Consumers are at the heart of the net zero transition. From installing solar panels and cycling to work to investing into sustainable pension funds, consumers are bombarded with choices for products and services that claim to be sustainable. But are they really? Greenwashing through advertising has been just one of the hot topics over the past several months. As we have pointed out in recent insights, it will remain the focus of regulators throughout the net zero transition process.
Growing action from regulators
Last week saw a number of decisions made by advertising regulators in the UK and Europe which highlight the increased scrutiny by regulators and appetite to clamp down on any campaigns which they consider could be misleading:
- The UK's Advertising Standards Authority (ASA), banned advertisements by several oil and gas companies. ASA concluded that ads from Shell, Repsol and Petronas omitted important information about their fossil fuel operations in favour of drawing attention to their green practices
- The Swiss Fairness Commission (SLK) advised FIFA to "refrain from making unsubstantiated claims", regarding their claim that the 2022 World Cup was fully carbon neutral. This came in the wake of five European nations lodging complaints and the BBC airing an investigative piece on the matter during the tournament
- Judges in Amsterdam ruled that Fossielvrij; an environmental campaign group, could proceed with its case against KLM, in which it accuses the airline of greenwashing and misleading consumers.
Other areas likely to see increased action are sustainable pension funds, who in the last few weeks have been accused of greenwashing. Currently, almost 50% of UK employees pay into employer schemes or private pensions where one is given the choice about where their money goes. Carbon Tracker Initiative have stated that asset managers have invested £295bn in oil and gas companies and that more than 160 funds with a green label held £3.67bn in 15 said companies.
Growing pressure on companies
The events of last week, emphasise the growing pressure put on companies from regulators to not mislead customers when it comes to their green practices; and to increase compliance with "E" in their ESG standards. In early May, Johnny White, senior business director at global advertising agency AMV BBDO, commented that "the era of unspecific claims such as 'environmentally friendly' is over", and added that "misleading environmental claims are under the microscopes" in the wake of news that companies will face stricter rules from regulators in London and Brussels.
Due to the increasing scrutiny from regulators, it is likely that in the coming months further action will be taken to combat greenwashing and going forward companies will have to be more careful about the claims they make. For example, CMA's report on greenwashing in the heating sector along with advice for consumers and good practices for businesses, warns that the regulator will consider "whether further action such as enforcement is needed".
What should businesses consider when making green claims?
Despite the growing pressures, companies can shield from future actions. As we have pointed out "Small claims make a big difference", so even small tweaks can add more clarity to 'green' advertising claims.
Ashley Borthwick adds:
"The latest ASA rulings highlight the importance of considering the overall impression created by an advert from a consumer's perspective. Businesses should avoid 'cherry picking' certain green elements and not placing them in the overall context of the business, product or service as may be the case. This can often be a difficult judgment call in practice. More detailed guidance tailored to particular industry sectors would be welcome to provide greater clarity".
This article was also authored by Harry Cussons, Research and Knowledge Analyst at Womble Bond Dickinson.