The UK consumer regulator the Competition & Markets Authority (CMA) announced on 26 January 2023 that it will extend its scrutiny of misleading environmental claims to the fast-moving consumer goods (FMCG) sector. This follows the CMA commencing an investigation of the fast fashion sector in 2022.

The CMA indicated that their decision to expand their work on green claims into the FMCG sector was based on:

• the value of the FMCG market (over £130 billion annually);
• the fact that FMCG products are used and re-purchased regularly; and
• the extent to which green claims are made on FMCG products (according to the CMA, green claims are made on 100% of toilet products, for example).

The CMA hope to protect consumers from being misled and paying a premium, in a climate where many are trying to balance making more sustainable choices with the pressures of the increased cost of living. Particular product areas named by the CMA as in-scope include food and drink, cleaning products, toiletries and personal care items. 

FMCG advertisers should therefore direct themselves to the CMA’s 2021 detailed environmental claims guidance and its Green Claims Code, to understand what they are expected to do to comply. Where claims are ultimately aimed at consumers (as is the norm for FMCG advertising), the guidance indicates that manufacturers, distributors and retailers can potentially all be held responsible.

While the guidance highlights a wide range of claim-types and compliance issues, the following types of claim are likely to be particularly high risk:

• vague and broad claims, e.g. marketing a product as ‘sustainable’ or ‘better for the environment’ with no evidence (the CMA identified this as an example of what they are focusing on);
• misleading claims about the use of recycled or “natural” materials in a product and how recyclable it is (guidance here can be found in recent decisions by the UK’s Advertising Standards Authority (ASA), such as the finding that an ad for a bottled drink which read “DELICIOUSLY REFRESHING, 100% RECYCLABLE*” was misleading where the asterisk referred to a small footnote which explained that the cap and label were not recyclable: 100% generally means 100%);
• branding a product range as ‘sustainable’ or similar (as well as being identified by the CMA as a focus area, this was one of the key issues in the CMA’s recent enforcement in the fashion sector- see further information in our previous blog here);
• use of visual presentations of products that imply environmental credentials is also risky. CMA guidance indicates that if a shampoo is packaged in a bio-degradable bamboo bottle which also uses a plastic lid or inner lining, then the packaging must state how each component can be disposed; and
• those making claims about the benefits of plant-based food and drinks should not assume they are immune from investigation either- recent ASA rulings against plant-based milk brands and supermarket foods have underlined the need to ensure that such claims are robustly substantiated.

FMCG companies seeking to predict likely next steps in this CMA investigation could do worse than look at what happened last year in the fashion sector investigation. If the CMA follows a similar pattern here, we can expect the CMA to spend 6 months considering the sector at large, and then mid-year publicly naming a handful of prominent market players that it will investigate further and potentially enforce against.

Momentum in this space shows no sign of slowing, with the CMA’s draft Annual Plan for 2023/4 indicating a continued commitment to investigating potential greenwashing by companies.  It is clearly a good time for FMCG brands to ensure their environmental advertising claims do not mislead and are soundly substantiated.

For information on key requirements for ESG claims in advertising in major jurisdictions, clients may consult the DLA Piper Advertising Laws of the World Guide.