3 April 2023

ESG Collection – 5 of 5 Insights

The risks of making environmental advertising claims

The content of this article has been updated to reflect legal changes as at March 2023.

What has happened?

With many UK consumers struggling with high energy prices, the cost-of-living and inflation, the UK's Advertising Standards Authority (ASA) is increasing its focus on the regulation of environmental or 'green' advertising claims. This has been demonstrated by a string of cases in January 2023, (including Keilini Technology discussed below), in which the ASA ruled that advertising electric fan heaters as an energy efficient alternative to conventional heating via gas played on consumer concerns about rising energy bills, and given the lack of substantiation, the ads were misleading.

Governments need to encourage consumers and businesses to be greener if countries are to meet their environmental targets, and consumers are increasingly looking for 'greener' credentials when making purchasing decisions. This has not been lost on marketers. 'Green', 'sustainable', 'natural', 'environmentally friendly', 'energy efficient', 'carbon neutral', 'eco', 'organic', 'recycled', 'recyclable', 'biodegradable', 'low emissions', 'plastic-free', 'without harming your world' and 'help save the planet' are just some of the terms increasingly used to attract consumers interested in environmentally friendly products and services. But how meaningful are these claims and what should consumers make of them?

While many marketers use these terms with genuine credibility, others have been accused of 'greenwashing' or 'green sheening' – making unfounded or deceptive green claims to persuade consumers to buy their products or services. This article looks at what marketers can do to minimise the risk of regulatory scrutiny.

Regulatory interest

The ASA, Competition and Markets Authority (CMA) and Department for Environment, Food & Rural Affairs (DEFRA) have all set out guidance on making environmental claims.

CAP and BCAP

The CAP and BCAP Codes have specific sections on environmental claims. The ASA conducted a review of these rules in September 2021 and decided that, while the existing rules were sufficient, the rising number of misleading green claims warranted further research and advice, including the following:

Guidance issued in December 2021 to help marketers and agencies interpret the Codes.
Specific enquiries on environmental claims in relation to aviation, cars, waste, animal-based foods and heating.
New guidance on general green claims and environmental claims in relation to travel marketing in December 2022.
Research into consumer understanding of Carbon Neutral, Net Zero and Hybrid claims in the electric vehicle market, with updated guidance issued in February 2023.
An advice note following its rulings against mini-heater ads in January 2023, with a CAP Enforcement Notice following in March 2023.

CMA

The CMA has issued guidance for businesses and a Green Claims Code and check list. The guidance states that claims must be truthful and accurate, clear and unambiguous and fully substantiated. The CMA has also taken the following actions:

On 10 January 2022, the CMA launched a review of environmental claims in the fashion sector and plans to look at other sectors in due course. In July 2022, the CMA began an investigation into environmental claims made by several fashion brands in relation to allegedly eco-friendly product lines.
On 23 January 2023, the CMA launched a project to scrutinise environmental claims in sales of household essentials, or 'Fast Moving Consumer Goods', such as food, drink, cleaning products, personal care and toiletries.

DEFRA

DEFRA has provided guidance, principles and examples to promote the use of clear, accurate and relevant environmental claims in advertising.

The rest of this article focuses on CAP Code requirements and some key ASA rulings. That is because the ASA has the most guidance and, in practice, is more likely to deal with green advertising claims.

CAP Code

The starting point for assessing marketing claims is Section 1 of the CAP Code, "The central principle for all marketing communications is that they should be legal, decent, honest and truthful. All marketing communications should be prepared with a sense of responsibility to consumers and society and should reflect the spirit, not merely the letter, of the Code".

Crucial to the issue of greenwashing is Section 3, which covers misleading advertising rules. In summary, marketing communications must not materially mislead consumers, either through what they include or what they omit – and this includes omitting to inform consumers of material information on non-environmentally friendly activities, as the HSBC decision discussed below makes clear. Consumers must be given sufficient information to make informed decisions in relation to products, and marketers must hold documentary evidence which objectively substantiates the claims they make. Qualifications must be clear. They may clarify but must not contradict the claims that they qualify. Section 3 also covers making comparative claims, such as "greener" or "greenest".

