Checklist: Greenwashing risk assessment (UK)

Introduction

This checklist will assist organisations in identifying, evaluating, managing and monitoring greenwashing risks. It is aimed at in-house counsel, marketing and public relations teams, compliance teams, boards of directors and senior management, in organisations of all sizes and in all sectors. The checklist has a specific focus on the UK but the practical steps and guidance provided will also be useful in other jurisdictions.

The checklist addresses the following steps:

1. Understand when greenwashing risk may arise and identify the applicable regulatory and/or legal framework
2. Conduct greenwashing risk assessment
3. Manage any greenwashing risks
4. Ongoing monitoring and management of greenwashing risk

The checklist is presented as a list of requirements that can be checked off as they are addressed. At the end of each step there are explanatory notes corresponding with each requirement in the checklist. It can be used in conjunction with the following How-to guides: How to understand and avoid the risks of greenwashing and How to navigate the regulatory and litigation risks associated with greenwashing in the UK and EU.

Step 1 – Understand when greenwashing risk may arise and identify the applicable regulatory and/or legal framework

Step 2 – Conduct greenwashing risk assessment

Step 3 –Manage any greenwashing risks

Step 4 – Ongoing monitoring and management of greenwashing risk

Explanatory notes

Greenwashing risks may arise in relation to any claims or statements made by organisations about their environmental (including climate change) credentials in relation to the products and/or services they sell. At its core, greenwashing is about misrepresentation, misstatement and false or misleading practices – either intentional or unintentional – in relation to environmental credentials. This creates reputational, regulatory and litigation risks for organisations.

For further information about the regulatory and litigation risks associated with greenwashing in the UK and EU, see How-to guide: How to navigate the regulatory and litigation risks associated with greenwashing in the UK and EU.

Legal framework

There is no harmonised legal definition of greenwashing. However, some jurisdictions have adopted specific rules and regulations that require organisations to consider and substantiate the veracity of environmental claims that they make in relation to their products and services, for example:

• the UK Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements and investment labels (SDR);
• the UK Green Claims Code;
• the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code);
• the UK Code of Broadcast Advertising (BCAP Code);
• the UK Digital Markets, Competition and Consumers Act 2024 (DMCCA) (which replaces the Consumer Protection from Unfair Trading Regulations 2008)
• the UK Green Claims in Fashion;
• Directive (EU) 2024/825 – Empowering Consumers Directive; and
• the proposed EU Green Claims Directive.

Some examples of the operation of greenwashing legal frameworks are set out below (see Greenwatch: Issue 4 for further details): 

• In the UK, the Competition and Markets Authority (CMA) has obtained first-of-its-kind undertakings from three UK fashion retailers (Boohoo, ASOS and George at Asda), requiring them to take action in relation to their green claims. Such undertakings act as a benchmark for assessing green claims within the fashion industry and more broadly.
• In the Netherlands, a Dutch environmental campaigner has succeeded in establishing that green claims by one of the country's most high-profile companies – KLM – were unlawful.
• In Australia, the securities regulator has obtained its first greenwashing success in court against an investment company.

Step 1 – Understand when greenwashing may arise and the applicable regulatory and/or legal framework

1.1 Understand the meaning of environmental or climate claims

Environmental or climate claims that put organisations at risk of greenwashing include:

• any form of environmental claims, for example, claiming that products are ‘green’, ‘sustainable’, environmentally friendly’ or ‘eco’;
• any form of claim in relation to climate change, for example, that a product is ‘net zero’ or ‘carbon neutral’; or
• any claims about the organisation’s future climate goals, for example, net zero targets.

1.2 Understand when environmental or climate claims might put an organisation at risk of greenwashing

When organisations make environmental or climate claims, the following factors are likely to present a higher risk of greenwashing:

• lack of clarity – eg, using broad and vague language, creating the impression that an item or service is more environmentally sustainable than it actually is;
• the criteria used to decide which products to make environmental claims about is too low, for example stating that a product is recycled when the product contains as little as 20% recycled material;
• insufficient information available to customers about products included in any ‘eco range’, such as what material the product is made from; and
• if an organisation refers to any accreditation scheme and/or standard, lack of clarity about whether the accreditation applies to particular products or to the firm’s wider practices.

