The UK Competition and Markets Authority (CMA) has advised the government to clarify the law on providing environmental information to consumers – including having standard definitions for terms like ‘carbon neutral’ which it says will help make it easier for shoppers to make choices around sustainability.
Following a public consultation, the CMA has recommended a number of actions for the government to consider, including changes to consumer law which make it easier for shoppers to make sustainable choices. This could be achieved by, for example, introducing legislative definitions for potentially misleading terms like “recyclable” and “carbon neutral.”
Standard definitions of commonly used terminology would help shoppers to compare similar products, says the CMA and it would also complement the CMA’s work on the Green Claims Code which helps businesses accurately communicate their green credentials to shoppers in an honest and transparent way.
The recommendations follow a request from the Secretary of State for Business, Energy and Industrial Strategy (BEIS) to the CMA in July 2021 which asked for advice on how competition and consumer law frameworks could be enhanced to better support net-zero and sustainability goals, including preparing for climate change.
In May last year, the UK competition watchdog set out its views on the types of misleading environmental claims made about products – including clothing – that could break the law, and is seeking views on draft guidance for businesses about ‘green’ claims.
Then in January this year, the body started its review of environmental claims in the UK fashion retail sector, investigating how products and services claiming to be ‘eco-friendly’ are being marketed, and whether consumers could be being misled.
The CMA’s review will examine environmental claims across the fashion retail sector in the UK to determine whether or not businesses are complying with consumer protection law. Where the CMA identifies businesses that it thinks are ‘greenwashing’, it said it will take “appropriate action”.
At this stage, the CMA says it has not seen sufficient evidence that competition law prevents firms from acting sustainably. For example, it is already possible for companies to work together to lessen the environmental impact of their sector, by pooling resources or expertise, without breaching competition rules.
However, the CMA has found that more clarity about what is, and is not, legal would help firms work towards sustainability goals without worrying that they are breaking the law in the process.
CMA launches sustainability taskforce
To build on its advice, and further its wider objective of supporting the UK’s transition to a low carbon economy, the CMA has launched a Sustainability Taskforce within the CMA. It will lead the CMA’s work in this area and will bring together colleagues from across the CMA, while also drawing on outside expertise. The Taskforce will develop formal guidance, lead discussions with government, industry and partner organisations and continually review the case for legislative change, particularly in light of market developments.
Sarah Cardell, General Counsel at the CMA, said: “We want it to be as easy as possible for businesses and, ultimately, shoppers to make choices which are better for the environment.
“That’s why we plan to shine a light on what businesses can and can’t do under current competition and consumer laws, as well as advising the government on changes that will help people shop more sustainably.
“Our new Taskforce will take a leading role in helping to make sure the UK’s economy not only serves the interests of consumers but also delivers on its environmental responsibilities.”