From recycled cards and coffee cups to paraben-free candles and creams, the environmentally friendly retail offerings of the UK charity sector (offered both online and in-store) are extensive. Many consumers look to charities they trust to purchase products which support a good cause and, at the same time, cause less harm to the planet… which is all the more reason not to undermine these positive initiatives with inadvertent ‘greenwashing’.
The expression and concept of greenwashing has become increasingly commonplace over the past few years. In legal terms, it is a false or misleading claim which has been made about the environmental impact of a product, service, or even an organisation itself. In recent years, the Competition and Markets Authority (CMA) has tackled greenwashing using its powers to investigate unfair commercial practices (UCPs) and enforcing through the Courts – a rather laborious and slow-moving route. The CMA also issued the Green Claims Code Green claims code: making environmental claims – GOV.UK back in 2021, providing guidance to organisations on what they ought (or ought not) to be saying in terms of environmental claims.
Now we have a new law which shakes up enforcement – the Digital Markets, Competition and Consumer Act 2024 (the DMCCA). It’s a behemoth of legal pick and mix, covering numerous ills facing the 21st century consumer. The UCPs are laid out clearly once more (plus a few new consumer protections such as changes to subscription contracts – another area for charities to note) but the most significant consumer law change is the power given to the CMA to investigate and directly enforce against ‘traders’ found to have infringed the new consumer laws, which includes greenwashing. This is likely to come into force in April 2025. With no court judgment needed, it’s a do not pass go, straight to a potential fine of 10% turnover for those who are found by the CMA to have infringed the law.
If you’re wondering, a ‘trader’ includes those selling the products to the consumer as well as those supplying the seller, up to and including manufacturers at the top of the supply chain. Definitely time to sharpen that due diligence pencil.
Whether it’s in relation to online or to ‘bricks and mortar’ retail activity, your organisation should get to grip with these new consumer protection laws and assess whether there is any risk of infringement. With its new consumer protection powers similar to its competition law powers, a CMA investigation is not to be taken lightly – significant resourcing can be required if your charity (or its trading subsidiary) is investigated and the risk from reputational damage is potentially of even greater concern.
We are following closely the various stages of the DMCCA’s ‘activation’. In the meantime, please do not hesitate to get in touch if you would like to know more about this or any other aspect of the DMCCA and how it impacts on your organisation.
For more information on the DMCCA, see our previous coverage: The DMCC Bill: a major upgrade to competition and consumer law? | Bates Wells and, in relation to subscription traps: DMCC Bill update: call for written evidence | Bates Wells.