The Green Claims Code: A Guide for Brands and Retailers

If you’re a brand or multi-brand retailer making environmental claims about products or services that you provide to UK customers, it’s essential to know about the Green Claims Code.

Introduced by the UK's Competition and Markets Authority (CMA) in 2021, the Green Claims Code is an update to consumer protection law designed to combat misleading green claims—i.e. "greenwashing". In other words, it ensures that any green claims are clear, truthful, and supported by evidence.

In this guide, we’ll cover everything you need to know about the Green Claims Code, including what it says, who it affects, and what happens to businesses that don’t comply. We’ll also offer clear, actionable steps to ensure you’re always on the right side of the regulations.

Let’s get started.

The Green Claims Code: the Essentials

What is the purpose of it? Ensure that brand’s environmental claims do not mislead consumers

Who does it affect? Any business that makes environmental claims about their products or services in the UK

When did it come into effect? 2021

What are the penalties? Expensive legal action and fines of up to 10% of a company's global revenue

What’s the context?

Ensuring the truthfulness of environmental claims is crucial. Unfortunately, many companies—either intentionally or unintentionally—make deceptive claims about their products' environmental impact or benefits. In fact, recent findings suggest that up to 40% of green claims made online could be misleading. This practice, known as greenwashing, is harmful to both customers and the planet.

To tackle this problem, the UK's Competition and Markets Authority (CMA) introduced the Green Claims Code in 2021. This initiative seeks to curb greenwashing, safeguard consumers, and guarantee that environmental claims are honest, clear, and supported by solid evidence.

What is the goal of the Green Claims Code?

The goal of the Green Claims Code is to make sure that when consumers consider products or services, they get environmental information that is trustworthy, easy to compare, and backed by proof.

It does this by laying out clear rules for businesses that want to make environmental claims. These rules help ensure that claims are honest and reliable, making it easier for consumers to make informed choices.

What counts as a “green claim”?

A "green claim" or "environmental claim" refers to any assertion made by businesses about the positive environmental aspects of their products or services.

These claims can cover a wide range of factors, including how products are made, packaged, distributed, used, or disposed of. They often appear on product tags, descriptions, in advertising campaigns, and other marketing materials.

Examples of green claims include statements about a product being recyclable, made from recycled materials, or having a lower carbon footprint. These claims play a crucial role in informing consumer choices and promoting environmentally responsible behaviour.

However, for these claims to be valid, they must be clear, accurate, and substantiated.

Who does the Green Claims Code affect?

The Green Claims Code affects all businesses, regardless of size, that make environmental claims about their products or services in the UK. This includes both UK-based businesses and international companies targeting UK consumers, across all forms of advertising and marketing.

Whether you’re a small independent brand or a large online platform, if your business communicates sustainability claims to UK customers, you must comply with the code's guidelines.

When does the Green Claims Code come into effect?

The Green Claims Code was introduced by the Competition and Markets Authority (CMA) and took effect on 20 September 2021. An update in 2023 expanded the guidance to cover claims about initiatives to reduce environmental impact. This guidance is reviewed and updated regularly to reflect new trends and findings.

What are the requirements of the Green Claims Code?

The Green Claims Code sets out several key requirements that businesses must follow to ensure environmental claims are responsible and not misleading:

1. Green claims must be truthful and accurate

Claims cannot imply anything that's factually incorrect. Details about sustainability and environmental impact must not be exaggerated.

For example: you should not claim that a clothing line is "100% organic" unless every component, including fabric, threads, and buttons, meets organic standards. If only the main fabric is organic, the claim should specify this.

2. Green claims must be clear and unambiguous

The wording of claims should be straightforward, allowing consumers to easily understand the environmental benefits of a product or service. Ambiguous or confusing statements must be avoided.

For example: if a brand claims that garments "use less water," they should provide clear context, such as "uses 50% less water in dyeing processes compared to conventional methods".

3. Green claims must not omit or hide relevant information

What a claim doesn't say is just as important as what it does say. Omitting key information can mislead consumers, influencing their purchasing decisions. Claims should not conceal any details that are crucial for a consumer to make an informed choice about a product.

For example: if a product is advertised as "biodegradable," the brand should also clarify if certain conditions are needed for biodegradation to occur—such as specific industrial composting facilities, which might not be accessible to all consumers.

4. Green claims must only make fair and meaningful comparisons

Comparative claims must not mislead consumers. Claims of being “greener” or “more environmentally friendly” than another product need to be supported by clear evidence.

For example: claiming that a new collection is "more sustainable" than its previous lines requires factual backing—like demonstrating a significant reduction in carbon emissions in the production process, supported by transparent data and comparison methodologies.

5. Green claims must be substantiated

Businesses need to back up their environmental claims with evidence, which should be based on objective facts. This evidence must be current, credible, and relevant.

For example: If a product claims to have a "lower carbon footprint," there should be lifecycle assessments or credible third-party certifications to prove this.

6. Green claims must consider the full life cycle of the product

Claims should account for the entire environmental impact of a product, from its components and manufacturing to its use, disposal, and the wider consequences of its environmental benefits. This includes considering any overall adverse impacts the product or service may have.