Such claims may concern the impact on the environment in general or on specific environmental aspects such as the climate, air, water or soil. They can be explicit (eg, text and/or logo) or implicit (eg, form of environmental images and/or colours).

If an organisation does make any such claims, it is potentially exposed to greenwashing-related liability risk, ie, regulatory action and potentially civil and/or criminal liabilities, particularly if such claims could be considered to be misrepresentation, misstatement and false or misleading by consumers or other businesses.

1.3 Identify the relevant laws and regulations

All UK organisations making environmental (including climate change) claims regarding their products and/or services must be aware of the requirements of:

• the Green Claims Code (GCC) – developed by the Competition and Markets Authority (CMA). The GCC does not create new legal obligations for businesses but clarifies the CMA's view on how consumer protection laws (including the CPRs) apply in practice to environmental claims;
• the DMCCA – make it unlawful for a business to engage in ‘unfair commercial practices’. These include making misleading statements about a product or service (including by omitting material information) if it is likely to affect consumers’ purchasing decisions;
• the Business Protection from Misleading Marketing Regulations 2008 (BPMMR) – similar rules to those set out in the CPRs exist for business-to-business environmental claims, which prohibit ‘misleading advertising’ (ie, advertising that it likely to deceive another business and affect its economic behaviour, or which, for those reasons, is likely to injure another competitor); and
• the CAP Code and the BCAP Code (the Codes) – Rules 9 and 11 of the BCAP Code and CAP Code, respectively, relate directly to environmental claims contained in advertising materials. For example, the Codes require the basis of any environmental claim to be clear to consumers and to be based on the full life cycle of the advertised product or service. The Codes also require any absolute claims to be supported by a ‘high level of substantiation’.

There may also be applicable sector-specific regulations (eg, the FCA ‘Sustainability Disclosure Requirements and investment labels’ (SDR) regime for the financial services sector), and organisations making such claims or disclosures to consumers or businesses in other jurisdictions must also be aware of any applicable rules and regulations in those jurisdictions.

Further detail and information about the laws and regulations that impact greenwashing can be found in the How-to guide: How to navigate the regulatory and litigation risks associated with greenwashing in the UK and EU.

Step 2 – Conduct greenwashing risk assessment

Once familiar with the concept of greenwashing and the relevant laws and regulations, organisations seeking to minimise their greenwashing risks should carry out a greenwashing risk assessment by following the steps outlined below.

2.1 Review relevant materials to identify all environmental related statements, claims and disclosures

Review all public facing and other third-party facing materials and communications, advertisements, marketing material, branding (including business and trading names), packaging and other information provided to consumers and other businesses, eg, annual reports and filings (including transition plans), and communications to clients or other public statements.

Identify all environmental (including climate change) related statements, claims and disclosures contained in those materials, eg, claims that a product is ‘sustainable’ or ‘eco-friendly’. Ensure the review also identifies any implicit claims (see step 1.2 above).

2.2 Assess whether any environmental related statements, claims and disclosures are accurate, reliable and legally compliant

Identify whether the statements, claims and disclosures identified under step 2.1 above are in accordance with all applicable regulations and legislation. Also, test whether the claims are able to withstand scrutiny by considering the issues set out below.

2.2.1 Consider the presentation and accuracy of any claims

Ensure that:

• any claims about the environmental characteristics of a product or service are accurate, clear, fair and not misleading;
• language used in any claims and disclosures is not broad or generic, but is correct and precise;
• all claims:
  • are presented in a way that can be understood;
  • are complete and do not omit or hide important information;
  • consider the full life cycle of the product or service; and
  • are based on verifiable data;
• only genuine ecological and environmental logos and symbols that have been approved for use by the relevant issuer are used;
• where claims are made regarding net zero or reduction of greenhouse gas emissions and they are based on off-setting (in whole or in part), this is clearly explained;
• any comparisons to other products or services are fair and meaningful – claims comparing the environmental characteristics of products and services should make clear what is being compared, how a comparison is being made and should compare like with like; and
• care is taken when making claims about the extent to which a feature of a product or service has environmental characteristics, when it may simply be meeting minimum legal requirements.

2.2.2 Ensure that all claims can be substantiated

Ensure that all claims are capable of being substantiated. This is likely to also require due diligence on information provided by suppliers, to ensure that claims being made within the supply chain are also accurate and clear.

