How acting on greenwashing can move the industry towards real change


INSIGHT
Published
Jul 5th '23
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With marketers keen to highlight their eco-credentials, we explore what is being done in the regulatory space to ensure these claims are sound and driving positive change in our industry

 

With the Co-op reporting that UK consumers’ annual spending on ethical products and investments has now exceeded £100bn – and in the context of ever-growing concerns about the impact of climate change – it’s easy to see why marketers want to shout about the environmental credentials of their products and services.

 

However, this push to appeal to the green-minded consumer has given rise to the phenomenon of ‘greenwashing’- when claimed eco credentials don’t match up to reality. Global research coordinated by the Competition and Markets Authority (CMA) in 2021 found that a staggering 40% of green claims made online could be misleading. In the UK specifically, rulings made by the UK’s advertising regulator, the Advertising Standards Authority (ASA) show a sharp rise in the number of ads breaching rules about environmental claims. This year alone, rulings have been made against the aerospace, travel and water sectors, with Etihad and Repsol among companies found to have breached the advertising code.

 

Done right, marketing can be a major driver of progress towards net zero. However, in order to maintain consumer confidence in ads, it’s vital that this issue of greenwashing is tackled head-on. So, what is the ASA doing in this space, and where might we be headed in terms of regulation of ‘green’ claims in marketing?

 

Existing regulation 

All ads that make environmental claims need to comply with both consumer protection law and the UK Code of Advertising and Direct & Promotional Marketing (CAP Code). Together these strict rules require advertisers to ensure that their ads are responsible and do not mislead consumers and that any claims made in their ads are truthful, clear and substantiated.

 

While these rules are robust, the ASA is rightfully taking a proactive approach to exploring what more can be done to drive compliance. In 2021, the ASA and CAP launched their Climate Change and the Environment (CCE) project to build a better understanding of the nature of green claims in different sectors and develop better resources for advertisers to support responsible marketing.

 

As part of this work, the ASA conducted research into consumer understanding of environmental claims in ads. The findings showed that while participants were engaged on environmental issues, there was confusion across the board about green terminology, including commonly-used terms like net zero and carbon neutral. Participants called for greater transparency about offsetting and target dates, as well as regulatory reform to standardise definitions. Some participants also wanted government to step in and help to police misleading green claims.

 

This evidence has fed into the ASA’s extensive and continually evolving guidance document for advertisers, which is designed to help advertisers interpret CAP rules relating to misleading environmental claims and social responsibility. You can read the latest iteration of the guidance here.

 

What next? 

In 2022, the House of Lords Environment and Climate Change Committee published a report that echoed consumer calls for a statutory taxonomy of environmental terms, but the Government’s response earlier this year made clear that it believes that the ASA remains best placed to determine how green claims in ads should be regulated.

 

The fact that no new legislation is incoming is a welcome recognition of the strength of the UK’s existing regulatory framework for online advertising. That said, it’s clear that greenwashing remains a significant issue and jurisdictions across the world are grappling with how to address it. The US Federal Trade Commission is currently reviewing its ‘Green Guides’, and the EU has proposed a Green Claims Directive which would require member states to implement a system to verify green claims and impose penalties for non-compliance. In other words, the international picture is evolving, and there’s a clear movement towards increased scrutiny of green ads.

 

Where could this end? At the extreme end of the spectrum, a report published by the Behavioural Insights Team (a UK-based social purpose organisation) in January recommends that, in the longer-term, government should consider banning fossil fuel ads, as well as ads from key sectors that fail to meet decarbonisation targets.

 

While we’re not there yet, it’s important that advertisers recognise that the regulatory magnifying glass is likely to be held ever more closely to the way that they market the environmental credentials of their brands and products. Ensuring green claims are truthful, honest and substantiated is essential – not only to withstand regulatory scrutiny, but to ensure that our industry remains socially conscious and continues to play its part in tackling the climate crisis.

 

For more information on how Internet Advertising Bureau (IAB UK) is working to make the digital ad industry more sustainable, head to their dedicated hub including a Sustainability Glossary and industry initiatives tracker.

 

Source: IAB UK

 

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