Avoiding greenwash to protect value
For businesses selling products to UK consumers, making sustainability or ‘green’ claims the wrong way could materially impact company revenue and value.
This is a reminder about the UK’s Competition Markets Authority’s (CMA) new regulatory powers (consumer rules effective from 6th April 2025, subscription contracts from early 2026) and what it means for misleading claims made including those in advertising, branding, logos, packaging and other descriptions.
This short introduction covers common environmental and sustainability terms used by business. If you are a consumer brand, retailer or supplier using these terms, you might want to read on.
What are the CMA’s new powers?
The CMA now has the power to determine if a business has breached consumer law and impose financial penalties. The latter is something that previously they were unable to do.
This means that where firms are falling short of the Digital Markets, Competition and Consumers Act (DMCC), the CMA now has enhanced enforcement powers.
While the DMCC does not specifically state the term ‘greenwashing’, its inclusion is implied where firms are misleading consumers through the use of vague terminology, omissions or other deceptive practices.
Who is affected by the DMCC?
The DMCC applies to any business selling goods, services or digital services to UK consumers, irrespective of size or sector and revokes the Consumer Protection from Unfair Trading Regulations 2008 (CPUTR).
Prior to the DMCC, the CMA was concentrating its misleading sustainability and environmental claims efforts largely in the fashion sector. The scope has significantly broadened, including into transportation, retail and consumer goods.
Does it matter to my business?
Aside from the risk and negative publicity of having a CMA investigation and potentially large fine if your claims are successfully challenged, there are further impacts.
These include increased rebranding and labelling costs; reduced revenue from restricted product sales; employee disappointment; the cost of staff retention and hiring; investor and customer mistrust – all of which take considerable time, resources and effort to rebuild.
Where the claim was central to your business, trust and revenue may simply not be recoverable.
What does greenwashing look like?
Sustainability-related claims are those that suggest a service, product, business or brand is better for the environment or society and has no impact or a reduced, less damaging or even positive impact.
There are many instances where companies use well-meaning statements and marketing materials to highlight their firm’s progress and products, yet sometimes miss the mark.
Misleading statements and claims occur when an impression is given that its products or services, brand etc are less harmful or of more benefit than they actually are. They can apply not only to statements made, but also all branding, product names, logos, symbols, packaging and marketing media.
Which also means that sustainability or environmentally related claims, where misleading will also fall under the scope of the DMCC and CMA.
To help, presented below are just a few higher risk examples where businesses need to be especially careful with their reporting disclosures, product labelling and marketing.
| Terms Used | Higher Risk / Potential for Misleading: |
| Green, Eco, Climate or Environmentally-Friendly | Use of broad ‘green’ or ‘environmentally / eco-friendly’ terms that are vague and essentially meaningless without substantiation. |
| Sustainable | Calling a product ‘sustainable’. Most man-made products are not ‘sustainable’ by their nature but may be made ‘responsibly’. Even more so where made from non-renewable materials. |
| Science-based, Net Zero and Other Far-Future Goals | Where targets and claims have no credible decarbonisation plan or capital allocation to support them or with no realistic chance of meeting the targets by the timelines stated. Particularly relevant where claims are related to long-term future goals. |
| Carbon Offset, Climate Neutral, or Carbon Negative-Positive | Higher risk where largely relying upon the use of carbon offsets to claim emissions reductions or zero emissions. Likely to mislead that there are no emissions associated with the product or service. Offsets are not consistent with a Science-based reduction approach and do not tackle the primary need to significantly reduce GHG emissions first. |
| One-Sided Statements | Promoting only the positive aspects of a product using a Life Cycle Assessment (LCA) or Environmental Product Declaration (EPD) study without reporting its negative aspects. For example, cherry picking the positives around a resource or emissions reduction, yet failing to state any wider (and possibly more material) negative other impacts that would occur with those additional sales. |
| Avoidance | Messaging around ‘avoided’ emissions associated with a secondary recycled product. A potentially complicated area for reporting, particularly in assessing whether the new sales would have still gone ahead even in absence of the product. |
| Free From, Toxin-Free | Irrelevant claims such as ‘CFC-free’ in aerosols or ‘micro-bead free’ from rinse off products when regulations have banned their use in a product’s manufacturing, or ‘plastic free’ or ‘waterless’ where the product is not normally expected to contain these constituents. |
| Compostable, Biodegradable | Where inferring consumers can home compost the item, when in reality industrial composting at an authorised waste treatment facility is required. |
| Recyclable | Where two or more forms of packaging or the product itself are bonded or formed together into an item that it is economically or technically unfeasible to separate for single stream material recovery, thereby misleading a consumer into thinking the product will be recycled. |
| Claims of 70% recycled materials when the remaining 30% is from virgin sources with a known negative impact. Channelling interest to increase sales in this product could result in undesired wider global impacts. | |
| Where mention is made of the product being recyclable without further guidance provided on whether the term applies to the product or packaging, to all of it, or part of it. | |
| Organic, Natural | Mentions of labels without certification or harmonised criteria, e.g. the non-certified use of ‘organic’ or ‘natural’ in the beauty and skincare industry. |
| Claims of organic or natural where the % content of those ingredients are less than would be expected by the consumer. |
What is the financial impact?
Under the DMCC the CMA will be able to impose fines up to £300k or 10% of global turnover (whichever is higher) for breaches, including misleading claims. This is in addition to the other knock-on costs and revenue erosion mentioned above.
To put this into perspective, and purely as an example, it would mean fines of £29m for a company similar to ASOS (10% global turnover 2.9bn in 2024), or substantially higher for companies like Vodaphone at £3.6bn or Unilever at £6bn.
Green Claims Code
While the latest CMA change is relatively new and continuing to develop, the background to this has been around for a while in the form of the UK Government’s Green Claims Code, released in 2021.
The Green Claims Code (the Code) is best practice guidance focused more so on environmental claims. In relation to the Code, the CMA had limited routes to enforcement, relying on court proceedings being brought forward through breach of consumer protection law and where needed in association with other regulators, Trading Standards Services and the Advertising Standards Authority (ASA). With the introduction of the DMCC, that changed.
Nevertheless, the Code remains valid and a highly useful resource for businesses seeking to align their sustainability claims in an appropriate way. The CMA released further guidance for making green claims across the wider supply chain in early 2026.
The Advertising Standards Authority (ASA) also released updated guidance in October 2025 on misleading environmental claims and social responsibility in advertising to supplement its BCAP and CAP codes (The Advertising Codes).
Action you can take now
- Identify all current in-use sustainability and environmental claims, logos, branding, symbols, certification claims, reports and marketing materials.
- Establish an internal process for verifying the existing claims and a standard for supporting evidence. Include procedures for what happens when products or services fall short of the verification process and standards.
- Discontinue use of claims made without substantiation, revise materials and republish. Advise supply chain partners where relevant.
- Form verification or evidence packs for all other claims made, prioritising action in higher risk areas where documentation is weakest. This includes claims made by your suppliers on products then sold on by you.
- Review how the EU’s future Green Claims Directive may also impact your business in light of your existing procedures and standards. Align where necessary.
- Train your marketing / commercial teams and supply chain partners in the methodologies, standards and future verification expectations.
- Continue to monitor future claims made and changes in the supply chain.