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How the regulatory tide is turning against greenwashing brands in 2023

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By Ellen Ormesher | Reporter

January 23, 2023 | 9 min read

Legal experts and regulatory bodies explain how brands will find it more difficult to greenwash their products in 2023.

Airlines greenwashing

Brandalism recently targeted the airline industry for greenwashing / Brandalism

Last week at Davos, the UN general secretary again called on businesses to make credible and accountable net zero pledges to mitigate the worst effects of climate change, and to avoid unsubstantiated claims and obfuscation.

The European Commission has found that 53% of sustainability claims made in 2020 were “vague, misleading or provided unfounded information about products’ environmental characteristics.”

Governments and ad bodies do appear to be wising up to these unsubstantiated green claims. Here are some of the regulations we can anticipate this year.

Fashion and travel under particular scrutiny

UK consumers spend, on average, £54bn a year on clothing and footwear. That number is only expected to rise.

While it is popularly thought that consumers are increasingly looking to make more sustainable purchases for their wardrobes, whether or not brands are actually substantiating their green claims remains in question.

In July 2022, the UK Competitions and Marketing Authority (CMA) launched a review of the sustainability claims of three major UK fashion brands: Asos, Boohoo and George at Asda. And while at present it and other regulatory bodies such as the ASA do not have the powers to fine businesses for greenwashing, the CMA’s director of consumer protection Cecilia Parker Aranha tells The Drum that it “can ask businesses to make important changes to their practices and take them to court if they refuse.”

She adds: “The government is consulting on introducing this power under consumer law and the CMA wouldn’t hesitate to use it for the worst offenders. In the meantime, we know that reputation is hugely important for lots of brands, particularly now that consumers are more aware of environmental issues and have higher expectations.”

Brinsley Dresden, a partner in marketing and ad law at Lewis Silken, predicts that the CMA review will likely be completed within the first quarter of this year and that “it’s going to cause a big splash”. “I think it’s going to be a wake-up call to the whole fashion sector to look much more carefully at the green claims they make and the wider implications.”

Fashion is just one sector the CMA plans to look at, however, having already announced that once it completes its current review it will move on to claims in the travel, transport and FMCG sectors – particularly food, cosmetics and household cleaning products.

Carbon offsetting crackdown

The Advertising Standards Authority (ASA) is calling for stricter regulation on the green claims made by brands after its research revealed consumers find current terminology “challenging and difficult to understand”.

Its report, which was published back in October 2022, found that carbon neutral and net zero offsetting claims are currently the primary source of confusion and misunderstanding for consumers.

On top of that, the legitimacy of carbon offsetting claims was thrown into question this week. Research into Verra – which is the world’s leading carbon standard for the voluntary offsets market and is used by major brands including Disney, Gucci and Shell – found that more than 90% of its rainforest offset credits are likely to be “phantom credits” and do not represent genuine carbon reductions.

“Quite a few advertisers rely on offset schemes to substantiate their claims,” says Dresden, “but I think we’re going to see a lot more scrutiny of these schemes, especially where related to airlines.”

EU plans to tighten regulation

A draft proposal by the European Commission would see a major clampdown on companies making green claims without substantiation within the EU.

Under the bill, EU countries would have to ensure environmental claims on all products and services (except financial services such as banking and investment products, which are regulated separately) are proven against a science-based methodology and across the entire lifecycle of a product.

The news broke after a Commission assessment of 150 claims about products’ environmental characteristics in 2020 found that most (53%) provided “vague, misleading or unfounded information”.

James Best, chair of the Ad Net Zero Action 1 Working Group, says of the proposed changes and the extent to which they differ from what is already in place in the UK: “Moves to have clear, consistent rules about the correct promotion of environmental claims in all forms of advertising are to be welcomed. This news from the EU is yet to confirm specifics, but from what is known so far it is likely to cover areas already regulated by the ASA under the CAP Code and we will monitor any developments with interest.

“The ASA continues to review its own guidance and advertisers should expect updated guidance in Q1 this year. Advertising has a fundamental role to play in helping promote sustainable products, services and behaviors around the world and it is essential that this advertising is consistently legal, decent, honest and truthful. This is a central pillar of Ad Net Zero’s action plan which continues to build support from UK and international organizations.”

Ad bans on the horizon

2022 saw a number of bans on the most polluting sectors advertising in European countries such as France and the Netherlands. Sydney, Australia became the first major city in APAC to ban fossil fuel advertising from its public spaces, while France became the first nation in the world to ban fossil fuel ads entirely.

Dresden says that while the UK is “very different” to France, “with very different attitudes and a very different legal system,” it is “not inconceivable” that we might start to see increased regulation in high-carbon industries like automotive (“for example, only being able to advertise electric vehicles and hybrids”) as the UK seeks to meet its target of no new petrol vehicles by 2030.

However, environmentalist groups and activists are demanding that regulation go further, calling for an immediate end to advertising for the most polluting vehicles, especially SUVs.

Campaigners from Adfree Cities (UK), Badvertising (UK), Résistance à l’Agression Publicitaire (France), Climáximo (Portugal), Greenpeace International and 35 other organizations and are calling for tobacco-style legislation to end adverts for high-carbon products.

Just last week, over 400 advertising billboards and bus stops in Belgium, France, Germany and England were hijacked by climate activists calling out Toyota and BMW for their misleading adverts and anti-climate policy lobbying tactics.

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