The risk of an accusation of “greenwashing” is now an important concern for many companies. Greenwashing is an ill-defined concept but, nevertheless, is increasingly a source of litigation and regulatory scrutiny – with more of both expected. It carries with it reputational, regulatory and litigation risks for which companies should be prepared. Whilst the risks are always context specific – varying by jurisdiction, industry
Climate-related litigation is increasingly being used as a tool to hold private and public sector actors to account over their contributions to climate change. According to the Grantham Institute’s 2023 Global Trends in Climate Change Litigation Policy Report (the “Report“) – which was published on 29 June 2023 – around two-thirds of climate-related cases have been filed since 2015: between 1986 and 2014, approximately 800 cases were filed, but between 2015 and May 2023, approximately 1,557 cases were filed.
Although the majority of the climate-related cases identified in the Report were brought against regional and national governments, the Report identified an increase in the number of climate-related cases brought against private sector actors. Of the 190 climate-related cases identified in the Report as being filed between June 2022 and May 2023, around 46% were filed against an increasingly diverse pool of private sector actors. This reflects the growing recognition by prospective litigants of litigation as an effective means of influencing the actions private sector actors are taking to address climate change. We discuss the trends identified in the Report in this blog post.
On 7 June 2023, the UK Advertising Standards Authority (“ASA“) – the UK’s independent advertising regulator – banned a series of advertisements from a number of large oil and gas companies for including misleading information about their socio-environmental credentials. These landmark rulings, which mark the latest step in the ASA’s fight against greenwashing, are expected to set a precedent for how companies advertise their socio-environmental credentials in the future. More broadly, the increased regulatory scrutiny will likely feed into the expected rise in ESG-related litigation.
This move from the ASA mirrors similar moves by regulators and law-makers both in the UK and in other jurisdictions. The UK Competition and Markets Authority (“CMA”) has, for example, commenced investigations into the accuracy of environmental claims made by businesses in the fast-moving consumer goods sector (for further information on the CMA’s investigation, read our earlier blog post here). The US Federal Trade Commission and the European Commission have also taken steps to tighten regulation addressing greenwashing in marketing materials (for further information on these initiatives, read our earlier blog posts here and here).
Continue Reading Greenwashing: UK advertising watchdog bans greenwashing advertisements
The European Commission has finally published its eagerly awaited Proposal for a Directive on substantiation and communication of explicit environmental claims (‘the Green Claims Proposal’). As its name suggests, the Proposal was crafted with a view to putting an end to non-mandatory consumer-facing claims of environmental benefit that bear no relation to reality
On 25 January 2023, the new CEO of the UK Competition and Markets Authority (“CMA”), Sarah Cardell, set out one way in which the CMA will seek to ensure that the UK’s transition to a net zero economy will not be held up by competition law concerns. Significantly, Sarah Cardell again emphasised that environmental sustainability is a strategic priority for the CMA. This is an invitation for businesses to start pushing harder on the CMA’s open door, for which Mayer Brown’s ESG team is on hand to help.
On 26 January 2023, the UK’s Competition and Markets Authority (the “CMA“) announced that it intends to investigate the accuracy of environmental claims made by businesses in the fast-moving consumer goods (“FMCG”) sector. The CMA has stated that it will examine claims made both online and in-store about household products – such as food and drink, cleaning, homecare and self-care products – to determine whether they comply with UK consumer protection law.
The investigation of goods in the FMCG sector will expand the scope of the CMA’s ongoing anti-greenwashing work, which has the ultimate aim of ensuring products and services that claim to be ‘green’ or ‘eco-friendly’ are being marketed to consumers accurately.
Continue Reading Greenwashing: UK competition watchdog to investigate the FMCG sector
On January 15, 2023, South Korea’s Financial Supervisory Service (“FSS”) issued new guidelines (the “Guidelines”) (Korean language only) to enhance transparency on the methods and procedures used by credit rating agencies to perform ESG bond certification evaluations. In announcing the Guidelines, the FSS noted that, prior to their introduction, there were
The Hong Kong Monetary Authority (“HKMA”) released a research report last week showing evidence that about one-third of global corporate green bond issuers are reaping the benefits of issuing green bonds without cutting down their greenhouse gas (“GHG”) emissions. This type of ‘greenwashing’ behaviour impedes progress on combating climate change and
The UK’s financial regulator – the Financial Conduct Authority (“FCA“) – on 25 October 2022, published its “Sustainability Disclosure Requirements (“SDR“) and investments labels” Consultation Paper (CP 22/20) (the “Consultation Paper“).
This follows the FCA’s July 2021 “Dear AFM Chair” letter regarding improving the quality and clarity of authorised
“Greenwashing” – that is, environmental claims that are not fully or properly substantiated, or that contain false information, omit critical information, are exaggerated or are presented in an unclear, ambiguous and/or inaccurate manner – continues to be a major focus of scrutiny across all sectors, and the advertising industry is no exception. The volume of statements and claims regarding the sustainability credentials of businesses’ goods and services, often made in the context of advertising and marketing, is increasing rapidly.
At the same time, the interests of regulators, consumers, and other stakeholders, in combatting misleading, “greenwashed” environmental claims has grown commensurately. According to analysis conducted by the Independent, over the past 12 months alone, the UK’s Advertising Standards Agency (“ASA“) has found 16 advertising campaigns to have exaggerated the green credentials of, or made unsubstantiated environmental claims about, the advertised brands.
As a consequence of this growing interest, the World Federation of Advertisers (“WFA“) – a global organisation that represents the common interests of advertisers and marketers – has issued landmark guidance on how brands can ensure that any environmental claims featured in their marketing communications are credible for both consumers and regulators (the “Guidance“). The Guidance, produced with the support of the International Council for Advertising Self-Regulation, the European Advertising Standards Alliance and the UK’s ASA (amongst others), is the first guidance that has been issued at an international level with regard to making environmental claims, and represents a highly significant development in the context of growing efforts to combat greenwashing.