Greenwashing: CMA targets FMCG sector

Greenwashing in FMCG sector: What are the risks?

If the review uncovers evidence of misleading green claims in the FMCG sector, the CMA will consider taking enforcement action.  That could be significant for any business, in terms of cost, disruption and its reputation.

In partnership with Trading Standards Officers, the CMA has a right of entry to those businesses to whom the CPRs apply. Where there are reasonable grounds to suspect that there may be a greenwashing/consumer protection breach, the CMA has powers of inspection, seizure and detention of goods, books and documents, including computer records, and it can request that employees attend interviews to assist its investigation.

Breach of the CPRs can result in unlimited financial penalties on conviction in the Magistrates Court and/or up to two years’ imprisonment for key offences on conviction in the Crown Court. Consumer redress schemes can require apologies or the payment of compensation.  Reputational consequences can, of course, be devastating.  The UK government has also proposed that the CMA be granted additional enforcement powers, which could soon see it levying fines of up to 10% of global turnover [2].

The CMA’s focus on the FMCG sector follows its recent scrutiny of the fashion industry.  The CMA has also indicated that its future likely targets include the travel and transport sectors.  Our prediction is that no sector is likely to be immune. Quite apart from regulatory oversight and the strict legal framework of the CPRs, all businesses are increasingly facing pressure from consumers and the general public, and from commercial counterparties, shareholders, employees, and investors, to ensure that their green, and wider environmental, social and governance (ESG), credentials are accurate and up to scratch.

Greenwashing and consumer protection: How we can help

Walker Morris’ Regulatory/Consumer Law, Competition and Commercial Dispute Resolution specialists can help businesses with the drafting or updating of appropriate policies and procedures to guard against greenwashing.  We can help with the provision of staff training on consumer protection, misrepresentation and/or specific greenwashing issues.  We can also assist with the strategic response to any greenwashing or other consumer protection investigation, complaint or allegation made against a business, or with wider commercial or dispute resolution advice in the context of the ESG agenda.

We will continue to monitor and report on any further legal and regulatory developments in this key area.

Please contact Gwendoline, Nick, Sarah or Stuart for further information, training, advice or assistance.

[1] That is, the practice of making claims (often exaggerated) about a business’ environmental credentials and the sustainability of its products, services and environmental impact

[2] Current indications from the government are that a Bill will soon be presented to Parliament, with a view to legislation to this effect being implemented by late 2023