Now sustainability is a big priority for shoppers, eco-claims are everywhere. Yet so too are accusations of greenwashing. So the crackdown is on, with everyone from watchdogs to financial investors placing the claims of food companies in their crosshairs

Greenwashing (noun/verb) is the act of making a product, policy or activity appear less environmentally damaging than it really is. And there’s few areas in which it’s more prevalent than food and drink. But increasingly it’s being called out, with a legislative crackdown to protect consumers, rival businesses and investors.

The number of adverts banned for greenwashing has tripled in the space of a year, according to research by The Independent, while over the past three years the Advertising Standards Authority has taken on 761 cases regarding misleading environmental claims in the fmcg sector, naming and shaming the likes of Tesco, Innocent and Alpro for unsupported eco-claims.

“The general problem we have monitored is around misleading claims – whether that’s advertisers not having the evidence to prove how environmentally friendly their product or service, or over-exaggerating their green credentials whether through ambiguity, omission, unfair comparisons or overarching absolute claims that overstate a products’ credentials,” explains an ASA spokeswoman.

But it’s no longer just a crackdown on advertising. Concerned that consumers were “paying more for so-called ‘eco-friendly’ products, while businesses that were genuinely investing in going ‘green’ weren’t getting the recognition they deserve”, the Competition & Markets Authority (CMA) issued an anti-greenwashing code in 2021. And having initially turned its attention to fashion behemoths like George at Asda and Asos over misleading claims linked to their sustainable ranges, last month it announced it would start investigating “vague and broad eco-statements” issued by fmcg retailers and suppliers.

“Should we find these companies are using misleading eco-claims, we won’t hesitate to take enforcement action – through the courts if necessary,” warned CMA CEO Sarah Cardell.

The CMA decided to amp up scrutiny of fmcg after a global sweep conducted by the watchdog in 2021 found 40% of green claims made online could be misleading consumers. The CMA suggests it will be targeting some lines particularly reliant on green marketing, such as cleaning products, toiletries and personal care items. According to Mintel’s UK Green Household Care Consumer Market report 2021, up to 91% of all dishwashing items and 100% of all toilet products are now marketed as ‘green’.

But food and drink suppliers should buckle up too, warns Changing Markets campaigns director Nusa Urbancic. The group, which works with NGOs to expose irresponsible corporate behaviour and to drive change towards a more sustainable economy, conducted a sweep of the fmcg sector last year and found “greenwashing is rife when it comes to plastic packaging and products from well-known brands” who are “obscuring the real impact of plastic” from consumers, she says.

For example, Changing Markets points out P&G’s Head & Shoulders ‘beach plastic’ shampoo bottle gives the impression the packaging is sustainable – but in reality, the bottle cannot be recycled further because it is dyed blue. Meanwhile, Coca-Cola spent millions advertising an initiative that saw it use 25% ocean-sourced plastic in its bottles. However, what it didn’t make clear that it only produced 300 of those bottles. “These initiatives are very small-scale,” Urbancic argues, and don’t represent the full extent of a company’s environmental footprint. Coca-Cola said in a statement last year it was “working hard to be a part of the solution” and that “innovative trials like this are essential to finding scalable solutions to reduce the amount of packaging we use”.

The Anti-Greenwashing Code

  • Claims must be truthful and accurate
  • Claims must be clear and unambiguous
  • Claims must not omit or hide important relevant information
  • Comparisons must be fair and meaningful
  • Claims must consider the full lifecycle of the product or service
  • Claims must be substantiated

Source: The Competition & Markets Authority

It’s not just brands under increased scrutiny. Changing Markets also argues UK supermarkets are misleading customers by not substantiating claims about their soft plastic take-back schemes.

Led by Wrap, those initiatives are part of the UK Plastics Pact, and have been rolled out to over 4,000 collection points across the mults. However, the group claims supermarkets are quick to market product packaging for things like crisps and salad bags as “fully recyclable”, without telling customers that’s only the case when they’re taken to collection points.

Plus, Urbancic says there is a “worrying lack of transparency” around how much soft plastic the grocers actually collect and how it is repurposed. “These plastics are often being exported to countries which have much less capacity to deal with plastic pollution.”

Companies known for their less-than-positive carbon footprints should be particularly careful before using environmental achievements as a “get-out-of-jail-free card”, says Greenpeace’s head of news, Stefano Gelmini. “Greenwashing is everywhere. A crackdown on misleading claims couldn’t come a moment too soon.”

As with the ASA, the use of broad statements was also a key theme in the CMA’s investigation of the fashion industry last year. For instance, the watchdog was concerned that ranges such as ‘Responsible edit’ from ASOS, Boohoo’s ‘Ready for the Future’, and Asda’s ‘George for Good’ range names made them sound more environmentally sustainable than they actually were.

