hidden or not made sufficiently clear to consumers. This could include, for example, failing to explain that a product must be disposed of in a particular way for the claimed environmental benefit to be achieved.

Retailers cannot assume responsibility rests solely with the manufacturer, as the legal risk may arise not only for the business selling or advertising the product, but also for manufacturers, suppliers and distributors involved at different stages of the supply chain.

Claims need to be verified and backed up by evidence

A central message in the guidance is that environmental claims must be backed by robust evidence. Businesses are expected to verify and substantiate the claims they make, even where the underlying information sits elsewhere in the supply chain.

In practical terms, businesses should only make claims they can prove. If they do not have enough information to confirm that a claim is accurate, they should either amend the wording or avoid making the claim altogether. For example, if a supplier describes a product as “eco-friendly” but cannot provide evidence to support that statement, a retailer should not repeat it. If the claim cannot be substantiated, the retailer may need to reconsider whether it should continue to sell the product.

This scrutiny does not stop at express statements. Packaging, logos and imagery may all be relevant, as may the absence of information that consumers need in order to understand the claim properly. Disposal requirements, for example, may be critical to whether a claimed environmental benefit can in fact be realised.

What does this mean in practice for businesses?

The CMA is likely to prioritise cases where misleading environmental claims cause greater harm to consumers. It is also likely to take a tougher stance where businesses should already be familiar with their obligations, particularly where relevant guidance or previous regulatory decisions are already in the public domain.

Because of that, a key area of focus is internal compliance. Businesses should ensure they have effective processes in place for reviewing, verifying and approving environmental claims. Where those processes are absent, or are not properly followed, the risk of enforcement is likely to increase.

The CMA may also require businesses to take steps to correct misleading claims, prevent similar issues from arising again and, where appropriate, provide redress to consumers. In deciding whether to impose penalties, it will take into account factors including the seriousness of the breach, the harm caused, the size of the business, and any aggravating or mitigating circumstances, including whether the business acted quickly to address the issue.

The enforcement backdrop is also more significant than before. Under the Digital Markets, Competition and Consumers Act 2024 (DMCC), the CMA now has the power to determine for itself whether consumer law has been breached, require businesses to change their conduct, order compensation for consumers, and impose financial penalties, all without going through the courts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.