Whilst not defined in law, “greenwashing” is the term generally used to refer to businesses that mislead consumers in relation to the environmental impact of their products or services, either in marketing material, annual filings or general communications.

Increased consumer consciousness as to their own environmental impact, and subsequent demand for “eco-friendly” products and services, has led to more and more organisations making environmental claims. Businesses are not prevented from making such claims, and it is only right that businesses do publicise their achievements, but they must not mislead consumers in doing so.

Greenwashing litigation, and proceedings challenging the accuracy of environmental statements issued by organisations, are increasing, with recent estimates suggesting that globally over 2,000 organisations to date have been subject to such claims. This looks set only to increase, and at pace, as both consumers and activists seek to hold businesses to account for misleading assurances, and operations which are not considered to be environmentally friendly.

Historically, greenwashing claims have often been brought against oil producers and those involved in the manufacture of plastics. However, its scope is not so limited and claims have been seen across numerous sectors (including car manufacturers, investment houses, banks and high-street retailers) on the basis that businesses have misrepresented – or over-stated – their green credentials.

In light of the recently increased enforcement powers of the Competition and Markets Authority – to issue fines up to the higher of £300,000 or 10% of a company’s global turnover in response to misleading advertising – what are the key areas of risk for businesses to consider going forwards?

Sustainability reporting requirements

Hand-in-hand with the growth of environmental litigation is a parallel drive to increase consumer knowledge and provide clear information to purchasers as to the environmental impact of the products they purchase.

For example, recent history has seen the emergence of ‘eco-labels’, predominantly used by food producers, to provide an at-a-glance score of the environmental impact that a food item has had throughout its entire production process. These schemes are supported by a number of retailers and in much the same way that energy efficiency labels are affixed to white goods, ecolabels are likely to be an increasingly common sight and driver of consumer behaviour. It is hoped that, should this trend continue, there will be acceptance of a unified and mandatory labelling system, to avoid unnecessary confusion.

Also on the increase is the use by organisations of ESG (Environmental, Social and Governance) scores. Historically ESG scores have been used within the financial sector to assess the likely risk of default by a business, but more recently these scores have been adopted across multiple industries. The growing importance of ESG scores is reflected in the EU’s Corporate Sustainability Reporting Directive, which serves to make the scores part of companies’ annual reporting processes. The Directive also requires a far greater volume of data to be obtained, as well as an express and specific focus on sustainability initiatives and audits.

This is a seismic development for EU-based businesses, as it effectively places their sustainability credentials on an equal footing with their financial reporting procedures.

 CMA investigations

Within the UK, the Competition and Markets Authority (“CMA”) has launched a number of campaigns focused on greenwashing, initially targeting fashion retailers, Fast-Moving Consumer Goods (FMCG) producers and supermarkets. Of specific interest are sustainability claims, and the extent to which a certain item may be ‘better’ for the environment.

Not only has the CMA issued guidance to assist businesses in understanding and  complying with their legal obligations, but it has also published the Green Claims Code (https://greenclaims.campaign.gov.uk/) as well as issuing sector-specific guidance in late 2024 to the fashion industry.

The key take-aways from these publications are that when businesses are promoting their green credentials, they should ensure that their claims:

• are truthful and accurate;
• are clear and unambiguous;
• do not omit or hide important relevant information;
• make comparisons in a fair and meaningful way;
• consider the full life cycle of the product or service; and
• are substantiated.

 ASA investigations

Combined with the CMA’s specific focus, and increasing consumer awareness of green claims, the UK’s advertising regulator, the Advertising Standards Agency (“ASA”) is also becoming more active in this area.

The ASA administers the UK Code of Non-Broadcast Advertising and Direct and Promotional Marketing (the “CAP Code”) and the UK Code of Broadcast Advertising (the “BCAP Code”). The CAP and BCAP Codes require the basis of environmental claims to be clear and confirm that unqualified claims could mislead the public if they omit significant information.