There are specific rules on environmental claims, in Section 11, including:

"The basis of environmental claims must be clear. Unqualified claims could mislead if they omit significant information.
The meaning of terms used in marketing communications must be clear to consumers.
Absolute claims must be supported by a high level of substantiation. Comparative claims such as "greener" or "friendlier" can be justified, for example if the advertised product provides a total environmental benefit over that of the marketer's previous product or competitor products and the basis of the comparison is clear.
Marketers must base environmental claims on the full life cycle of the advertised product, unless the marketing communication states otherwise, and must make clear the limits of the life cycle. If a general claim cannot be justified, a more limited claim about specific aspects of a product may be justifiable. Marketers must ensure claims that are based on only part of the advertised product's life cycle do not mislead consumers about the product's total environmental impact."

Life cycle of a product

A key concept is 'the full life cycle' of the product. This means that all aspects of a product's or service's environmental life cycle including its supply chain are important including:

how and where it was manufactured, produced or carried out
how it is transported from its place of manufacture or origin
its use or performance
disposal of the product, and any waste or by-products
the consequences of any environmental benefit claimed and the period in which it would be realised
whether the product or service has an overall adverse impact.

What general principles can businesses take from recent ASA decisions on green claims?

The ASA has ruled on numerous environmental claims. In the last part of this article, we discuss some of these rulings in detail. Before that, here are some general principles drawn from the cases:

Regulators are increasingly scrutinising businesses over their environmental advertising and marketing claims.
The ASA is very strict when it assesses green claims.
Marketers should expect that members of the public, campaign groups and/or competitors will challenge their environmental advertising claims. The ASA itself is also sometimes proactive in challenging a claim, as it did in the mini-heater rulings.
Businesses must be very clear when making any green claims, including by reference to the full life cycle of the product unless the claim is expressly limited.

Any limitations and qualifications must be sufficiently prominent and clear and not contradict the main claim.

Absolute claims eg 'environmentally friendly' (especially ones which claim an overall positive impact on the planet) can be very difficult to substantiate.
If a comparative claim is made eg 'environmentally friendlier', it is necessary to specify what the product or service is being compared against. Only compare like with like (for example, the same life cycles).
Businesses must be able to substantiate all environmental claims (including the full life cycle unless expressly limited) with objective technical documentary evidence.
Providing consumers with links to additional authoritative information, especially established UK government information can sometimes help.

Examples of ASA rulings to show what is expected

We conclude with some example ASA decisions across a variety of sectors to illustrate the above points.

See recent decisions here

Keilini Technology (2023)

A website ad for a Keilini Portable Heater contained the following:

'Brits Are Using New Heating Device to Combat Soaring Energy Bills. InstaHeat'.
'According to the national weather agency, it will be particularly cold this winter – possibly one of the coldest winters in decades. Are you prepared? To make matters worse … the energy crisis will result in expensive energy for the next three years. It’s not surprising this winter energy bills for an average household could hit £3,000. In these difficult times, people need a cheaper way to stay warm.'
'This new type of ceramic heater has an incredible efficiency. Almost no energy is wasted. This is not only good for the environment, but also good for your wallet. It heats every area in your room in just 60 seconds. No other comparable heating device is as efficient. In addition, the Keilini Portable Heater is really cheap, tiny and very handy … With winter just around the corner, the Keilini Portable Heater is the cheapest yet most convenient way to stay warm and cozy [sic].'

The ASA considered consumers would interpret the ads as promoting a product that provided a viable alternative to all heating systems, including gas central heating and to mean that the product would provide heating at cheaper prices than conventional heating systems.

The ASA said it was highly unlikely that a small electric heater would be a viable source of sufficient heating for most households, that gas was generally cheaper than electricity and the claims had not been substantiated, so the ads were misleading.

These rulings resulted in the publication of an advice note and Enforcement Notice warning against similar claims in the future.

Deutsche Lufthansa (2023)

A poster for Lufthansa said:

'LUFTHANSA GROUP. CONNECTING THE WORLD. PROTECTING ITS FUTURE. #MakeChangeFly', and featured an image of the front of a plane in flight, with the underside of the plane represented by an image of the Earth from space.

The ASA considered the claim 'PROTECTING ITS FUTURE' was likely to be interpreted by consumers as an environmental reference to how Lufthansa's approach to aviation was protecting the future of the world, given that this text appeared immediately after the text 'CONNECTING THE WORLD', and was superimposed on a picture of the globe.

The claim was not qualified, and the ASA thought consumers would understand it to mean that Lufthansa had already taken sufficient steps to ensure that the net environmental impact of their business was not harmful.

