Greenwashing & Accountability: An interview with Client Earth
Jamie Rocha-Sharp - 05 December 2022
There’s no doubt about it, the ethical consumer market is bigger than ever, and a number of businesses are becoming more sustainable in response. Yet small steps towards a more sustainable future often equal big claims made in advertising. Greenwashing is the term used when a company's claims around sustainability go further than their actions. In short, cases where a company makes statements that mislead consumers about the environmental impact of what they do.
Below, Chambers Student’s Jamie Rocha-Sharp speaks to Jonny White, a client accountability lawyer at Client Earth. Client Earth is an environmental organisation that works with industries and governments to explore legal strategies to combat climate-related risk.
Chambers Student: What is the legal status of greenwashing, and what impact has it had on environmental law?
Jonny White: A number of markets and sectors today are essentially free of regulation. When companies say: ‘net zero by 2050’, for example, there is no formal accountability. But there are big overhauls of the law regarding climate communications in the UK and the EU on the way. For example, the EU Corporate Sustainability Directive 2024 will require businesses to provide a detailed net zero plan, and it will demand a greater degree of disclosure around the climate impact of their business. In the UK, following COP26 businesses were required to produce convincing climate transition plans by 2023 detailing the transition to net zero by 2050. The EU also has a legislative proposal called the ‘Green Transition’ which is similar, and contains an anti-greenwashing proposal with a particular focus on language like ‘net zero’, ‘carbon offsets’, and the use of terms such as ‘biodegradable’ and ‘recyclable’.
On the litigation side of things, legal action has up to this point come mostly from NGOs, but in the future, I think we’ll see more consumer regulators getting involved. Competition laws will come into it as well. Since January, we have already seen regulations tightened by the UK’s Competition & Markets Authority (CMA). And again, competitors will notice when each other aren’t adhering to green regulations, especially if it grants them a competitive advantage. The cheapest, most profitable process aren’t always going to be the greenest. But here more than anywhere, regulators can be powerful agents in keeping companies in line. If you ask any climate scientist, there will be much more evidence available in the next five years. Extreme weather, flooding and heat waves will increase the need to act, and increase the number of claims that companies are making in response.
CS: What legislation is there in the UK that regulates misleading communication more broadly?
JW: There is a lot that regulates misleading communication. The Financial services and Markets Act prohibits misleading communications to shareholders, and provides a route for shareholders to protect themselves against any dishonest or misleading statements that affects the business, and this includes greenwashing. For ordinary people, there is the Advertising Standards Authority (ASA), which is largely a self-regulatory system that can stop an advert deemed to be misleading. Consumer law is also the same in the UK as it is in the EU. Internationally, you can look at the Organisation for Economic Cooperation & Development (OECD), which provides guidelines around greenwashing and responsible business conduct focused on consumer interests, similar to the ASA.