Helpfully, the ASA has consolidated its guidance on misleading environmental claims under the CAP and BCAP Codes. This guidance sets out the principles which the ASA uses when assessing environmental claims in advertising and promotions. Some key points for businesses to consider are:

1. Marketers must consider consumers’ likely interpretation of a claim and include additional information where necessary to make claims clear.
2. Marketers should not assume a high level of knowledge.
3. Marketers must be able to substantiate claims and ensure they hold robust documentary evidence to prove all claims before submitting marketing communications to publication. If a significant division of scientific opinion exists or evidence is inconclusive, that should be made clear to readers: marketers should not suggest that their claims command universal acceptance if they do not.
4. General claims about environmental credentials should not be made without qualification, unless the marketer can provide evidence to show the claims relate to that product or service’s entire lifecycle.
5. Even where claims can be substantiated or are technically correct, advertisements must not mislead consumers about the environmental benefit of a product or service.

Litigation

Broadly speaking, greenwashing litigation often proceeds as a claim for misrepresentation under the Digital Markets, Competition and Consumers Act 2023 (the “Act”), which replaced and updated the previous Consumer Protection from Unfair Trading Regulations 2008 (the “Regulations”).

In summary the Act, which applies to the dealings businesses have with consumers from 6 April 2025, serves to prohibit unfair commercial practices (including misleading acts and behaving aggressively). Like the Regulations which preceded it, the Act lists a number of practices which are always considered to be unfair (such as fake reviews and misuse of trust marks), and serves to prevent practices which would cause an average consumer to take a transactional decision they would not otherwise have taken.

In the context of greenwashing, vague claims such as ‘eco’ or ‘sustainable’ are generally interpreted as absolute claims which indicate that a business, product or service does not have any prejudicial environmental impact across its full scope of operations. Any environmental assurances promoted by a business must be capable of definitive substantiation, otherwise, they are likely to fall foul of the legal requirements. Substantiation may itself require third party verification.

How can businesses stay out of trouble and protect themselves from accusations of greenwashing?

The focus of the regulatory investigations by the ASA and CMA is to identify and address those green claims which are made without supporting evidence, or which are generally vague and incapable of independent verification.

Greenwashing claims are commonly thrown about, particularly in sectors which are seen as contributing to climate change. Any suggestion that a business has sought to mislead, or acted disingenuously in connection with the environmental impact of its operations, will only serve to place it in the spotlight for future claims.

However, there are steps businesses can take to avoid allegations in the first instance, deflect claims and ensure that any publicised environmental claims are capable of scrutiny. As a starting point, organisations must be honest in their assurances and ensure that any public statements are supported by data and strong evidence. Vague and general assertions should be avoided, as should any language which implies that sustainability obligations are taken more seriously than may be the reality. Businesses must not only consider customer-facing assurances, but they must also make sure that any behind the scenes activities can also withstand scrutiny, should there be an instance of green whistleblowing.

It is also recommended for businesses to:

1. comply with any sector- or product-specific laws which apply to their products or services;

2. read the Green Claims Code and ensure all operations are compliant with legal consumer protection law obligations;

3. provide a balanced and transparent view when promoting their environmental credentials, and contextualise any assurances made;

4. consider carefully whether there are any businesses practices which require revision, to make them more environmentally friendly;

5. undertake regular internal audits of marketing and other material to ensure that best practices are being followed; and

6. ensure compliance with the CAP and BCAP Codes, particularly by avoiding making false or deceptive statements, ensuring claims are compliant and providing consumers with the information they need to make informed choices.

Conclusion

Greenwashing litigation is noticeably increasing in frequency and intensity, and consumer consciousness of environmental issues is only going to continue at pace. Scrutiny of an organisation’s stated green credentials is to be welcomed, and it is right that such matters are considered and promoted at the highest level within businesses. Nevertheless, in so doing businesses must resist the temptation to utilise misleading or unsubstantiated marketing and labelling.

Historically, claims around this issue have related to a physical characteristic or intrinsic quality of a product, such as a product’s performance when compared with competitors. That being said, the relevant legislation is not drafted in such restrictive terms and the promotion of a product’s green credentials will likewise fall within their scope, especially if the use of such phrases or assurances results in a consumer entering into a transaction which they may not have otherwise.

It is those businesses which are unable to produce supporting information or evidence who are likely to fall foul of this investigation and be subject to enforcement action. At their core, greenwashing claims seek not only to ensure that organisations act in environmentally friendly ways, but also that they provide clarity, transparency and honesty as to the environmental impact of their activities.

