How Greenwashing Is Regulated
Stuart Helmer
Avoid the pitfalls of greenwashing. Join Stuart Helmer from CMS and learn the relevant green claims regulation and the consequences of greenwashing.
Avoid the pitfalls of greenwashing. Join Stuart Helmer from CMS and learn the relevant green claims regulation and the consequences of greenwashing.
How Greenwashing Is Regulated
14 mins 43 secs
Key learning objectives:
Define Greenwashing
Outline regulation regarding green claims
Understand the consequences of greenwashing
Define greenhushing
Overview:
Greenwashing refers to the practice of making exaggerated, misleading, or false claims about a company's environmental efforts or the sustainability of its products. Businesses typically do this to appeal to environmentally-conscious consumers. Regulators are increasingly focused on green claims because consumers and businesses are placing more importance on sustainability when making purchasing decisions. Companies caught making misleading environmental claims face several risks including reputational damage, legal and financial penalties and criminal charges in very extreme cases.
Summary
What is greenwashing?
Greenwashing refers to the practice of making exaggerated, misleading, or false claims about a company's environmental efforts or the sustainability of its products. Businesses typically do this to appeal to environmentally-conscious consumers. However, when these claims don’t align with reality, this can mislead the public and damage trust.
Why are regulators concerned with environmental claims?
Regulators are increasingly focused on green claims because:
- Consumers and businesses are placing more importance on sustainability when making purchasing decisions
- Research suggests a significant proportion of green claims can be misleading
- Misleading environmental claims create an unfair advantage for businesses that overstate their efforts while disadvantaging responsible advertisers
What are some examples of green claims regulation?
In the EU we have:
- Unfair Commercial Practices Directive
- Directive on Empowering Consumers for the Green Transition
- Green Claims Directive (currently being debated)
In the UK we have:
- Digital Markets, Competition and Consumers Act of 2024 (Part 4)
- Consumer Protection from Unfair Trading Regulations of 2008 (due to be repealed in April 2025)
- Business Protection from Misleading Marketing Regulations 2008
What are the consequences of greenwashing?
Companies caught making misleading environmental claims face several risks including reputational damage, legal and financial penalties and criminal charges in very extreme cases.
What is greenhushing?
This is when businesses avoid talking about their environmental efforts altogether for fear of greenwashing accusations. Regulators encourage companies to continue making green claims but to do so transparently, acknowledging both their progress and areas for improvement.
Stuart Helmer
Stuart Helmer, UK Head of Advertising and Marketing at CMS in London, has 20 years of experience in advertising compliance and disputes. He advises businesses on making advertising claims, including environmental claims, in compliance with English law and regulation. He leads multinational teams advising on these issues throughout Europe and beyond. Stuart also advises on advertising disputes, regulatory enquiries, and dealing with competitors with unfair or misleading advertising.
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