CMA’s Cecilia Parker Aranha talks fighting greenwashing with its Green Claims Code

Episode 35 of the Influencer Marketing Lab podcast where the Competition and Markets Authority's Cecilia Parker Aranha discusses fighting greenwashing with its Green Claims Code.

The Influencer Marketing Lab podcast is sponsored by Tagger the data-driven influencer marketing platform and social listening tool.

Show notes

Welcome to episode 35 of the Influencer Marketing Lab - a weekly podcast tracking the growth spurts and growing pains of influencer marketing.

This week I'm in conversation with Cecilia Parker Aranha, Director of Consumer Protection at the UK’s Competition and Markets Authority. We take a closer at sustainability, and how influencer marketers can avoid the charge of greenwashing by following the CMA's Green Claims Code.

Podcast episode highlights

In this episode we:

• The aims of the Green Claims Code
• What points it covers
• How it affects brands, influencer marketers and creators
• The vertical sectors the CMA may prioritise
• Next year's review process

Cecilia Parker Aranha biography

Cecilia Parker Aranha has been a Director of Consumer Protection at the UK’s
Competition and Markets Authority since 2014.  She has led a range of enforcement
cases, including investigations into online hotel booking and breaches of consumer
protection law during the Coronavirus (Covid-10) pandemic.

Cecilia Parker Aranha is the Project Director for the CMA’s investigation into misleading environmental claims and is contributing to the CMA’s advice to Government on the relationship between the consumer protection law framework and environmental sustainability.  She represents the CMA in the International Consumer Protection and Enforcement Network, a global network of 60 consumer protection bodies, where she is currently co-leading work on greenwashing.

Cecilia has worked in Government for more than 20 years. She has a specialism in
consumer protection law and is a member of the Law Society of Scotland’s Consumer Law Committee.  Cecilia holds a degree in Law and German and an MSc by research in Social Policy both from the University of Edinburgh.

Useful links

• Green claims checklist
• For further information on how to implement and use green claims responsibly, read the Green claims full guidance.
• Cecilia Parker Aranha on LinkedIn
• Competition and Markets Authority on LinkedIn
• Competition and Markets Authority on Facebook
• Competition and Markets Authority on Twitter

Episode transcript

Scott Guthrie 4:07
Today, we're talking about the CMA's green claims code is to help businesses understand how to communicate their green credentials. But what's the main aim for the code?

Cecilia Parker Aranha 4:19
So this year, Scott, the CMA has a commitment to supporting the transition to a low carbon economy. And that means using our powers and in a way that will help shift consumption patterns and helped change market so that they are more sustainable.

We're concerned that people are being misled by environmental claims. And that makes it really hard for them to choose more sustainable options. And so with the green claims code, what we're hoping is that we will make sure consumers have the right information to make those choices that businesses feel confident in how they are complying with the law in this area. And that we're also will also be creating a level playing field for businesses that are genuinely trying to do the right thing for the environment.

Scott Guthrie 5:01
Why did the CMA feel there was a need for the Green Claims Code? And did it undertake any research ahead of the drafting?

Cecilia Parker Aranha 5:09
So there were a couple of things. We kicked off our work on misleading environmental claims about a year ago. We started with a call for information where we asked businesses, consumers, academics, other stakeholders, like NGOs, what their views were. There was a general feeling that greenwashing was a big problem, and that more guidance was needed in this space to really make a difference. 

We also worked with our counterparts in the International Consumer Protection community.  Between us, we did what we call a web sweep. So effectively, that meant looking at websites, identifying websites that were making green claims, and then assessing the information that was on there.

And when we did that web sweep, we concluded that about 40% of the green claims that we saw could be misleading.

That doesn't mean that 40% are misleading. But very often, what we were seeing was very vague wording, or we were seeing claims being made with no evidence to back them up, or at least no evidence that was being made clear to the consumer. So so we were suspicious of of those claims, and whether they were really genuine.

Scott Guthrie 6:20
So 40%, with potential red flags, that's quite an outcome. The codes are new, but does that mean it's new consumer protection laws that have been passed?

Cecilia Parker Aranha 6:32
No, these rules on consumer protection have been around since 2008, as have similar rules designed to protect businesses from misleading marketing. But we've seen such a big increase in consumer demand for green products, and a corresponding increase in products being marketed as good for the environment. And so what we're aiming to do with the Green Claims Code is to explain how the existing law applies to making environmental claims. And we hope that the code will encourage businesses to think carefully when they're marketing products as environmentally friendly and and that that will discourage greenwashing.

Scott Guthrie 7:05
Let's dig in a little bit now into the codes, how many there are, and what do they cover.

Cecilia Parker Aranha 7:11
The green claims code has six principles that we recommend to businesses or we tell businesses to comply with in order to minimise the risk of breaking consumer protection law.

The first one is about being truthful and accurate. And so for people to make good decisions about what they buy, green claims need to be honest, and they need to be accurate. And of course, that means that anything you say needs to be truthful. But you also have to avoid creating an inaccurate impression. So for example, a business shouldn't be saying that a garment is made with recycled fibres, if actually, it only contains 20% recycled fibres. And that labelling could create a misleading impression for consumers.

