As 2030 and 2050 edge closer – key milestones under the UK government’s net zero strategy – UK businesses and regulators are under increased pressure to ensure the information that businesses provide to stakeholders about the environmental impact of their products and services is accurate and not misleading. Overstating ‘sustainable’ or ‘green’ credentials now carries material legal, regulatory and reputational risks.

English civil law provides consumers and investors with various legal options. However, these claims can be difficult to prove and costly to litigate. It is unsurprising therefore that the UK Advertising Standards Authority (ASA) is increasingly leading the way in tackling greenwashing.

English legal remedies

There is no formal definition of ‘greenwashing’, which broadly refers to a wrong or inaccurate statement about a product or service’s environmental credentials.

Under English law, customers who purchased goods or services on the basis of misleading environmental claims might be able to bring claims under the law of misrepresentation, negligent or fraudulent misstatement and/or breach of contract. The Financial Services Markets Act 2000 may also allow shareholders of UK-listed companies to bring claims for losses suffered due to misleading public documentation.

However, bringing these types of claims is challenging. Proving that the customer relied on the specific statement in question when making their purchase may be hard, and scientific evidence may be needed to prove that the statement was wrong or inaccurate. It may also be hard to quantify and prove the alleged loss and damage. Further, litigation can be expensive, stressful and time consuming.

Given the complex legal landscape, the ASA may be a more effective forum for stakeholders’ complaints, especially where compensation is not sought – since it is not possible to recover monetary damages in an ASA action.

The ASA’s environmental strategy

The ASA regulates advertising in the UK and has focussed on environmental matters for some years.

The UK Advertising Codes for non-broadcast and broadcast media provide that marketing communications must not materially mislead or be likely to do so. On environmental claims, the codes states that: “The basis of environmental claims must be clear. Unqualified claims could mislead if they omit significant information.”

The ASA has published specific advertising guidance on “the environment: misleading claims and social responsibility in advertising”, which clarifies key concepts, including by reference to related rulings.

Recent greenwashing rulings

In the past six months, the ASA released over 15 rulings about environmental claims in advertisements across a range of sectors.

In one case, claims by several airlines in paid-for Google ads gave a misleading impression of the airlines’ environmental impact. Another ruling concerned paid-for Google ads by two car manufacturers that gave a misleading impression that particular vehicles were “zero emissions”. A complaint against a third company was not upheld, since the “zero emissions” claim was unlikely to mislead in the context of that specific ad.

In another example, a paid-for Facebook ad by a menswear company that it was a “carbon neutral business” was found to be misleading because it lacked information about the basis of the claim of carbon neutrality.

The ASA also found that an ad by an artificial grass supplier that its product was “fully recyclable” and which implied that the product was eco-friendly did not provide sufficient evidence of the recyclable nature of the product. The ad was also misleading because it implied that the product was “eco-friendly” without providing information about the full life cycle of the product.

Notably, the rulings about ads in the airline and car manufacturing sectors came about following the ASA’s proactive investigations into claims made in ads identified using artificial intelligence (AI) monitoring.

When conducting an investigation, the ASA will consider any evidence or justification put forward by the company, including detailed scientific evidence. When considering complaints about statements made by the Greater London Authority (GLA) about the expansion of the Ultra Low Emissions Zone, the ASA considered 10 research studies the GLA relied on, before upholding the complaints.

In the majority of recent environmental rulings, the ASA concluded that the ads were misleading. It has exacting standards; even a company that took advice from its CAP Copy Advice Team had a complaint upheld against it.

The extent to which companies engage with ASA investigations will vary. Companies will commonly defend an ad while unilaterally offering to amend or clarify it or (in respect of paid-for ads) change their policies.

Where the ASA finds an ad misleading, it will request that it should not appear in the same form again and that future ads must not mislead in the same way.

This will often dispose of the matter, but if not, the ASA may deploy sanctions ranging from “naming and shaming” offenders on its website to asking trade associations to withhold services.

In extreme cases, offenders may be referred to Trading Standards, albeit such referrals seem rare. The ASA’s website shows no referrals within the past year. It is expected that most companies will choose to comply not least due to the increased reputational and civil litigation risks from the ASA publishing an adverse ruling.

What’s next?

The ASA’s 2023 Annual Report refers to its environmental work as perhaps its “most important work in the long term”.

The report states the ASA is moving away from complaints-led investigations and towards “proactive ASA-led monitoring and enforcement”. In particular, the ASA recently adopted AI monitoring, enabling it to process over 500,000 adverts each month and spot trends.

These are clear statements of intent. Given the ASA’s use of AI, more actions are likely to be taken in respect of statements in paid-for Google ads, which might historically have gone unnoticed by many consumers. More thematic investigations are also likely, as was the case last year for car manufacturers and airlines.

Complexities of modern businesses, supply chains and product lifecycles require a careful appraisal before environmental claims are made. In the marketing context particularly, companies should ensure they are familiar with the codes and the ASA’s guidance.

If in doubt, companies with non-broadcast media ads may seek advice from the ASA’s Copy Advice Team. By thinking about how best to present accurate environmental information in their ads, companies will put themselves in the best possible position to deal with criticism and, potentially, engage with an ASA investigation.

This article was first published in Business Green on 10 May 2024.