The ASA understood that air travel was known to produce high levels of both CO2 and non-CO2 emissions which were making a substantial contribution to climate change. There were currently no environmental initiatives or commercially viable technologies that would substantiate the absolute claim.

Given the basis of the claim had not been made clear and it had not been adequately substantiated, the ad breached the Code.

Pepsi Lipton (2022)

A poster for Pepsi Lipton on a bus shelter included text stating:

'DELICIOUSLY REFRESHING, 100% RECYCLED*'. The asterisk linked to small text at the bottom of the poster that stated 'Bottle made from recycled plastic, excludes cap and label'.
The ad included pack shots of two Lipton Ice Tea bottles, with a recycling logo and the text 'I’M 100% RECYCLED PLASTIC' visible.

The ASA said consumers would understand the claim '100% RECYCLED*' alongside images of the bottle with the label and cap to mean that all components of the Lipton Ice Tea bottle (ie the bottle, cap and label) were made entirely from recycled materials. The qualifying wording appeared in very small text in the left-hand bottom corner of the ad, and therefore it could be overlooked.

The ASA ruled that, even if some consumers had seen the qualification, because the cap and label were not made from recycled materials, and the overall impression created was that all parts of the bottle were made entirely from recycled materials, the qualification was insufficient to counter that impression. This claim was therefore held to be misleading.

Oatly (2022)

Several Oatly ads were investigated. The ASA received 109 complaints challenging whether Oatly's claims were misleading and could be substantiated.

First, two TV ads for Oatly's oat drinks, which included:

'Oatly generates 73% less C02e vs. milk, calculated from grower power. To verify see www.oatley.com/helpdad.'

The ASA considered that consumers would understand the claim to mean that all of Oatly products generated 73% less CO2e compared to any type of cows' milk. However, Oatly had only provided evidence in relation to their Oatly Barista Edition oat drink and whole cow's milk. Therefore, the claim was not substantiated and was misleading.

Paid-for Twitter and Facebook posts stated:

'The dairy and meat industries emit more CO2e that all the world's planes, trains, cars, boats etc., combined. Need help talking to dad about milk? Go to oatly.com/helpdad.'

The ASA said the claim would be understood to mean that the emissions produced by the full life cycle of the transport industry had a lower overall impact than that produced by the full life cycle of the meat and dairy industry. Although Oatly's evidence had related to the full life cycle for the meat and dairy industry, it only related to part of the life cycle for the transport industry (accounting only for the emissions coming directly from using the vehicle). As equivalent parts of the life cycle had not been accounted for in the emissions figures used, the claim overstated the emissions from the meat and dairy industry compared to the transport industry. The ASA considered it was extremely unlikely the claim would have been supported if Oatly had used equivalent and full life cycle analysis. Consumers would have understood the comparison was based on an equivalent and full life cycle analyses when that was not the case. Therefore, the claim was misleading.

An ad in the Sunday Times Style Magazine said:

'Today, more than 25% of the world's greenhouse gases are generated by the food industry, and meat and dairy account for more than half of that'.

And an ad in the Guardian Weekend magazine included:

'Climate experts say cutting dairy and meat products from our diet is the single biggest lifestyle change we can make to reduce our environmental impact'; and
'If everyone in the world adopted a vegan diet, it would reduce food's annual greenhouse emissions by 6.6bn metric tons (a 49% reduction)'.

For the Sunday Times ad, Oatly substantiated the 25% figure for greenhouse gases part of the claim. However, the ASA considered that although some consumers may have understood 'meat and dairy' to include eggs, fish, shellfish and other organisms in water environments, many would not. Oatly's evidence discussed the greenhouse gas emissions for meat, aquaculture (including fish and shellfish), eggs and dairy. Egg and aquaculture industries would have been a significant contributor for the emissions. Because the claim would be understood by many consumers as relating only to meat and dairy (without eggs, fish etc), the ad was therefore misleading.

The first claim in the Guardian magazine was held to be understood as a definitive, objective claim based on scientific consensus. However, Oatly's source was one expert on climate change. Furthermore, he had in fact stated that a vegan diet was 'probably' the best way to reduce your environmental impact. As Oatly left out that qualifier and the claim was only the opinion of one expert, it had overstated the position. Therefore, the claim was misleading.

In respect of the last claim, Oatly provided figures from a comprehensive review relating to the environmental impact of moving to vegan diets and including data from 38,700 farms and 1,600 processors, packaging types and retailers across the world. Oatly had substantiated the claim and it was not misleading.