Conversely, whilst such claims and litigation are intended to lead to greater candour and transparency, they may also inadvertently lead to ‘green-hushing,’ as organisations seek to downplay or provide minimal details in relation to their environmental impacts to avoid scrutiny.

In the final piece in our series commenting on Manchester’s aims to achieve net zero by 2038, we look to the future and offer our predictions as to some of the key environmental issues for businesses going forwards.

Manchester’s objectives – and the UK as a whole – are clear, as are the opportunities for businesses to cooperate and participate in achieving net zero. As we have highlighted in our previous blogs, businesses can no longer shy away from their environmental impact, and must integrate ‘green’ issues and how they consider them in their day-to-day operations.

But what does this mean in practice?

Whilst environmental impact is not a new concern for businesses, unlike in the past, in the next few years the promotion of environmental objectives will be placed onto at least an equal footing and importance as other daily business concerns.

Appreciation of environmental impact

As we have highlighted in previous blogs in this series, there are many ways in which businesses can help contribute to Manchester’s goals.

All of these measures however require businesses to evaluate their environmental footprint, and then to take measures to address specific issues arising. For example, we have previously touched upon cycle to work schemes and onsite EV charging. Whilst not necessarily applicable to every business, these are perhaps obvious areas for businesses to consider if they can reduce their carbon impact.

Likewise, our blog series has also commented on the potential to retrofit the built environment. There are a number of potentially ‘easy wins’ in this regard, in terms of upgrading insulation and heating systems, but there are cost consequences.

We recommend that businesses take the time now to consider all aspects of their operations, and assess where and how measures can be taken to contribute to the net zero aims. It would be advantageous for businesses to undertake this task now, before they are compelled to do so, in order to best position themselves going forwards in light of expected growth in this area.

Lengthier due diligence exercises

As environmental awareness increases, and local and national drives to achieve net zero pick up pace, we anticipate that this will be reflected in more protracted and complicated due diligence exercises.

We have touched upon some of the relevant concerns within this series, but the net result will require businesses to consider additional matters when considering purchases and acquisitions. For example, where new build commercial properties are constructed with the benefit of on-site energy generation, issues of licensing, regulatory requirements and health and safety will need be incorporated into enquiries. The consequence of considering such additional matters will be to increase the cost of, and time required to complete, legal due diligence.

Cultural change

It is accepted that net zero cannot be achieved overnight, and will require a concerted and consistent approach across all sectors. That being said, change needs to start somewhere and may for many businesses require a cultural change and significant revision to their current operating procedures.

Such changes can only flow from the top of an organisation, and the active promotion and furtherance of environmental aims cannot be seen or treated as a simple tick-box exercise. The achievement of net zero will require a new mindset and a genuine prioritisation of the objectives to be achieved.

Solid foundation for environmental claims

In contributing to the region’s net zero aims, businesses may want to promote their own environmental credentials – either by way of encouragement of others, or to promote the steps they are taking. However, organisations must remain mindful that any ‘green’ claims they publish about themselves must be accurate and not misleading. Recent years have seen an almost overnight increase in the number of ‘greenwashing’ claims, and the Competition and Markets Authority is actively investigating claims of sustainability.

In order to avoid falling foul of these novel causes of action and litigation, businesses need to be conscious of the way in which they publicise their net zero actions and, where necessary, have in the background clear data to demonstrate the validity of their claims – for example, in terms of their environmental sustainability or net zero achievements.

Increasing importance of ESG scores

Environmental, social and governance scores have existed for many years, although historically they have been used by financial institutions to benchmark their performance against competitors and assess likelihood of default by a business.

The last few years has seen a rapid increase in their prevalence, across all sectors, and we predict that they will only play an ever more central role over the coming years. Not only does the EU Corporate Sustainability Reporting Directive serve to mandate the inclusion of ESG scores within companies’ annual reporting processes, but this information will also likely play an increasingly seismic role in M&A deals, and is already being seen as a key influencer in investment decisions:. Investors will require clear and unambiguous confirmation that their investments have verifiable ‘green’ credentials.

