How to tell if an ‘eco-friendly’ firm is greenwashing
We’re seeing more ‘eco-friendly’ and ‘all natural’ products on our shelves, as consumers demand more sustainable choices.
But as companies come under increased pressure to meet their Environmental, Social, and Governance (ESG) goals, how can we tell if some are twisting the truth?
When their sustainable claims are untrue or exaggerated they can be accused of ‘greenwashing’.
This basically means they are misleading consumers to make them believe their products or services – or the business itself is sustainable, when that is not the case.
Are there laws to protect consumers from greenwashing?
There are no laws in Ireland that specifically challenge greenwashing.
However, there are more general consumer protections, such as the Consumer Protection Act 2007 (CPA), as Victor Timon, Partner at law firm Lewis Silkin explained.
“Under the CPA, a seller must not make false claims about any goods or services they are selling,” he said.
The CPA now also incorporates the EU Directive on Unfair Commercial Practices as part of that legislation.
“Under the directive, a commercial practice is unfair if it is misleading and is likely to distort your buying decision,” Mr Timon noted.
The Sale of Goods and Supply of Services Act 1980 also includes an implied term that goods will correspond with their description.
The Advertising Standards Authority in Ireland (ASAI) also sets rules and issues decisions in respect of false or misleading advertising.
However, Mr Timon pointed out that unlike its UK counterpart, it has no power to enforce those decisions.
What are the penalties for firms that do engage in greenwashing?
The Competition and Consumer Protection Commission (CCPC) is charged with policing consumer protection law in Ireland.
Mr Timon said the CCPC can issue compliance notices, apply to court for prohibition orders against traders to prevent certain practices, or ultimately prosecute a trader in court and ask the judge to apply a fine or even imprisonment in certain cases.
However, the CCPC does not get involved in individual cases between traders and consumers, which Mr Timon said must be pursued by the consumer through the courts.
“Penalties under the CPA for summary judgements (lower courts) are up to €3,000 or a prison term of six months, or both,” Mr Timon said.
“Convictions on indictment (higher courts) are up to €60,000 or a prison term of 18 months, or both,” he added.
What firms have been accused of greenwashing?
One of the most talked about cases is the Volkswagen emissions scandal.
In 2015, the US Environmental Protection Agency found that many Volkswagen cars being sold in America had been fitted with a ‘defeat device’.
Mr Timon explained that this was basically a piece of software in diesel engines that could detect when they were being tested, and then changed the performance to make the results look better.
“Volkswagen was making a big push to sell diesel cars in the US at the time.
“It subsequently admitted the offence which spilt over into car sales in Europe also – and paid billions of dollars in compensation and fines,” he said.
Separately, in 2020, the UK’s Advertising Standards Authority (ASA) upheld a complaint about a Ryanair advertisement, which claimed that the airline had the lowest carbon emissions in Europe.
“Ryanair has the lowest carbon emissions of any major airline – 66g CO2 for every passenger kilometre flown,” the advert stated.
However, Mr Timon explained that the comparison to other “major airlines” only included four others – and there is no industry definition of what is considered to be a “major airline”.
“Perhaps the nail in the coffin, was that the figures were based on efficiency rankings from 2011 – of little value for a substantiation claim in 2019,” he said.
More generally at the end of 2020, the European Commission and national consumer authorities conducted a sweep of websites across the member states specifically targeting greenwashing.
Mr Timon said in more than half of the cases, the trader did not provide sufficient information for consumers to judge the claim’s accuracy.
“In 37% of cases, the claim included vague and general statements such as ‘conscious’, ‘eco-friendly’ and ‘sustainable’, which aimed to convey the unsubstantiated impression to consumers that a product had no negative impact on the environment,” Mr Timon explained.
He said in 59% of cases the trader had not provided easily accessible evidence to support its claim.
In their overall assessment, they believed that in 42% of cases the claims may be false or deceptive – and could therefore potentially amount to an unfair commercial practice under the Unfair Commercial Practices Directive.
Were any Irish companies fined after the EU sweep last year?
