“It’s so important we don’t blow this huge opportunity we have by greenwashing,” warned Helen Browning, chief executive at the Soil Association.
Browning was speaking at January’s Sustainable Food Conference, held in London. The opportunity she was referring to is regenerative agriculture – one of the latest sustainability concepts to have got food companies in a spin for its paradoxical potential both to deliver environmental improvement and mislead consumers due to its lack of an agreed definition.
On this the food sector has form. In some cases the greenwashing has been obvious (think of fake farm names and dodgy carbon offsetting schemes). But mostly it is more nuanced: from carbon neutral claims and net-zero commitments to ‘low carbon beef’ and regenerative ingredients, there are undoubtedly some dubious claims being made but this has arguably tarred everything with the same brush.
Companies are also hesitating to promote their planet-protecting initiatives as regulators stand ready to pounce. The Advertising Standards Authority (ASA) has become more aggressive in its pursuit of greenwashers, and is now using AI-assisted collective advert regulation to shift from complaints-led investigations to proactive monitoring and enforcement.
The Competition and Markets Authority (CMA) has also launched investigations into fashion and food as it targets a few big fish to fry. “This is everything, everywhere, all at once,” warned Dominic Watkins, head of consumer sector at DWF, at a Footprint roundtable in April last year.
Fashion first
Every business will be affected, but it is FMCG firms in the cross hairs currently. The CMA has published tailored advice for the FMCG fashion sector to follow in making claims about their environmental initiatives. In September, 17 well-known fashion brands were also ‘asked’ to review their business practices; this following a deeper investigation into the practices of ASOS, Boohoo, and George at Asda. In March 2024, the CMA secured landmark changes from the brands to change the way they display, describe and promote their green credentials.
The three firms signed undertakings committing them to use only accurate and clear green claims – including in their sustainable ranges, use of imagery, product filters, environmental targets and how they refer to accreditation schemes. “All fashion companies – from designer labels to budget-friendly brands or independent boutiques – must be transparent and honest with their customers or risk enforcement action,” said Hayley Fletcher, CMA interim senior director of consumer protection, at the time.
Legal experts like Watkins have been left bewildered by the approach, likening the undertakings to a British Retail Consortium audit. Others however have managed to swerve such interventions – including Unilever. The owner of Hellman’s, Cif and Dove looked to be breaching a number of the green claims code rules by using vague language, plus imagery and colours that created an overall impression that some products were more environmentally friendly than they actually were, said the CMA in 2023.
However, this fish was let off the hook. The company had seemingly changed its approach and fallen into line, with the authority not taking a view on its compliance with consumer law. This is a regulator that seemingly likes to publicise first and ask questions later.
“The CMA’s green claims code and successful enforcement action to date has helped businesses understand how they can promote their green credentials whilst staying on the right side of the law,” the regulator said in a statement. “The CMA has seen positive changes to the claims made including in the fast-moving consumer goods sector. Given these points, and the ongoing impact of the CMA’s work, the CMA has decided as a matter of administrative priority to close this investigation.”
Food in the firing line
Those who have had a ticking off already may well have swerved a bigger bullet – in the shape of the Digital Markets, Competition and Consumers (DMCC) Act 2024. The Act, which comes into force in April, gives the CMA powers to administer fines of up to 10% of global turnover. For a business the size of McDonald’s, for example, that’s up to $2.5bn (10% of $25bn). Compass or Nestlé could face fines of $0.5bn or $10bn respectively.
Fines in the billions may be unlikely but those in the millions are certainly a possibility, suggests DWF’s Watkins, noting that there have never previously been any fines arising out of claims, pricing, misleading actions or omissions that have exceeded £1m. “Brands should be cautious with claims and make sure that they are entirely satisfied that they have the evidence in place […] as well as being confident that the evidence would survive the triple scrutiny of the CMA, a court and the public,” he says.
At the very least, food companies should undertake a thorough review of their due diligence systems and advertising approval processes. “Ensuring rigorous assessment of high-risk claims is imperative: the jeopardy of risking 10% of your global turnover is significant,” he explains. Good governance can go a long way to keeping companies clean when it comes to green claims (and compliance with new non-financial reporting rules).
The DMCC means penalties for greenwashing will (potentially) sit in the same bracket as those for breaches of competition law. And like competition law the fines can be handed out (relatively) quickly without the need to trouble a court. Campaigners who have been hard at work spotlighting the companies they believe to be making false claims are delighted. The amount of greenwashing hasn’t dropped yet, says Urska Trunk from Changing Markets Foundation (CMF) but “companies are feeling the heat” thanks to both the DMCC and the Green Claims Directive at EU level, she says.
CMF has been building a bank of fashion and food greenwashing examples to feed to the CMA. The latest set involved dairy Coop Arla, which was accused of “greenwashing its way to climate leadership” by CMF and Greenpeace Nordic. The company has pledged to reach net-zero by 2050, but its climate plans only meet one of the nine recommendations in UN guidelines for setting such targets. Arla has also faced issues with carbon neutral claims made on its products. An initial reaction to the report, sent to The Grocer, claimed there were “multiple inaccuracies, and it is not a true reflection of Arla’s science-based targets and commitment to producing more sustainable dairy”.
Hot air and methane
The big protein producers will remain top of the hit list given their hefty environmental footprints and the big net-zero commitments and claims they are making. Past research has critiqued the low carbon claims made by meat companies and supermarkets. Burger King has also had its feet held to the flame for low methane claims.
Trunk feels that companies have used dodgy green claims as a mainstream strategy to mislead consumers and derail new environmental legislation. There is also an argument, however, that the new powers will see green claims come to a halt. And if companies can’t claim about the good, green initiatives they have, then they may well not invest in them. Will work on producing regenerative wheat, for example, as pioneered by the likes of Wildfarmed die out if companies are afraid to promote it?
As has long been predicted, the safe spaces for making green claims are shrinking. “They are becoming notoriously difficult to substantiate,” Watkins explains, “with conflicting views over evidence and evidence quality. Even fully evidenced claims can have holes picked in them,” he adds.
The regulatory net is tightening but it might not only be the fraudulent fish that are caught.
If you have any questions about points raised above, or how this may affect your business, please get in touch with Dominic Watkins.
This article was originally prepared by David Burrows, together with Footprint Media Group and is also available here.
