The UK’s Competition and Markets Authority (CMA) announced the release of new guidance aimed at helping businesses including retailers, brands and manufacturers to understand supply chain responsibility for making accurate green claims. The guidance indicates that businesses may be liable for misleading environmental claims, even if they are only passing along information provided farther up the value chain.
The CMA said:
“A business may be deemed to be repeating an environmental claim where it stocks a product. For example, if a manufacturer labels a product as having an environmentally friendly characteristic, which is false or misleading, the manufacturer and the retailer may be liable for engaging in an unfair commercial practice.”
According to the CMA, the new guidance was developed in response to requests from stakeholders in a variety of sectors, seeking further clarity on supply chain responsibility in relation to environmental claims, following the regulator’s release of its “Green Claims Code” in 2021, outlining consumer law-based principles for making eco-friendly claims.
The guidance makes clear that businesses across the supply chain are required to take steps to ensure that any environmental claims that they make are accurate and not misleading, including those made “indirectly or by passing information from others on to consumers.”
The CMA also said that green claims need to be verified and backed up by evidence, and while acknowledging that “it can sometimes be difficult to obtain the relevant information from other businesses,” states that if a company is unable to obtain the information needed to verify the accuracy of a claim from farther up the supply chain,“you should consider whether you should make the claim differently, in a way you can verify.”
The guidance added that “where another business is the source of the claim and will not or cannot verify it, then you may need to consider your trading relationship with that business for that product, given the legal risk this may open up for you.”
While making it clear that responsibility for green claims is shared across the supply chain, the CMA said that it would take several factors into consideration when prioritizing cases for enforcement, and the target of the enforcement, noting that it “would consider which businesses engaged in the commercial practice, including who made the claim about the product” as one of the key factors, and that “genuine attempts to comply with the law may also be considered a mitigating factor when assessing penalties.”
The regulator added that it would view practices as “particularly egregious” if businesses do not have, or do not follow, internal processes in place to ensure the accuracy of their environmental claims, and in cases in which businesses should already be clear about their obligations, including cases in which guidance has already been published, or previous regulatory actions have already been taken.
The guidance also included checklists for companies, including recommendations for retailers to seek evidence from suppliers before advertising or selling products to consumers, asking brands to provide confirmation of proof of claims, and reviewing claims on a regular basis, and for suppliers and manufacturers to provide retailers with the assurance needed to make accurate claims, such as providing records on aspects such as product composition and testing, or providing evidence of an independent verification process, and “avoiding making casual claims which may be taken for a verifiable claim.”
Click here to access the CMA’s guidance document.