But the devil is also in the detail. The criteria brands use to decide which products to include in these eco collections is also not good enough, the CMA says. For example, some products contain as little as 20% recycled fabric, while many even missed crucial information about fabric origin.

It’s still unclear what the investigation’s outcome will be – the CMA can only ask companies to change their practices or take them to court if they refuse to co-operate – but for food and drink businesses wondering how this might play out, the ripple effects are already visible. Since the greenwashing probe started, H&M has abolished its popular Conscious collection, while Asos has ditched its Responsible Edit category.

Despite the evidence, Urbancic is still sceptical over regulatory enforcement: she believes the two watchdogs’ role in tackling green claims, “while necessary and useful”, is not enough. “Companies will just remove the claims that can’t be justified or become more subtle in how they make them in order to avoid scrutiny.”


Increased transparency

That is why there needs to be increased transparency when it comes to corporate sustainability, she argues, such as binding climate targets and standardised emissions reporting. This is an increasingly relevant topic in the world of investment, where a series of high-profile cases have brought the issue of green claims into the spotlight.

The most recent case is that of Brazilian meat giant JBS, the subject of a complaint to the US Securities & Exchange Commission (SEC) for allegedly omitting crucial information about its carbon footprint when selling green bonds to investors. The JBS case shows increased scrutiny of so-called ‘green finance’ as investment has soared from $5.2bn in 2012 to $540.6bn in 2021, CityUK data shows.

“[But] it’s not just about green bonds, it’s about sustainable funds, ESG targets and the broad sustainable financing market,” says Sarah-Jane Denton, an environmental lawyer at Travers Smith.

She argues the investment community has been a “guinea pig” for green financial regulation as some of the biggest asset managers like BlackRock and Fidelity already have to disclose climate-related information under the Task Force on Climate-Related Financial Disclosures (TCFD) framework, created in 2015 by international body the Financial Stability Board.

It’s now time for the scope of mandatory reporting to widen so “there is much more transparency in the market – because people need to know where these trillions are going”, says Denton.

In the US, the SEC is planning on rolling out tighter regulation around environmental bonds issuance this April. Meanwhile, an EU-wide proposal for a new Green Bond Standard regulatory framework to enhance the effectiveness and transparency of the market is expected to be approved at some point this year. The UK is set to follow, Denton believes.

“When the EU does something, a lot of people tend to follow or it becomes a de facto old standard that people might even voluntarily adopt” – as the Financial Conduct Authority has already proposed rule changes to increase scrutiny of the terms ‘green’ and ‘ESG’ in investment fund marketing, signalling it’s taking greenwashing seriously.

litter rubbish plastic cups waste

Because regulatory proposals are still in early stages, there isn’t much precedent around greenwashing punishment, making it hard to tell what will happen to companies that find themselves in hot water. If JBS loses its case, it could be forced to pay fines or delist its green bonds the same way French tyre maker Michelin had to when it was found its Indonesia business had links to deforestation in 2021. But there is no telling what the SEC will do just yet.

Likewise, the outcome of the CMA’s clampdown of the fmcg sector is still “speculative”, says Travers Smith competition dispute lawyer James Danaher. He says businesses should firstly refer to the CMA’s ‘Green Claims Code’ (see left), which provides a framework of how they should go about marketing their goods and services, as well as avoiding certain practices.

Bill Dunkerley, a regulatory lawyer at Pannone Corporate, adds businesses need to “be honest and have available clear and unambiguous data in support of all their claims”. And where they may not be able to change procedures or manufacturing and labelling processes overnight, what matters is that they are open about their environmental credentials. He argues if there is any hint that a business has sought to mislead shoppers with unfounded green claims, this will only serve to place them in the spotlight for future claims.

Both the ASA and CMA have enough powers to require companies to make changes to their products or adverts if their claims can’t be substantiated. And the risk of getting it wrong could involve reputational damage, lost sales and damaging fines.

But don’t rule out consumer activists, warns Nicole Kar, global head of Linklaters’ Antitrust & Foreign Investment Practice. She says increasing awareness around greenwashing can also open the floodgates for consumers to successfully pursue claims for damages, as long as they show they have suffered financial loss – “for example, because they wouldn’t have bought the product without the promised green benefits”.

The biggest danger for Urbancic, however, is that consumers are exposed to so much greenwashing it could lead to cynicism around real sustainability initiatives. Arguably, there’s already some cynicism. So a clampdown on claims without merit has to be a good thing, right?

The big food & drink greenwashing crackdown