Carbon accountability

Han-in-hand with the increase in ESG scores, we anticipate that the next few years will see an increasing awareness, and benchmarking, of carbon accountability. Manchester has already provided information as to how much carbon its net zero measures have saved, and we consider it is only a matter of time before similar information is volunteered by other sectors.

To date, these scores have mainly been used by aviation companies to provide information as to the carbon impact of individual flights, but we anticipate their spread into construction, hospitality and retail.

As worldwide efforts to achieve net zero increase, and consumers become more alive to their own environmental impact, carbon scores will likely become increasingly omnipresent and a key driver of consumer behaviour. It may be the case that carbon limits are in time placed on businesses, and potentially individuals, as further drivers of change. For example, similar initiatives have been introduced by some banks which have already started to offer card accounts with an in-built carbon tracker.

In time, it may be the case that retail goods, and other purchases, are provided with an individual ESG/ carbon accountability score in much the same way that energy efficiency ratings currently attach to white goods.  We therefore recommend again that business look now at where their main carbon spend is occurring, and what measures may be available to address and reduce this.

War on plastic

Although our series has not focussed on the war on plastic, Manchester’s actions towards net zero are taking place against the national background of this issue. The government has stated its desire to avoid all avoidable waste by 2042, and recent years have seen the prohibition on sales of certain items, such as single-use plastic cutlery, and the introduction of the plastic bag charge.

Businesses are not immune to these measures and have been equally affected by the Plastic Packaging Tax and extended producer responsibilities, both of which serve to impose waste management cost obligations on businesses for the packaging they generate and handle.  Whilst the purpose of these regulations is to encourage and incentivise durability, repairability and recycling, and move away from disposal as the default option at a product’s end of life, the additional costs generated are almost certainly going to be passed on throughout the supply chain.

As part of the suggested internal review and assessment identified at the start of this piece, businesses need to start considering now whether any of their produced items can be redesigned using environmentally friendly components, or re-packaged in a way that supports environmental targets.

What does the future hold?

Absent of a crystal ball, no one can predict with certainty what tomorrow may bring, but so far as the achievement of net zero and climate action are concerned, the route is clear: preservation of the environment is to be promoted.

We suggested at the outset that businesses may want to consider now (before they are obliged to do so) what their environmental footprint is and how they may be able to reduce this so as to contribute not only to their immediate community, but also the wider objectives stated by Manchester and central government.

Whilst this will almost certainly result in immediate costs being incurred, these perhaps pale into insignificance given the greater good to be achieved.

Photo: Sakorn Sukkasemsakorn

In the second of our series focusing on Manchester’s aim to become a zero carbon city region, we take a look at transport and travel. It is well accepted that transport is the largest contributor to greenhouse gas emissions, contributing just less than a quarter of all UK domestic emissions in 2020. Emissions from cars and taxis account for more than half of this figure.

Greater Manchester is not alone in facing a significant challenge, but it has clear objectives in response, which mirror those being pursued at a national level.  For example, in the Department for Transport publication ‘Decarbonising Transport: Setting the Challenge,’ the UK Government has set itself an ambitious target of zero emissions across all modes of transport by 2050. The publication anticipates achievement being attained through a combination of facilitating the transition to large-scale use of zero-emission vehicles, and supported by the implementation of a meaningful and effective refuelling infrastructure, including the installation of 300,000 public charge points by 2030.

How does Manchester hope to achieve its aims?

Within its own operations, the Council has committed itself to reducing direct emissions by replacing its fleet with electric vehicles, and hopes to reduce its emissions by between 35%- 45% by 2025.

The city region is eager to encourage sustainable and accessible travel options across its boroughs but beyond its own activities, the wholesale uptake of zero-emission vehicles faces a number of significant logistical hurdles. For example, electric vehicles require somewhere to re-charge and whilst for many it is possible for their vehicles to be charged at home overnight, within Manchester approximately 60% of homes do not have access to off-street parking.

For those who do not have access to home charging, their only option will be to access the public network. Pending the development of improved battery technology and mileage, the fundamental difficulty of availability of charging stations is not easily overcome.

