Everything You Need To Know About The Law Around Greenwashing

In September 2014, British Airways was forced to withdraw a staff perk involving cut-price flights on private jets following accusations of greenwashing. An email making the offer was sent just days before the national airline announced that it had signed a £9 million deal with the UK’s biggest purchaser of carbon dioxide removal credits. British Airways called the deal a critical step in its “ambitious drive to accelerate the airline’s climate change efforts.” 

Private jets release up to 14 times more pollution than commercial airlines because they carry so few passengers. A spokesperson for Greenpeace told The Times:

“British Airways has an extensive back catalogue of greenwashing scandals, but the company’s bosses must be drunk if they think they can strike deals with private jet companies, dish out cheap flights on the most polluting mode of transport, while trying to convince us all that they’re attempting to cut BA’s emissions by capturing carbon from whisky. It’s almost laughable.”

This latest greenwashing scandal shows that even large companies with significant legal, compliance, and marketing resources at their disposal can take actions that can result in greenwashing claims. To ensure your business does not face reputational damage and potential regulatory investigations and civil litigation, it is essential to understand the law around greenwashing and make avoiding it an integral part of your Environmental, Social, and Governance policy.

What is greenwashing?

The core concept of greenwashing is the act of misleading third parties, such as consumers, suppliers, and investors, by overstating the positive environmental impact of a product, service, brand, or business. However, individual regulators and enforcement bodies have created their own definitions of greenwashing. For example, the Competition and Markets Authority (CMA) defines greenwashing in its Green Claims Code as environmental claims that suggest or create the impression that a product or service:

  • has a positive environmental impact or no impact on the environment;
  • is less damaging to the environment than a previous version of the same good or service; or
  • is less damaging to the environment than competing goods or services.

You also need to be familiar with the following terms:

  • Greenbleaching/greenhushing – downgrading, downplaying, or staying silent on the environmental credentials of a product or service to avoid inadvertent greenwashing or admitting to missing environmental targets.
  • Bluewashing – overstating the positive social impact of a product, service, or brand. This is referred to as pinkwashing or rainbowwashing in the case of LGBTQ+ information.

What is the law around greenwashing?

  • The Consumer Protection from Unfair Trading (CPUT) Regulations 2008 –protect consumers from unfair commercial practices, including misleading advertising and marketing. 
  • The Digital Markets, Competition and Consumers Act 2024 – this received royal assent on 24 May 2024 and will revoke and reinstate the CPUT with similar rules (the most notable changes concern fake reviews and drip pricing). 
  • The Business Protection from Misleading Marketing Regulations 2008 – which prohibit advertising that misleads traders (rather than consumers) and also regulates comparative advertising. 

The Green Claims Code (see above), the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code), and the UK Code of Broadcast Advertising (BCAP Code) support the above legislation.

If your organisation breaches any of the above legislative provisions, it could be subject to a regulatory investigation and prosecution.

What are the civil liability risks associated with greenwashing?

Part of any company risk management plan must now include mitigating the chance of civil claims associated with greenwashing. Examples where risks occur are:

  • Section 90 of the Financial Services and Markets Act (FSMA) provides that investors who suffer a loss through misleading or untrue statements or omissions can claim liability against the person responsible for the prospectus or listing particulars that included the statements (or failed to include them).
  • Sections 172 and 174 of the Companies Act 2006. The former covers the duty to promote the success of the company; the latter states that directors must exercise reasonable care, skill, and diligence.
  • Section 260 of the Companies Act 2006 allows company members to bring a derivative claim where they are seeking relief on behalf of the company from a cause of action arising from a director’s negligence, default, breach of duty, or breach of trust.

Directors can also be liable for greenwashing under misrepresentation and negligent misstatement and via consumer law civil claims.

Getting legal help

If you have been accused of greenwashing and are facing a regulatory investigation or civil claim, it is crucial to get legal advice immediately. Waiting too long can result in prosecution being or the case going to court, jeopardising your commercial reputation and financial solvency.

Get in Touch

Tanveer Qureshi specialises in general crime, white-collar crime and regulatory investigations and prosecutions.  If you require legal representation or have a related question, please contact me for free consultation or call me directly on ​0203 637 2190.