On February 10, the UK’s advertising regulator, the Advertising Standards Authority (ASA), announced the publication of updated guidance for advertisers making environmental sustainability-related claims to consumers, including use of the terms “carbon neutral” and “net zero.” The ASA explained that the amended guidance reflects the “key principles of the Competition and Markets Authority’s guidance on environmental claims on goods and services” and that “in light of the low understanding and lack of consensus around the meaning of carbon neutral and net zero claims, [the Committees of Advertising Practice] and [the Broadcast Committee of Advertising Practice] advise advertisers to take into account the following guidance, which draws on key principles of the [Competition and Markets Authority] guidance, and, if followed, means that claims are less likely to mislead.”
The updated guidance is as follows:
These amendments follow a review carried out by the ASA’s Climate Change and the Environment project, which identified the use of carbon neutral and net zero claims as a “priority area . . . given their increasing prevalence and the potential for consumers to be misled by them.” Participants of the review asked for greater transparency regarding offsetting and that there was little consensus as to the meaning of “carbon neutral” and “net zero.”
Last year, the ASA ruled that two UK retail banks had made “misleading” claims that “omitted material information” in their billboard advertisements. While ASA did not impose a financial penalty, the banks are not permitted to use the advertisements again and must ensure that future marketing communications making environmental claims were “adequately qualified and did not omit material information about its contribution to carbon dioxide and greenhouse gas emissions.” The ASA also has made greenwashing-related rulings involving companies operating in other sectors including an airline and an oil and gas company. In both of these cases, the companies were not permitted to use the advertisement again.
Taking the Temperature: The ASA states that it intends to “carry out monitoring” to assess the impact of the new guidance for up to six months following publication. Depending on the outcome of this review, there may be further developments to the rules governing advertisers. Additionally, the ASA states that they are aware of “entirely unqualified” claims being made, and that they will be taking “proactive action immediately to address such claims.” Firms operating outside the guidance should expect regulatory intervention. As a non-governmental self-regulatory organization (SRO), the ASA’s enforcement powers are somewhat limited. These include publishing the non-compliant companies’ details on its website until they comply, placing advertisements to highlight the non-compliance, working with social media and search engines to remove content and asking other ASA members to “revoke, withdraw or temporarily withhold recognition and trading privileges.” For persistent rule breakers, the ASA has the power to refer the companies to other consumer protection agencies such as Trading Standards. Notwithstanding the limits of its enforcement authority, the ASA’s action highlights that regulators around the world, including SROs, remain focused on greenwashing, and as we have commented, we expect litigation and enforcement activity arising from allegations of false sustainability claims to continue to increase in the near and medium terms.