The next thing is, is really to be clear and unambiguous. Claims need to be transparent and straightforward. So your customers can easily understand them. And you shouldn't be presenting things in a way that will confuse customers. Now, among other things, that means using language which consumers can easily understand. 

But, that said, for people that are designing advertising or social media campaigns, you also need to be careful not to oversimplify the message so that that in itself becomes misleading. Otherwise, you risk falling foul of the first principle, or indeed the third principle, which is that you must not omit or hide important, relevant information.

And so we know what claims say can influence the decisions that customers make  when they're shopping. And if businesses leave out that important information that can influence that decision, it will happen or it can happen if marketing is focusing on saying one thing or not another, or if it says nothing at all about particular aspects of a product. So if you take, for example, claims around net zero and carbon neutrality, those claims are becoming increasingly common.

The businesses need to be clear about what they're doing and how they're doing it in order to live up to those claims. They need to give accurate information about whether and to what degree they're they're actively offsetting industry actively reducing emissions, and then what offsetting they're doing, and if they are offsetting emissions, they also need to provide information about any scheme that they're using. And particularly, it's helpful for consumer consumers to know if that's an audited or an accredited, offsetting scheme.

The next principle is around comparative environmental claims. And that's quite common to see as well these days you the comparisons can be to other products. So a business seeing our product at a lower carbon footprint than our competitors. Or it can be too early or version of the same product. So we quite often see these days now with reduced packaging. But it's really important that consumers aren't misled, by the way those claims are made. So, for example, a business might make a claim that according arranges greener, but if it doesn't say what it's greener than or why it's greener, it's probably not going to be acceptable from a consumer law perspective.

We also ask businesses to consider the whole lifecycle of the product. And it's worth noting in the UK at the moment, there's no obligation to provide full lifecycle information. But life cycle still matters because of the context in which the product is operating. So you need to think about whether the bit of the life cycle you're focusing on is going to create a misleading impression in comparison to the rest of the lifecycle. So probably easiest, if I give an example, if you claim that you're reducing the plastic content of your packaging, and you're only focusing on one part of the lifecycle. And if it turns out that you have switched to something that's got a higher carbon footprint to manufacture, or is harder to recycle, you could actually be misleading consumers by telling them that you've reduced the plastic in your packaging.

And then the last principle is, I think, probably the most important and that's, you have to have the evidence to back up your claims. And claims which aren't evidence back are much more likely to break consumer law. And I think the key thing for businesses is to start with the evidence. You know, once you know what impact you are making on the environment, or what impact you are not making on the environment, it's much easier to decide what green claims you can legitimately make.

Scott Guthrie 11:28
That's fascinating. Thank you, I tried not to interrupt you because it was fascinating you running through them. So in essence, there are six, six principles: 

1. Be truthful and accurate.
2. Be clear, and unambiguous.
3. Don't try and mislead by omission.
4. If you're comparing it, make sure those comparisons are meaningful.
5. Consider the full lifecycle of the product.
6. Prove it. start with the evidence. 

Would that be a fair way of summing up?

Cecilia Parker Aranha 11:59
Yep, that's right. And if you follow those principles, you're much less likely to end up in trouble with us or our enforcement partners.

Scott Guthrie 12:06
And of course, we're talking where you're talking about businesses. But when we're talking about business that spreads out to the agents, the agencies, the PR, and the marketing agencies, and the talent that they are working with, as part of media and advertising sponsored content, I presume?

Cecilia Parker Aranha 12:22
Yes, that's right. Businesses across the value chain might be liable for these misleading green claims.

Scott Guthrie 12:27
So we've got six principles, but are there any particular verticals or sectors that the CMA intends to prioritise?

Cecilia Parker Aranha 12:35
So we're in the process of deciding what sectors to prioritise at the moment. I think it's likely that we will target sectors where we see a lot of problems like fashion, beauty and personal care, food and drink. But it's really important to note that the guidance applies to every sector, and we're just at the beginning of this process. So businesses in every sector are at risk of intervention from the CMA if they're greenwashing. And just because we don't target the sector that you're in, in our upcoming compliance review, does not mean we will not be looking at you further down the line.

Scott Guthrie 13:08
You mentioned fashion and style, beauty and food and drink. Were you saying that they're the biggest offenders at the moment, or that they produce the most content?

Cecilia Parker Aranha 13:19
I don't think I can with any confidence that they're the biggest offenders at the moment, but they are sectors that we know matter a lot to consumers. People spend a lot of money on clothes, on personal care and on food and drink. And so it's these sectors where people are highly likely to be looking at things from an environmental perspective and making choices based on the packaging and advertising that they're seeing.

Scott Guthrie 13:45
That's an interesting point, Cecilia, because if you look at the proportion of brand sponsored posts on Instagram, number one is fashion and style 34%. Number two is beauty and cosmetics. That's 21%. Number three is food and drink at 16%. So combined, you've got 71% of sponsored content for within those three verticals. These verticals that matter a lot to consumers at the moment.