For example: if a smartphone is marketed as "eco-friendly" because of its energy-efficient charger, this claim should also consider the phone's manufacturing process, potential e-waste, and the overall environmental impact throughout its lifecycle.

Examples of good and bad green claims

Let's look at a few more specific examples of both legitimate and problematic green claims.

Good green claims:

• Specific and verified: A product is labelled as "made with 100% recycled plastic bottles," and this claim is supported by certification from a credible third-party organisation.
• Clear lifecycle information: A clothing brand states that its new line uses "organic cotton grown with 70% less water," providing detailed information about the farming practices and water savings during the cotton's growth cycle.
• Accurate and unexaggerated: An electronic device is marketed with the claim that it is "energy-efficient, reducing energy use by up to 40%," and the claim is based on comparisons with previous models, verified by independent energy efficiency testing.

Bad green claims:

• Vague and non-specific: A brand claims its products are "eco-friendly" without providing any specific information about what makes them so, such as materials used, production processes, or lifecycle impacts.
• Misleading comparisons: A fashion brand claims its garments are "the most sustainable on the market" without providing clear, verifiable comparisons with other products or defining what criteria are used for the claim of being "most sustainable."
• Omitting relevant information: A product is marketed as "made with recycled materials," but fails to disclose that it contains a significant percentage of new, non-recycled materials, or that the recycling process itself is energy-intensive and contributes to carbon emissions.

Good green claims help build trust and credibility with consumers, while bad green claims can lead to skepticism and potentially harm a brand's reputation.

What happens if you break the Green Claims Code?

Non-compliance with the Green Claims Code can lead to significant consequences for a business, impacting operations, reputation, and its bottom line.

Here's what can happen if a company fails to adhere to the code:

• Legal action: Businesses can face serious legal implications. For instance, the CMA launched an investigation into Unilever in December 2023 for potentially overstating the environmental friendliness of its products.
• Fines: The CMA has the authority to impose fines up to 10% of a company's global revenue for breaches of consumer law, which includes violations of the Green Claims Code. This can amount to substantial financial penalties for companies found in breach.
• Increased operating costs: Non-compliance can result in higher operational costs, such as demurrage charges for detained products at borders and expenses for correcting or removing marketing materials. The amount of money and hours involved in the CMA's investigations into greenwashing highlight the significant resources needed to tackle non-compliance.
• Reputational damage: Consumer trust is paramount, and failure to meet sustainability expectations can lead to loss of customer loyalty, decreased sales, and reduced market share. In a competitive market, the reputational damage from non-compliance can be a significant setback.
• Reduced investor confidence: Investors are increasingly valuing sustainability in their investment decisions. Non-compliance can deter investment and negatively affect a company's valuation. For instance, Boohoo's stock experienced a significant drop amid greenwashing investigations by the CMA.
• Access to markets: The ability to enter and operate in international markets can be jeopardised by non-compliance, with increased risk of products being held at borders, leading to costly delays and disruptions.

How can brands and retailers comply with the Green Claims Code?

To ensure your brand or retail business complies with the Green Claims Code, start by conducting a full audit of all your existing claims. This crucial first step involves thoroughly examining every environmental claim you make about your products to ensure each is supported by robust evidence. Specifically, you should:

• Check that each product statement is backed by verifiable evidence. This means having clear, reliable data or certifications from reputable third parties to support your environmental claims.
• Track the lifecycle of each product comprehensively. This tracking should cover the entire journey of the product, from its production to disposal, to ensure that claims about any aspect of the product can be substantiated.
• Establish a regular procedure to review all your claims against the latest government regulations and guidelines, which are frequently updated.

Green Claims Code Checklist

When making a green claim on a product or product line, make sure you can confidently answer 'yes' or agree to each of the following statements:

1. The claim is accurate and clear for everyone to understand.
2. There's up-to-date, credible evidence to support the truthfulness of the claim.
3. The claim provides a full picture of the product or service, or accurately represents one part without misleading about other parts or the overall environmental impact.
4. The claim is free from partially correct or incorrect aspects or conditions.
5. General claims (like eco-friendly, green, or sustainable) are substantiated by the whole life cycle analysis of the brand, product, business, or service.
6. Any conditions (or caveats) that apply to the claim are clearly outlined and understandable.
7. The claim won't mislead customers or other suppliers in any way.
8. The claim doesn't exaggerate its positive environmental impact and avoids any untruths, whether stated or implied.
9. Durability or disposability information is transparent and accurately labelled.
10. The claim doesn't omit or conceal vital information about the environmental impact necessary for making informed choices.
11. Information that can't fit into the main claim is easily accessible through other means (e.g. a QR code or website).
12. Standard features or legal requirements are not misrepresented as environmental benefits.
13. The basis for comparisons is fair, accurate, and understandable to everyone.

Introducing: green claims compliance automation

Navigating the Green Claims Code is just one part of the broader regulatory landscape that brands and retailers must manage. To ensure full compliance across all your environmental claims, partnering with Compare Ethics can streamline the process.

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