All substantiation of claims should:

• be based on accepted scientific methodologies, recognised scientific evidence and state of the art technical knowledge;
• be independently verified or certified by accredited relevant organisations where possible;
• be robustly documented, as should all decisions regarding the substantiation of such claims; and
• not be retrospective and should be made available at the time a claim or disclosure is made.

As an example of how to substantiate claims, the CMA refers to a cleaning company that claims it is the ‘UK’s most sustainable cleaning solution’. It refers to this as an absolute claim that requires robust substantiation to prove that the company's practices are more environmentally friendly than any other cleaning company’s service on the market. The company should hold evidence relating to its products and services and others across the market, on a range of relevant and objective measures, which demonstrate that point.

Step 3 – Manage any greenwashing risks

If any claims are identified that do not meet the requirements of applicable regulations or legislation, or may be considered misleading, misrepresentative, misstatements, false or inaccurate, an organisation is at risk of:

• regulatory action; and
• legal action from consumers and other businesses.

3.1 Identify and remove, amend or withdraw any non-compliant greenwashing claims and disclosures

If an organisation has made any environmental (including climate change) claims that put it at risk, it will continue to be at risk of allegations of greenwashing unless it withdraws, removes or amends such claims.

In relation to, for example, changing product packaging on goods that are already on the market, withdrawing the goods from the market may be difficult and costly. However, the potential reputational damage and costs of, for example, any enforcement action and/or financial penalties (which the CMA has said may be substantial) against the organisation may be even more costly.

3.2 Incorporate management of greenwashing risk into corporate governance

There are a number of ways in which organisations can ensure that management of greenwashing risk is incorporated into wider corporate governance.

3.2.1 Board level commitment

Incorporate awareness of greenwashing and how it gives rise to potential liability and reputational damage into corporate policies that are endorsed and overseen by the board (or equivalent). Adopt and implement a culture and leadership that champions environmental transparency and an anti-greenwashing approach.

3.2.2 Relevant expertise

Ensure that the board and executive management team have access to the appropriate skills and expertise to manage greenwashing risk. This will not only require legal expertise, but also sector-specific environmental, climate change and sustainability expertise. External counsel with experience of managing, or defending, greenwashing claims may be required in certain circumstances.

3.3 Review and strengthen the organisation’s procedures and controls for greenwashing risks

Ensure all levels of the organisation (including subsidiaries) understand their duties in relation to environmental statements (including climate change) and that this flows through board and business strategy, formulation and delivery, including net zero transition plans and any sustainability disclosures.

3.3.1 Organisation wide awareness and training

Key roles such as in-house counsel and marketing and communications teams should have training to ensure that they understand the legal requirements relating to greenwashing, are able to identify greenwashing risks, and can take steps to deal with any risks that arise. More generally, steps can be taken to raise awareness of greenwashing risks across the organisation. This might include staff bulletins, high-level training sessions and mentions in organisation-wide meetings and updates.

3.3.2 Implement robust checks and controls

Implement robust and appropriate checks and controls for the approval of marketing materials that include confirmation that any environmental claim has been verified or substantiated by an expert (ie, someone with relevant scientific and technical knowledge and expertise in the type of claim being made) and supported by a legal review by a lawyer that understands greenwashing risk. Use a checklist, for example, the Green Claims Code Checklist.

Step 4 – Ongoing monitoring and management of greenwashing risk

4.1 Regularly review environmental claims and supporting evidence

Regularly review environmental claims and any evidence that supports them, to ensure that the evidence is still relevant for so long as those claims are being communicated.

4.2 Regularly review corporate governance and internal policies and procedures

Organisations should also regularly review their corporate governance policies and procedures to ensure that they continue to reflect current regulatory requirements and best practice.

Additional resources

The Law Society (UK), Climate risk governance and greenwashing risks 
The Law Society (UK), Greenwashing: what do you need to know? 
www.gov.uk, Green claims: CMA secures landmark changes from ASOS, Boohoo and Asda
www.gov.uk, CMA to scrutinise ‘green’ claims in sales of household essentials
www.gov.uk, Greenwashing: CMA issues tailored guide for fashion brands

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Overview of climate legislation and regulation in the UK and Europe
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How to comply with climate-related regulations applicable to the financial services sector in the EU
How-to guide: How to navigate the regulatory and litigation risks associated with greenwashing in the UK and EU

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