To meet objectives it is expected that by 2030 there may need to be upwards of 3,000 additional public charge points within the Manchester region. Manchester has published the EV Charging Infrastructure Strategy which sets out its role in providing more charge points, but the Council is reluctant to install on-street charge points as these can:

“cause obstructions to pavements and street clutter, and we do not support the use of cables crossing the pavement to charge vehicles at the roadside… as these can cause trip hazards.”

Recent figures indicate that Manchester is perhaps some way behind other regions in the UK in this regard, with around 24 charging points per 100,000 population, compared with the UK average of 42 per 100,000.

Although there is no statutory duty to provide public charge points, Manchester is looking at opportunities within council-owned car parks to expand the public network for residents and businesses, and within the last few months there have been announcements to construct charging ‘oases’ within the city to address some of these concerns. However, replicating the service provided by petrol stations is not without some hindrance. Whilst there are a number of different charging systems available, with varying recharge speed from a few minutes up to several hours, were Manchester to be successful in its aim then it will need to ensure that re-charging is able to take place on demand and within a reasonable period of time.

Central Government plans to ban the sale of new petrol and diesel cars by 2030 are well under way, but by contrast the uptake of electric vehicles remains sluggish. For example, by the end of March 2022 there were still less than 2,000 plug-in cars registered in Manchester, equating with around only 1% of the total number of cars registered. This is below the UK average of 2.4%.  Whilst the transition will not happen overnight, to enable individuals to move freely, efficiently and at low-cost, whilst also being environmentally friendly, there needs to be a viable alternative to current combustion engines.

Hydrogen is being considered as an alternative fuel source although the enabling technology still requires refinement and, in addition, there are very obvious safety risks arising from the storage and use of this fuel. Current plans for hydrogen fuel appear to be restricted to the haulage sector, and do not extend to domestic and residential travel. Therefore, this is not something which will necessarily help to achieve objectives in the shorter term.

Barriers to implementation

The aims are laudable and are to be welcomed.  However, despite their increasing presence, electric vehicles are far from the predominant mode of transport and the impact of the Government’s intended ban on the sale of fossil fuel vehicles will not be fully appreciated for many decades yet. Likewise, the transition to a net zero transport network is likely to be many years away.  The fact that success will not be achieved overnight is not a reason for the objectives not to be pursued in the interim, but implementation must be mindful of the very real logistical problems that need to be overcome.

There are also concerns as to how ‘green’ electric vehicles actually are, and the level of ‘carbon debt’ created during their manufacture. For example, at present not only are electric vehicles generally more expensive to buy, but their production requires the input of significant volumes of fossil fuels. In addition, questions remain as to how electric vehicles, specifically their batteries, are to be stored and disposed of at end of life.

The electricity required to power electric vehicles also needs to be sourced from within the national grid, and the mass charging of vehicles at peak times is likely to put a strain on the system. Although wind and solar and renewable energy sources are currently active within the network, the proportion of energy generated by them is not only intermittent but also lags far behind the energy generated through fossil fuel usage.

What can businesses do to assist?

There are no statutory requirements at present for businesses to contribute to net zero through assisting and enabling a greener transport network.  Whilst grants are available, the transition to green and sustainable alternative fuels remains a costly option, which is also accompanied by logistical issues and numerous other considerations.

That being said, the objectives have been stated loud and clear and, in order to position themselves, businesses may want to consider the feasibility of alternative fuel and transport. For example, car share and cycle to work schemes may be one option, but it is accepted that these may not always be possible or practicable depending on the nature of the work undertaken by an organisation.

Alternatively, business may wish to consider providing electrical charge points and, for those involved in the haulage sector, it may be worthwhile exploring the availability and applicability of hydrogen to their operations, despite technology realistically still being a few years away from wholesale adoption.

As corporate ESG scores increase in importance, especially following the implementation of various sustainability reporting requirements, businesses would be well advised to give careful consideration to actively implementing ‘green’ measures within their day to day operations, including in respect of their transport and travel needs.

Such changes will not come overnight, and will require a concerted effort to achieve them, as well as behavioural and cultural change.

Our next commentary piece will consider how behaviour may be influenced and shaped to assist the transition to green technology. To read our first blog in the series, visit https://pannonecorporate.com/manchesters-move-towards-net-zero/