Businesses must make sure they do not overstate their environmental credentials during their advertising campaigns. Doing so could constitute “greenwashing”.

The term ‘greenwashing’ was first coined by an environmentalist in the USA during the 1980s, but it did not enter common use until recently.

Some examples of corporate greenwashing tactics include:

• Claiming positive Environmental, Social, and Governance (ESG) processes while they are being implemented, when actual progress or results are yet to be achieved.
• Cherry picking product attributes or data and ignoring others which would be negative in environmental terms.
• Misuse of labelling schemes

The Advertising Standards Authority (ASA), the UK’s independent advertising regulator who makes sure that ads across UK media stick to the advertising codes, has been clamping down on greenwashing in advertising recently.

Shell has been found guilty of ‘greenwashing’ with an advertising campaign themed ‘ready for cleaner’ that breached advertising guidelines. The ASA ruled the petrochemical giant’s campaign was misleading as it left out information on Shell's more polluting work with fossil fuels. The adverts found to be in breach are banned from appearing in future.

It's the latest such breach to be confirmed by the ASA, following bans for Tesco for a plant-based burger ad, a Persil advert, and two HSBC adverts, all of which were found to be misleading in their claims of environmental benefits.

Action like this to tackle inflated environmental sustainability claims is only likely to increase in future, as we see rising consumer and investor demands for products and services that really fulfil sustainable objectives.

Companies who may have selectively highlighted some actions over others, or perhaps slapped a green label and a recycle logo on a product, need to be aware that their customers are going to look below the surface to be sure they are not being offered empty promises by brands.

The practice of corporate greenwashing has been in the spotlight in the financial services sector too. The Financial Conduct Authority has anti-greenwashing rules on its schedule for later this year, for inclusion in its Sustainability Disclosure Requirements (SDR).

Certainly, larger organisations need to be clearly focused on ESG ratings, as this increasingly drives investment decisions in financial markets. This type of attention will inevitably filter down to smaller enterprises in terms of consumer demands.

The ASA and sister organisation CAP updated their guidance on 23 June 2023 to help businesses comply with their codes for broadcast and non-broadcast advertising, sales promotions and direct marketing communications, including postings on social media.

This is not legal advice; it is intended to provide information of general interest about current legal issues. You should seek specific legal advice before acting in reliance on any of the information provided.