Innocent (2022)

A video on demand, YouTube and TV ad included the following claims:

'Let’s get fixing up the planet. Fix it up real good…'
'Reduce. Re-use. Recycle. Because there is no planet B. If we’re looking after nature she’ll be looking after me', accompanied by images of people in a green environment, with many of them alongside bottles of Innocent drinks.
'Innocent. Little drinks with big dreams for a healthier planet'.

The ASA received 26 complaints challenging whether Innocent's claims were misleading and could be substantiated, including campaigning group Plastics Rebellion.

The ASA said consumers would understand the claims to mean that Innocent was environmentally friendly and that purchasing their products had environmental benefits. The ASA required Innocent to hold evidence proving a positive environmental impact.

Although Innocent was undertaking actions which were aimed at reducing the environmental impact of their products, that did not demonstrate that their products had a net positive environmental impact over their full lifecycles. The bottles included non-recycled plastic and the extraction of raw materials, and subsequent processing of those materials in order to produce the bottle would have a negative impact on the environment. Therefore, the claims were misleading.

Tier (2022)

A poster seen on the London Underground featured an image of a Tier electric hire scooter with text including:

'Be environmentally … friendly. Take a TIER.'
Smaller text at the bottom said '#changemobilityforgood'.

This ad was challenged by the ASA (showing that the ASA can be pro-active).

The ASA considered the ad was an absolute claim. It would be understood to mean that the Tier electric scooter caused no environmental damage over the full lifecycle of the hire scheme, rather than that it had lower carbon emissions than the comparator vehicles.

The claim was not expressed in a more limited comparative way, such as ‘environmentally friendlier’, neither did it make clear if it was intended to refer to swapping to a Tier scooter from another form of transport and, if so, what that was.

While Tier had provided analysis of the measures they had implemented to demonstrate the environmental impact of their electric scooter, the ASA considered that the evidence provided did not demonstrate that the Tier E-Scooter scheme caused no environmental damage over its full lifecycle. Therefore, the ad was misleading.

Tesco (2022)

Tesco ads on TV, video on demand, radio, press, social media and websites were variations of the following radio ad:

'It may not sound like it, but Zoe here is doing her bit for the planet. By swapping to Tesco Plant Chef burgers every now and then, she’s making a difference, not by much, but every little, well you know, and we’re all for it. So we’ve lowered the price of dozens of our Plant Chef products. Good for your pocket, even better for the planet.'

The ASA said consumers would understand that the ads were promoting a swap from a meat burger, such as beef, to Tesco’s Plant Chef plant-based burger, rather than understanding the claim to be a general claim about swapping from meat to plant-based food.

Claims such as 'a little swap can make a difference to the planet', 'even better for the planet' and 'a little swap is […] even better for the planet' would be understood to mean that such a swap would make a positive environmental impact on the planet.

Because the ads implied that switching to products in the Plant Chef range would positively affect the environment, the ASA expected to see evidence that that was the case based on the full life cycle of the Plant Chef burger in comparison with a meat burger. The evidence provided did not demonstrate this, therefore the claims were not substantiated and were likely to mislead.

Sainsbury's (2022)

A radio ad (and a variation in a TV ad) included the following claims:

'When you think of power, you don’t usually think of a chickpea but these little wonders pack a punch. Not only are they a source of protein and iron but they also make their own natural fertiliser, which all plants need to grow. So, by mixing half chickpeas with half the chicken in your curry, your dish will be better for you and better for the planet. Chickpeas. Small but powerful. Sainsbury’s, helping everyone eat better.'
'To learn about how chickpeas can benefit your health and the planet visit about.sainsburys.co.uk/helping-everyone-eat-better.'

The complainants believed the chickpeas, lentils and beans in the ads were grown and imported from abroad, and so would have a greater environmental impact than domestically produced meat.

The ASA thought consumers would understand that the ads were advocating a reduction in meat portions, with examples of substitutions for plant protein equivalents, and the ad meant that reducing meat consumption in our diets was better for the environment, based on the environmental impact associated with the meat industry compared with the production of plant proteins.

The ASA said the ads were focusing on a change in diet, rather than a comparison of domestic and imported produce. The ads were making a general claim regarding the overall accepted premise that a plant-based diet was, in general terms, better for the environment. They did not feature or promote any particular product range but only showed the ingredients, which could be purchased at many retailers.

