The UK competition watchdog has given companies that make misleading claims about their environmental credentials until the end of the year to stop the practice, which is known as “greenwashing”.
Too many businesses were “falsely taking credit for being green” in order to woo environmentally minded consumers, the Competition and Markets Authority said.
The CMA highlighted the upcoming Cop26 climate conference being hosted by the UK in Glasgow, and urged firms to adhere to new guidelines it published on Wednesday to support global efforts to reduce carbon emissions.
Starting in 2022, the regulator will launch a review of misleading green claims, with sectors including fashion, transport, the beauty industry and food and drink likely to face particular scrutiny.
The CMA began looking into green claims last year, finding that up to 40% could be misleading to consumers.
The Advertising Standards Authority has clamped down on several major companies in recent years over greenwashing adverts, including the airline Ryanair, the carmaker BMW and the oil producer Shell.
The CMA’s work will focus on whether companies’ claims breach consumer law, with the regulator saying any transgression could result in sanctions even before the review begins.
Its work will be underpinned by the new guidelines some have called the “green claims code”, which highlights six principles of behaviour companies should adhere to when making claims about the environmental impact of their products.
Among the CMA’s guiding principles are that firms “must not omit or hide important information” and “must consider the full lifecycle of the product”.
Greg Hands, the energy and climate change minister, said: “Millions of UK households are rightly choosing to switch to green products as they look to reduce their carbon footprint. But it’s only right that this commitment is backed up by transparent claims from businesses.
“The competition regulator’s new code will help to ensure this with advice on how best to communicate and understand environmental claims.
“Government is also reviewing green energy tariffs to ensure consumers can be confident they are choosing companies that make a conscious choice to invest in renewable energy.”
Andrea Coscelli, the chief executive of the CMA, said exaggerating green credentials could be an outright breach of consumer law, liable to lead to sanctions.
“More people than ever are considering the environmental impact of a product before parting with their hard-earned money,” he said. “We’re concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms don’t get the recognition they deserve.
“Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA.”
Breaches of the relevant consumer protection legislation can carry a penalty of imprisonment for up to two years.