Sustainability or spin? Greenwashing and the law

2021-03-19

LSE law graduate and future trainee Matthew Unsworth takes a look at how competition authorities are responding to misleading eco claims

What is ‘greenwashing’?

The essence of ‘greenwashing’ is making an untruthful or misleading statement about how eco-friendly a product or service is. Companies are unlikely to tell outright lies but they might make claims which are quite subtly deceptive. Imagine, for example, a new appliance which is said to be more energy efficient than its rivals, with no mention of the fact that it uses more water too. Or an aerosol which is advertised as free from chlorofluorocarbons (CFCs), even though it would be illegal to use these chemicals anyway. In each scenario, a consumer is likely to believe, erroneously, that the product in question is better for the environment than alternatives.

Greenwashing is not a recent phenomenon; it has existed in some form since at least the 1980s. However, there are signs that the problem has become especially acute. In January, the International Consumer Protection and Enforcement Network investigated almost 500 websites making product sustainability claims and found that in 40% of cases there was a risk of consumers being misled. This is of real concern when UK shoppers alone spend over £41 billion on sustainable goods each year and there has been a global shift towards greener purchasing decisions amid the COVID-19 pandemic.

The legal position

There is no specific anti-greenwashing legislation in the UK. Having said this, many misleading environmental claims will fall foul of the restrictions contained in the Consumer Protection from Unfair Trading Regulations 2008. In particular, instances of greenwashing are likely to contravene Regulation 5, which prohibits false and misleading commercial practices, or Regulation 6, which prohibits commercial practices serving to hide or obfuscate material information. It is worth bearing in mind that a deceptive eco-claim will only constitute an offence under either regulation if it causes or is likely to cause consumers to enter into a transaction when they would not otherwise have done so. The situation is broadly similar in the EU, under Articles 6 and 7 of the Unfair Commercial Practices Directive 2005, in the US, under §5 of the Federal Trade Commission Act 1914, and in Australia, under Section 18 of the Competition and Consumer Act 2010.

Alternatively, in some circumstances, it might be possible to bring a claim for fraudulent misrepresentation against an alleged greenwasher. There are precedents for this on both sides of the Atlantic. In the Californian case of DeWind v Glenmore Wind Farm, a developer was sued for having overstated the energy potential of a wind farm site, which, according to the claimant, gave the impression that the project was economically viable when this was not true. The claim was ultimately dismissed. Misrepresentation is also the basis for a class action brought against Volkswagen in the UK relating to the “dieselgate” scandal. The car manufacturer is alleged to have programmed diesel vehicles to artificially lower their nitrogen oxide output to cheat emissions tests. As well as an apparent breach of air pollution laws, this practice is said to have led buyers to believe they were getting a cleaner car than was in fact the case. Lawyers at Slater & Gordon, Leigh Day and Freshfields are all advising on the claim, which a Law Society report predicts will pave the way for further greenwashing class actions over the next 30 years.

Read More

Legal Cheek, 19 March 2021
; https://www.legalcheek.com/lc-journal-posts/sustainability-or-spin-greenwashing-and-the-law/