From this month, the Competition and Markets Authority (CMA) is able to fine companies up to 10% of their global turnover for violating consumer protection laws, including for greenwashing.
The enhanced authority given to the CMA through the new Digital Markets, Competition and Consumers (DMCC) Act is a clear and positive signal that the UK is taking greenwashing seriously. Companies making misleading claims around the environmental credentials of their products and services will be under scrutiny, and the financial consequences are significant.
But could the risk of fines, on top of increasing scrutiny around green claims, make businesses reticent to talk about sustainability?
‘Greenhushing’
Companies in the fmcg sector are no strangers to scrutiny of their environmental claims. The CMA has led several high-profile investigations into consumer brands.
The increased scrutiny has, in some cases, led to ‘greenhushing’, whereby companies under-report or deliberately withhold information about their environmental efforts and achievements.
The effects of greenhushing are already keenly felt. Nine of the 14 major sectors are intentionally decreasing their climate communications, according to a 2024 survey of over 1,400 global companies. Concerns about external scrutiny was named the third-biggest barrier to net zero progress by 400 sustainability leaders in large businesses [Carbon Trust].
If companies are too nervous to communicate their climate action, sustainability risks becoming disincentivised and progress towards net zero severely hampered. In addition, the current geopolitical landscape means taking climate action – and communicating it – is being deprioritised by some companies.
Communicate with confidence
So how can businesses avoid falling into the greenhushing trap and communicate their sustainability action with transparency and confidence? The principles of making impactful and transparent green claims are simple.
Key among these principles for building trust is honesty. This is particularly important in the world of environmental claims, where progress over perfection is the rule of thumb. Sustainability is a journey. Businesses must be upfront about where they are on that journey and foster credibility by communicating challenges as well as successes.
In general, companies don’t intentionally mislead consumers. The root cause is often a lack of understanding around green claims and insufficient knowledge-sharing between sustainability and marketing teams.
This is further heightened by a somewhat confusing and constantly evolving regulatory landscape. Upskilling marketing teams on the topic of sustainability claims will help drive the right behaviours, and ensure a company’s sustainability communications are in line with best practice.
The CMA’s own Green Claims Code outlines six key points to ensure claims are compliant. The Advertising Standards Agency (ASA) has a free copy advice service for companies to submit adverts for review ahead of broadcast, to ensure green claims align with the relevant Committee of Advertising Practice (CAP) code.
While fines are an effective deterrent and an important step towards cleaning up green claims, companies must continue to be bold in taking and communicating climate action. Consumer awareness of corporate sustainability is growing, and saying nothing is not an option.
There are companies already walking the talk on transparent climate claims. Others can follow suit with impactful, transparent sustainability communications that cut through the noise and reap the benefits of consumer trust, credibility and brand loyalty.
Anna McShane, senior label programme manager at the Carbon Trust
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