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Greenwashing Claims Are on the Rise

Regulatory investigations and litigation of green claims, such as claiming that products or services are “eco”, “natural”, “recyclable”, “carbon neutral” or “environmentally friendly” are on the rise in the UK, EU and US. The impact of greenwashing is sector-agnostic, although the oil and gas, textiles, aviation, food and beverage, personal care and cosmetics industries figure highly.

There is divergence in the regulators’ approach across jurisdictions, although breaches of these anti-greenwashing rules consistently result in substantial penalties in the form of fines, sometimes based on worldwide turnover of a company, reputational damage and potentially costly product recalls.

We have observed, as is reflected in the case studies we analyse below, that the green claims under scrutiny are claims made to consumers. However, consumer-facing businesses need to look at their supply chain and ensure that they have the right processes and contracts in place to check whether their suppliers are not misleading them. Green claims actions against a company can have an impact on its reputation, on its brand value, on its reporting and ultimately on its shareholder value.

There is no question that under consumers’ and regulators’ watchful eyes, it is harder to make green consumer claims. But these claims are popular with consumers and potentially provide a great opportunity to sell products and services. We believe that these claims can be made with the right due diligence processes and legal advice in place, which will allow the verification and justification of any green claim, as well as spot any potential non-compliance before it is too late.