Three traders in Ireland were approached by the Competition and Consumer Protection Agency in relation to their green claims following the EU wide sweep last year.
However, no penalties were issued.
A spokesperson for the CCPC said in all three cases, the companies engaged with the CCPC and provided the additional information sought.
As a result, the firms carried out a number of actions.
These included amendments to their websites and the removal of errors relating to product details.
They also amended their websites to provide clarifications and ‘additional substantiation’ regarding environmental claims.
A spokesperson for the CCPC said they were satisfied with the actions taken by the traders and did not deem that there was a need for enforcement actions to be taken.
The CCPC did not provide the name of the companies in question.
“Due to the nature of the CCPC’s enforcement role and ongoing market surveillance in this area, we are unable to provide any further details relating to the traders in question, at this time,” the spokesperson said.
The spokesperson added that the CCPC “regularly” participates in European ‘Consumer Protection Cooperation Network’ (CPC Network) sweeps, which are a set of market surveillance checks that are carried out by the CPC Network across Europe.
How can I spot companies that are greenwashing?
If you are unsure as to the authenticity of a business or brand’s ‘green claims’, a spokesperson for the Competition and Consumer Protection Commission suggests you follow a number of steps before you buy.
1 Look for proof of claims
If you are unsure about a brand’s ‘green claims’, do some quick research online or via social media to find out more.
Be wary of businesses with vague or superficial references to sustainability.
Most genuine brands will want to share details of their ethical and sustainable approach to doing business, so, instead, look for brands with sections of their website or social media pages, dedicated to outlining their ‘green credentials’.
2 Research the parent company
Although one particular brand or product may prove genuine in terms of their ‘green claims’, it’s important to examine the bigger picture, including any parent company it may be owned by or affiliated with.
Research the parent company’s green credentials and look to the overall sustainability lifecycle.
For example, a particular brand may use 90% recycled packaging materials, but what about the other processes of the wider business group – such as manufacturing, logistics or sourcing materials?
3 Don’t judge a brand by its packaging
Watch out for vague language such as ‘eco-friendly’ or ‘all-natural’, as well as ‘green’ imagery which can be used to convey the product or brand as being sustainable or ethical.
Don’t judge a brand by its packaging alone.
Be sure to read the list of ingredients and check the labels thoroughly before you buy to ensure you are satisfied that the claims are genuine.
4 False certifications
Look out for fake ‘approved by’ seals or standards marks by institutions that may not even exist.
If you’re unsure about a certification seal, do some quick research to find out more before you buy.
Instead, look out for approved seals such as EU Ecolabel, EU Organic Logo, Fair Trade Certified, and Rainforest Alliance Certified.
What should I do if I suspect a company is greenwashing?
The CCPC monitors compliance with consumer protection law on an ongoing basis.
Their enforcement work is based on information they obtain through a range of channels including; contacts to their consumer helpline, research, and market surveillance.
“If a consumer believes that they have been misled about ‘green claims’, we would ask that they contact us so that we can assist them in addressing their issue,” a spokesperson for the CCPC said.
You can call the helpline on 01 402 5555 or log on to ccpc.ie for more information.
Are stronger laws on the way to protect consumers?
With the focus growing on sustainability, it is inevitable that specific legislation dealing with green labeling is on the way.
In December 2019, the European Commission published the European Green Deal to tackle environmental challenges.
Mr Timon said this will result in an EU regulation requiring manufacturers to be able to prove any statements they make about the sustainability, eco-friendliness, or other “green” attributes of their products.
“The new regulation has been expected this year – probably to come into force two years after that,” he said.
It is expected that this will be followed by specific legislation to empower consumers to pursue greenwashing claims.
In the meantime, in respect of a consumers’ general rights, Mr Timon said the ‘New Deal for Consumers’ published by the EU in 2018 contains GDPR type fines for breaches of consumer law.
“Regulators like the CCPC will have the right to make test purchases and evaluate products against a manufacturer’s or seller’s claims about their performance – including any green credentials,” he said.