Op-Ed: Greenwashing Regulations in 2021 – The Year of the Level Playing Field
Greenwashing regulations are stepping up – 2021 is the year of the level playing field where businesses can no longer hide behind unsubstantiated and inaccurate claims. In this op-ed, CEO of Compare Ethics, Abbie Morris shares her thoughts on the changing landscape.
The UK’s Competition and Markets Authority (CMA) and European counterparts are investigating misleading environmental claims and are set to publish new guidance for businesses in the summer of 2021. The time is up for greenwashing. This year, we will witness the emergence of a new level playing field where businesses can no longer hide behind vague and unsubstantiated claims.
Pervasive greenwashing has created an atmosphere of distrust between brands and citizens, who are increasingly keen to align their spending to their values. Whilst the market for ethical consumption stood at over £41 billion in the UK alone in 2018, shoppers are sceptical about the environmental claims being made about products. The trust deficit in sustainability has found that 83% of citizens feel mislead by green and sustainable buzzwords in advertising.
This comes as no surprise as organisations such as H & M, as well as Everlane and Matt and Nat, have been reprimanded for overexaggerating their sustainability credentials or distorting their overall level of transparency. Cases of greenwashed advertising across the travel, food, fashion, and beauty sectors highlight that the current rules are not sufficient – we need systemic change.
What’s more, in the Compare Ethics Building Trust in Sustainability Report, the findings revealed that only one-fifth of shoppers trust sustainability claims directly made by brands. The new regulations will undoubtedly need to recalibrate the current crisis of trust. Clearly defining what is a misleading environmental claim will create a more level playing field for customers to access products that genuinely do less harm to the planet’s ecosystems.
A second important opportunity that the new greenwashing regulations present is the post-Brexit collaboration between the UK CMA and international regulatory bodies including the Dutch Authority for Consumers and Markets, International Consumer Protection and Enforcement Network, and the European Union (E.U).
The E.U has set out a new initiative in September 2020 to strengthen the role of consumers in the green transition. This includes minimum requirements for sustainability logos and marks like the EU Ecolabel. Efforts to limit the sale of products with a short life span feed into the wider EU Circular Economy Action Plan. This stipulates that companies should, “substantiate their environmental claims using Product and Organisation Environmental Footprint methods,” which paves the way for businesses who are able to support their claims with data.
This initiative will need all corners of Europe to move at the same time to have maximum impact. Before Brexit, over 80% of the UK’s environmental laws originated from the EU and it remains to be seen what this picture will be going forward. The campaign to educate businesses on how to correctly communicate their sustainability commitments gives UK regulators the opportunity to work in collaboration with our European neighbours to prevent market distortion and continue demonstrating to international peers that our core values are aligned. Moving in unison on this issue also means business is not able to gain a competitive advantage in one market versus another due to their misleading greenwashed advertising and communications. Collaboration with regional partners will be essential to level the current playing field.
Finally, the third opportunity that the new greenwashing regulations will provide is a platform for genuine, transparent brands to thrive in a market that is no longer warped by colossal marketing budgets. Traditionally, smaller independent brands have struggled to compete with international retailers when communicating their sustainability credentials. Whether that be about supply chain transparency, the use of circular or organic materials, or fair wage practices, it has previously been challenging for them to get their voices heard. For example, high street and fast-fashion retailers have been able to bid large sums of money on key internet search terms that include ‘sustainable’ or ‘organic’ with little or no substantiation. This has reduced the ability of verified sustainable brands being able to appear on top of search engines. The new guidance must prevent this from happening. For many of the brands that Compare Ethics works with, including Gung Ho, Fanfare, or TOBEFRANK, the new regulations must create a safe space online that promotes the most responsible first, not the largest budgets with the least data available.
At Compare Ethics, we believe that agreed industry-wide standards that rule on greenwashing, complemented with the use of technology and third-party verification tools can create an equal opportunity for honest and responsible organisations.
This is not to ignore rampant greenwashing and corruption in supply chains or say that standards without better data in our systems are a silver bullet. Rather, new rules provide an opportunity to start to move industries in the right direction. What gets measured gets done. We need to build trust in the level playing field framework first then build on these agreed standards with new data inputs over the medium term.
This should act as a call to action for businesses to equip themselves with strong data systems in order to substantiate their claims and communicate with accuracy. The time is up for poor substantiation and communication accuracy. There is no doubt that businesses who work proactively ahead of the new greenwashing regulations will reap the rewards in the long term and thrive in 2021 – the year of the level playing field.
To find out more about how Compare Ethics can help your business prepare for the CMA’s investigation into greenwashing, we will be hosting a live webinar on February 10th in collaboration with the CMA, to help you understand the latest developments in greenwashing regulatory change.