Greenwashing: UK advertising watchdog bans greenwashing advertisements

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).

The legislative background

In the UK, there are two advertising codes of practice that describe how businesses should advertise: the Committee of Advertising Practice non-broadcast code (the “CAP Code“); and the Committee of Advertising Practice broadcast code (the “BCAP Code“). The Committee of Advertising Practice (“CAP”) is responsible for writing the codes, whilst the ASA is responsible for administering the codes.

The CAP Code specifies standards for accuracy and honesty that businesses must adhere to when making sales promotions and direct marketing, including communication on websites, apps and cross-border platforms that meet certain conditions, whilst the BCAP Code specifies similar standards governing broadcasting via television, radio etc. Both the CAP Code and the BCAP Code are enforced by the ASA, who investigate potential breaches of the codes. If advertisements are deemed to have violated either of the codes, then the ASA can demand that the advertisers amend or withdraw the advertisements. If the advertisers do not, then the ASA will consider sanctions available to it, which include (but are not limited to): (i) denying the advertiser access to advertising space; (ii) requiring the advertiser to have their future marketing communications vetted prior to publication; and (iii) referring the advertiser to its legal backstop, Trading Standards, for action under consumer protection legislation, which could lead to criminal prosecutions that result in fines and/or imprisonment.

In February 2023, the CAP updated its Advertising Guidance, which sets out key principles that advertisers should follow to ensure that their advertisements do not breach the CAP Code or the BCAP Code by including misleading socio-environmental statements. The Advertising Guidance states that “marketers must consider consumers’ likely interpretation of a claim” and “where general claims could be interpreted as absolute claims, or have multiple possible interpretations, additional information is required to make the meaning of a claim clear“.

The ASA’s investigations

The Advertising Guidance affirms that the ASA intends to take a tougher stance on environmental matters and tighten-up its position on problematic advertisement claims where there is evidence to do so. This has materialised into the ASA taking action against advertisers.

In addition to the recent oil and gas sector bans, earlier this year, the ASA banned advertisements made by two airlines that made misleading claims about the environmental impact of flying. Previously, in 2022, the ASA banned advertisements made by: (i) a bank for misrepresenting the green credentials of its investments; and (ii) a supermarket for making unsubstantiated claims of purported planetary benefits of its plant-based products.

In announcing the recent bans, the ASA stated that the oil and gas advertisements “omitted material information” by promoting their green offers and plans without including any reference to their larger polluting operations, which still dominate the businesses of the companies concerned. As such, the ASA deemed that the advertisements – which took various forms, including posters, television broadcasts and social media videos – misled the public on the environmental benefits of the companies’ products, thereby violating both the CAP Code and the BCAP Code.

The ASA is currently creating rules to govern carbon neutrality and net zero claims more broadly, so businesses should expect increased scrutiny of their socio-environmental claims in the coming years.

Mitigating the risk of regulatory action

The Advertising Guidance states that the ASA’s approach is aligned with the CMA’s approach, who have taken a similarly tough stance on combatting greenwashing (for more information on the CMA’s approach, read our earlier blog posts here and here). Given this alignment, in addition to ensuring compliance with the CAP Code and the BCAP Code, businesses should consider the CMA’s Green Claims Code’s six core principles when making environmental claims. In brief summary, they are:

1. Be truthful and accurate: claims must not mislead consumers by giving them an inaccurate impression, even if the claims are factually correct. Claims must only give an impression that goods or services are as green and sustainable as they really are;
2. Be clear and unambiguous: claims should be worded in a straightforward and transparent manner, which is not liable to confuse consumers or give the impression that goods or services are better for the environment than they are;
3. Not omit or hide important information: consumers must be provided with the information they need to make informed choices, since omitting or hiding information can inappropriately influence consumer decisions;
4. Only make fair and meaningful comparisons: comparisons should be based on clear, up-to-date and objective information, and should not benefit one product or brand to the detriment of another if the comparison is inaccurate or false;
5. Consider the full life cycle of the product or service: all aspects of a product’s or service’s environmental impact over its lifecycle may be relevant to the accuracy of a claim including, for example, the manufacture and transport of a product; and
6. Be substantiated: claims must be capable of being tested against scientific or other evidence.

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