I mentioned at the top of our conversation that purpose-led influencer marketing campaigns are on the rise, particularly around sustainability and green issues. But in terms of liability, who is liable under consumer law, if an influencer campaign run on behalf of a brand fails to meet the requirements of the code, you mentioned the value chain, but just in terms of liability who potentially along that value chain is liable under consumer law?

Cecilia Parker Aranha 16:50
Businesses at any level of the value chain who are making misleading claims can end up being liable, whether they're making those claims directly to consumers or not. So it could include, for example, a brand which is paying for an influencer to market their product, the influencer themselves, and possibly the platform that is running the campaign. So really, it could be anyone in that process. In any investigation, the CMA would look at the role that everybody involved had actually played.

And of course, we would think carefully about where the most effective place to target our action was. So you know, if it's the brand that has generated the claims and the content, then they're in the best position to put things right. So we would, we would take a look at that. And it's also worth thinking as well, that outside of the CMA's investigation, agencies might well have contractual liability to businesses or to influencers. And of course, there are reputational risks as well if you get this wrong, that the businesses would need to think about.

Scott Guthrie 17:53
So: brand; influencer; platform and by inference, I'm guessing it's the agency - the influencer marketing agency; or the media agency that's involved within that chain as well.

Cecilia Parker Aranha 18:07
You could include that as well. And so the influencers themselves the individual influencers, could also find themselves liable.

Scott Guthrie 18:16
And what sanctions does, the CMA have at its disposal to seek to redress or to rectify wrongdoing?

Cecilia Parker Aranha 18:25
So at the moment, the consumer protection framework gives us power to investigate businesses. That means that we can gather information from them and we reach our own views on whether or not they are breaching consumer law. And usually, businesses will be given an opportunity to put things right on a voluntary basis by giving us a written commitment which will be publicised and which we'll monitor compliance with.

And if businesses don't make changes at that stage, we can then take them to court. And the court will pose a court order if it agrees with us, there has been a breach of consumer protection law.

Scott Guthrie 19:04
That could be a financial penalty?

Cecilia Parker Aranha 19:06
Any businesses that don't comply with that court order can be given a financial penalty. The court can also order and we can ask businesses for other forms of sanctions.

So we could ask them, for example, to publicise what has happened, what has gone wrong and right and tell our customers about it, for example, in some cases, we can seek redress for consumers, although that's most likely to happen in cases where you have obvious direct financial loss to consumers.

We cannot also ask businesses to implement new systems. So for example, if your business doesn't already have a robust system for ensuring that the messages you're creating or the content you're creating as complying with consumer law, we might ask you to look at that to bring in additional measures to make sure that you're you're not breaking consumer law and that your staff know what to do.

Scott Guthrie 20:01
So it's a lot more than just a slap on the wrist. It can be a lot more onerous, both financially and reputational. And, actually, operationally, as you're saying to reject the way that you're conducting business. Yeah, absolutely. So the CMA is currently building awareness around these codes. But what's next, we hope to ramp up your work on this next year.

Cecilia Parker Aranha 20:26
So we're kicking off a review in the New Year. As I said, We haven't decided which sectors yet. But we'll we'll start by looking at looking at some key sectors and looking at businesses in that and reviewing what they're doing to really understand to what extent greenwashing is an issue, and then to identify businesses who might need some enforcement action in order to get them into compliance. So if we do find businesses during the course of that, that review will then kick off enforcement action go through the process of of investigating them, and finding out what evidence they have to back up their claims and asking them to put things right if they're if they're going wrong.

Scott Guthrie 21:05
Is the CMA working with any other agencies or regulators on this endeavour?

Cecilia Parker Aranha 21:10
We work really closely with our enforcement partners. We are in regular conversations with other consumer protection enforcement bodies like Trading Standards, and also sector regulators. So people like OFGEM and the Financial Conduct Authority, who can also enforce rules under consumer protection legislation.

We also work very closely with the Advertising Standards Authority. And the ASA has recently announced that they're going to be focusing on the area of greenwashing and environmental claims in advertising over the coming year. And so we're talking to them regularly making sure we're joined up and hopefully to help consumers make sure that there's a consistent approach taken but also to make sure businesses are are getting consistent messages from from different regulators.

Scott Guthrie 21:58
So how can we do our bit and learn more as influencer marketers? Where can listeners turn to for more information about the green claims code,

Cecilia Parker Aranha 22:08
You can go to our campaign page, which is greenclaims.campaign.gov.uk. And from there, you'll find out more about our  principles.

There's a quiz that you can try and there's access to the full guidance. We also have some tips for consumers on that page as well to help consumers navigate green marketing. And we have a lot more information on our website that that people can take a look at,

Scott Guthrie 22:34
Celia Parker Aranha, director of consumer protection at the CMA thank you so much for your time and for your insights today.

Cecilia Parker Aranha 23:01
Thanks for having me Scott.