The topic of green claims has been high on the Competition & Markets Authority's ("CMA") radar for some time. 

In 2021 we saw the CMA launch its own Green Claims Code. In 2022 the CMA began its investigation into the fashion sector, and specifically claims made by ASOS, Boohoo and George at Asda, with that investigation concluding two years later with each of those companies providing undertakings to the CMA to change the way they display, describe and promote their green credentials. 

Following this investigation, the CMA published a new 'Fashion Supplement' to its Green Claims Code, designed to help retailers (and others) in the fashion industry comply with their obligations under consumer legislation to avoid creating misleading environmental claims.

In 2023, the CMA announced a review into environmental claims in the fast-moving consumer goods sector. These are essential items used by people on a daily basis and repurchased regularly, such as food and drink, cleaning products, toiletries, and personal care items. The CMA kicked-off this sector focussed review in December 2023 by announcing an investigation into green claims made by Unilever; however, in November 2024 the CMA confirmed it would not be taking any further action. 

So, lots of activity! However, to date, the CMA's enforcement powers in respect of compliance with its Green Claims Code (or lack thereof) have been fairly limited. Enter, the DMCC Act. 

The DMCC Act brings with it increased enforcement powers for the CMA – not only does this mean greater consequences for non-compliance, but companies may be subject to a new regime of investigation and enforcement through the CMA directly.

What does the DMCC Act say about sustainability?

While the DMCC Act doesn't contain anything specifically relating to so-called "greenwashing" and the making of sustainability-related claims, the government has made clear that such claims can be addressed as what is called a 'misleading commercial practice'.

Before the DMCC Act, misleading commercial practices were covered in the Consumer Protection from Unfair Trading Regulations 2008, which is what the CMA has used to date to bring enforcement action against companies that mislead consumers in relation to environmental claims.

One aspect of the DMCC Act is that it repeals and reinstates (with some notable changes) those Regulations. This means that, moving forward, it will be the DMCC Act that will contain the rules around what is and isn't a misleading commercial practice.   

CMA guidance

As mentioned at the start of this article, the CMA has created its own guidance on how businesses can make green claims that are compliant and not misleading. This applies to claims made at the point-of-sale and on packaging and labelling, in addition to claims made on media such as websites, social media, advertising and marketing content, and so on.

The Green Claims Code sets out six principles which are designed to help businesses comply with the law. These are:

• Claims must be truthful and accurate
• Claims must be clear and unambiguous
• Claims must not omit or hide important or relevant information 
• Comparisons must be fair and meaningful
• Claims must consider the full life cycle of the product or service
• Claims must be substantiated.

In addition, the fashion supplement sets out more information under the following headlines, outlining in broad terms the CMA's position in each case:

• Avoid using unclear terms (like green, sustainable or eco friendly) unless the product as a whole has a positive environmental impact or no adverse impact. 
• Avoid using logos, imagery and icons in a misleading way (leaves, globes, etc).
• Ensure comparisons are clear.
• If the claim relies on consumer action, make sure that consumer action is clear.
• Be clear when using filters and other navigational tools (e.g. filters and drop down menus that group together products with green credentials).
• Product ranges that are held out as being better for the planet, or less harmful, should be handled with care.
• When referring to affiliations and accreditation schemes - exercise caution.
• Make it clear if a claim is based on specific parts of a product's life cycle.
• Ensure environmental targets are presented clearly, using terms that consumers understand and avoid creating a misleading impression about the overall impact your fashion retail business has on the environment.

CMA's enforcement powers

The DMCC Act substantially enhances the CMA's role in enforcing the consumer protection regime generally, including with respect to unfair practices. Currently, the CMA must rely on court proceedings to enforce any breaches of consumer law, which it says causes delays and limits its impact. However, the DMCC Act will allow the CMA to directly investigate suspected infringements and practices that may harm the collective interests of consumers in the UK, and issue enforcement notices without going to court first. As a result, CMA investigations will likely run to a much tighter timeline and the CMA will expect companies under investigation to keep up.

From a financial angle, the DMCC Act enables the CMA (or the courts) to issue fines of up to 10% of annual global turnover. These new powers are expected to be activated in April 2025, after which we expect the CMA to change its approach to enforcement. It will be able to issue fines for breaches of undertakings/assurances given to it by any company, as well as any fresh instances of breaches of consumer laws by any company selling to UK consumers.

How do you get DMCC Ready?

Given the increased enforcement powers, businesses making sustainability-related claims will want to make sure that they are proactively reviewing the claims they make and the processes they have in place to ensure robust substantiation of those claims – the bar will be high, and businesses will need to be able to reach it.  

See our Get DMCC Ready Hub for further information on the DMCC Act, including guidance, insights, news and events.