Glossary entry

Greenwashing

Definitions

Greenwashing

Greenwashing means misleading consumers, authorities or others by implying or making a claim, which cannot be verified, that an entity’s products, services, activities, policies, business practices, processes or brands:

(a) have a positive effect on the environment;

(b) have no adverse environmental impact; or

(c) are less damaging to the environment than a previous version of the product, similar products or competing products, services, activities, policies, business practices, processes or brands.

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Drafting notes

Greenwashing involves creating a misleading impression (deliberately or otherwise) that a company or its products or services are more sustainable or ‘green’ than they are.

How are greenwashing claims made?

It can be effected through marketing, advertising, branding, packaging and labels as well as through public statements, public information or actions. It can also be effected by omitting or withholding information.

What makes a claim misleading?

Whether a statement or action is ‘misleading’ can be determined by reference to:

  • Consumer protection law and, in particular, the Competition and Markets Authority (CMA)’s Green Claims Code and guidance on ‘Making Environmental Claims on Goods and Services’.
  • The Advertising Codes, which are mandatory rules for advertisers produced by the Committee of Advertising Practice (CAP) and the Broadcast Committee of Advertising Practice and enforced by the Advertising Standards Agency (ASA).
  • ASA Advertising Guidance on Misleading Environmental claims and Social Responsibility.
  • Environmental legislation such as the EU’s Energy Labelling Directive 2010 (2010/30/EU) and subsequent delegated regulations on labelling and standard product information.

CMA’s Green Claims Code

The CMA’s Green Claims code is based on the following principles:

  • Claims must be truthful and accurate.
  • Claims must be clear and unambiguous.
  • Claims must not omit or hide important relevant information.
  • Comparisons must be fair and meaningful.
  • Claims must consider the full life cycle of the product or service.
  • Claims must be substantiated.

ASA’s Advertising Code rules

The key Advertising Code rules concerning greenwashing are similar to the CMA’s principles.

Application

Corporate ESG (especially climate change) commitments, company articles, shareholder agreements, organisation ESG (especially climate change) policies, company reports, supply chain contracts and other agreements where a certain level of environmental performance is required or is to be monitored over time, corporate social responsibility (CSR) documents, supply chain clauses, green leases, investment and finance agreements, procurement contracts, real estate and construction contracts, project documents to incorporate the promotion of sustainable practices.