The claim highlighted a benefit of how chickpeas grew, and Sainsbury’s provided a link to a study which supported the claim. The ads were focusing on one aspect of the chickpea’s life cycle and highlighting a reason why reducing the portion size of chicken in a meal and substituting that for chickpeas would be better for the environment.

The ads featured a URL which took consumers to a page with information on Sainsbury's 'Helping everyone eat better' campaign. This outlined the Eatwell Guide -the UK Government’s dietary recommendations and provided further links to reports and articles, which were used to substantiate the claim.

The ASA concluded the claims were not misleading.

Unilever (2022)

A TV ad for Persil washing liquid contained the following:

Whilst showing images of a beach strewn with litter and plastic and children collecting plastic from rivers and ocean waves on a beach the voice overlay said 'At Persil, we know that change doesn’t just happen in the comments section'. The ad showed a woman writing '#plantmoretrees', and scrolling through social media and clicking 'Sad'.
'…remove tough stains the first time, even in a quick or cold wash and our bottles are made with recycled plastic.'
'REMOVES STAINS AT 30ºC' and '60 minutes quick wash'.
'MADE WITH 50% RECYCLED PLASTIC' and '*Excludes cap & label' in smaller font.
'TOUGH ON STAINS, KINDER TO OUR PLANET'.

The ASA said 'kinder to our planet' was an environmental claim that was comparative. However, the basis of the comparative claim 'kinder' was likely to be ambiguous. The ASA thought the ad did not state or explain the basis of the claim, such as whether the advertised liquid detergents were 'kinder' in comparison to Persil’s own previous products or other products.

According to the ASA, while the ad highlighted the benefits of the detergents – being effective in cold and quick cycles, and the use of recycled plastic – it was not clear if those were new or recent developments, and whether they were specific to the advertised detergents or applied more widely to Persil’s range of products.

Furthermore, the ad featured messaging about Persil’s wider environmental initiatives including encouraging people to personally take action to care for the environment, and showing children collecting plastic litter. In the context of an ad with several messages relating to environmental issues, the meaning and basis of the claim 'kinder to our planet' was unclear.

The ASA said it had not seen evidence or analysis to demonstrate the overall environmental impact of the featured liquid detergents over their full life cycles, compared with Persil’s own previous products or other products, in support of the claim 'kinder to our planet'. Therefore, the claim was not substantiated and was likely to mislead.

HSBC (2022)

Bus stop posters contained images of nature and said:

'Climate change doesn’t do borders. Neither do rising sea levels. That’s why HSBC is aiming to provide up to $1 trillion in financing and investment globally to help our clients transition to net zero.'
'Climate changes doesn’t do borders. So in the UK, we’re helping to plant 2 million trees which will lock in 1.25 million tonnes of carbon over their lifetime.'

The ASA received 45 complaints challenging whether the ads were misleading as they omitted HSBC's contribution to CO2 and greenhouse gas emissions.

According to the ASA, the ads would be understood to mean that HSBC was making, and intended to make, a positive overall environmental contribution, was committed to ensuring its business and lending model would help support businesses’ transition to models that supported net zero targets and undertaking an environmentally beneficial activity by planting trees which would make a meaningful contribution towards the sequestration of greenhouse gases in the atmosphere.

The ads appeared in the run up to COP26. The ASA considered that consumers would not expect that HSBC, in making unqualified claims about its environmentally beneficial work, would also be simultaneously involved in the financing of businesses which made significant contributions to carbon dioxide and other greenhouse gas emissions and would continue to do so for many years into the future.

The ASA reviewed HSBC's Annual Report which indicated that its current financed emissions stood at around 65.3 million tonnes of carbon dioxide per year for oil and gas alone, which the ASA said was likely to be much higher once other carbon-intensive industries such as power and utilities, construction, transport and coal mining had been included. HSBC intended to continue funding thermal coal mining and power production – a fuel that emitted high levels of CO2 and other greenhouse gas emissions – until 2040.

The ASA acknowledged HSBC’s comments concerning the level of natural gas and oil production required up to and in 2050, and understood that some level of financing would be required for this. However, despite the initiatives highlighted in the ads, HSBC was continuing to significantly finance investments in businesses and industries that emitted notable levels of carbon dioxide and other greenhouse gasses.

The ASA did not consider that consumers would know that that was the case. The ASA considered it was material information that was likely to affect consumers’ understanding of the ads’ overall message, and so should have been made clear. The ads omitted material information and were therefore misleading.