Introduction
This guide will assist in-house counsel and private practice lawyers in their understanding and navigation of the regulatory and litigation risks associated with greenwashing in the UK and Europe.
This guide covers:
- Overview of greenwashing
- Regulation in the UK
- Regulation in the EU
- Greenwashing litigation
- Management of greenwashing regulatory and litigation risk
This How-to guide can be read in conjunction with How-to guide: How to understand and avoid the risks of greenwashing, which provides information and practical guidance about greenwashing generally, and Checklist: Greenwashing risk assessment, which provides detailed steps for organisations to follow for the prevention and mitigation of greenwashing risks.
This guide is focussed on business–consumer regulation, rather than business–business regulation (such as the UK Business Protection from Misleading Marketing Regulations 2008). It covers greenwashing regulation that is applicable to all sectors and does not cover sector-specific regulation such as financial services.
Section 1 – Overview of greenwashing
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.
In most jurisdictions, including the UK, there is no harmonised legal definition of greenwashing and the concept of greenwashing varies by product, service, regulator and jurisdiction. Examples of greenwashing provided by the UN in its article ‘Greenwashing – the deceptive tactics behind environmental claims’ include:
- claiming to be on track to reduce a company’s polluting emissions to net zero when no credible plan is actually in place;
- being purposely vague or non-specific about a company’s operations or the materials used in its products;
- applying intentionally misleading labels such as ‘green’ or ‘eco-friendly,’ which do not have standard definitions and can be easily misinterpreted; and
- communicating the sustainability attributes of a product in isolation of brand activities (and vice versa) – for example, a garment made from recycled materials that is produced in a high-emitting factory that pollutes the air and nearby waterways.
The EU describes greenwashing as ‘the practice of giving a false impression of the environmental impact or benefits of a product, which can mislead consumers’.
Greenwashing-related regulatory and litigation risks can arise as soon as an organisation makes any environmental or climate-related claim or statement. The risk increases if such claims are made by an organisation in, or to consumers in, a jurisdiction with a strong rule of law or anti-greenwashing regulations. Litigation may be brought by regulators, investors or strategic litigants.
Section 2 – Regulation in the UK
Tackling greenwashing is a priority for regulators around the globe, and as noted above, the prominence of greenwashing litigation is rising. A summary of the key greenwashing regulations in the UK, who they apply to and how they are enforced is set out below.
Note that not all of these are new, greenwashing-specific regulations; some involve the application of existing general consumer protection rules (eg, advertising rules) to greenwashing. This guide does not include any detail of broader sustainability disclosure regulations and standards that may also trigger allegations of greenwashing.
2.1 UK regulations applicable to all sectors
Any business, in any sector, that makes ‘environmental’ or ‘eco-friendly’ claims or statements about their goods, products or services in the UK, needs to be aware of the regulations and codes listed below.
- The Green Claims Code (GCC) was published in September 2021 by the UK Competition and Markets Authority (CMA). The GCC is intended to help businesses comply with their obligations under consumer protection law when making environmental claims about their products and services.
- The UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code) and the UK Code of Broadcast Advertising (BCAP Code) (together, the ‘Codes’) set out the rules that businesses advertising in the UK must follow. The CAP Code applies to non-broadcast advertisements, sales promotions and direct marketing communications (marketing communications). The BCAP Code applies to all advertisements (including teleshopping, content on self-promotional television channels, television text and interactive television ads) and programme sponsorship credits on radio and television services licensed by Ofcom. The Advertising Standards Authority (ASA) is responsible for administering and regulating the application of the Codes ‘in a way that is transparent, proportionate, targeted, evidence-based, consistent and accountable’.
The Digital Markets, Competition and Consumers Act 2024 (DMCCA) was given royal assent in May 2024 and updates and amends the UK’s competition and consumer protection framework. Key elements of the consumer law provisions came into force on 6 April 2025 via the Digital Markets, Competition and Consumers Act 2024 (Commencement No.2) Regulations 2025. Alongside this, the Competition and Markets Authority has also now published its final guidance on unfair commercial practices. These provisions update previous requirements and prohibitions in relation to unfair commercial practices, and introduce new prohibitions of practices such as drip pricing and fake reviews. The DMCCA also increases the CMA’s enforcement powers. The DMCCA replaces and updates the Consumer Protection from Unfair Trading Regulations 2008 and previous consumer law guidance.
The table below sets out key information regarding the GCC, the CAP Code, the BCAP Code and the DMCCA. It is worth noting that the Financial Conduct Authority worked closely with the CMA and ASA to ensure its anti-greenwashing rule and associated guidance (see 2.2 below) is consistent with the CMA’s guidance on the GCC and the requirements of the CAP and BCAP Codes.
| Green Claims Code | CAP Code and BCAP Code | DMCCA | |
| Status | The GCC does not create new legal obligations for businesses but does clarify the CMA’s view on how consumer protection laws apply in practice to environmental claims. | First published in 2010. | The new consumer rules apply from 6 April 2025, although the new rules on subscription contracts do not apply until spring 2026. The CMA began a consultation on draft guidance for businesses on the price transparency provisions on 3 July 2025, which closes on 8 September 2025. |
| Who is obliged to comply | Traders (ie, a person – natural person, company, charity, arm of government) acting for purposes relating to their trade, business, craft or profession. | Anyone making advertisements (broadcast and non-broadcast) in the UK. | All consumer-facing businesses, whether on-line or off-line |
| Enforced by | CMA/Trading Standards/other regulators | ASA/Trading Standards/ Ofcom | CMA |
| Key requirements | Traders must ensure that their environmental claims are as follows:
| 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’. Advertising Guidance from CAP consolidates the ASA’s position on misleading environmental claims and social responsibility. The guidance was last updated in June 2023. | The DMCCA sets out two main types of unfair commercial practice: |
| Sanctions | Consumer rights of redress, civil/criminal sanctions or alternative dispute resolution (ADR). | Ads may be required to be amended or withdrawn. ASA may take further action if ads are not amended or withdrawn. If advertisers and broadcasters persistently break the Codes, ASA can refer them to other bodies for further action, such as Trading Standards or Ofcom. | Gives the CMA powers to directly enforce (without going to court) the unfair commercial practices regime (including the power to issue fines for breaches of up to £300k or 10% of an offending businesses global turnover, whichever is higher). |
2.2 Financial Conduct Authority’s Sustainability Disclosure Requirements
The Sustainability Disclosure Requirements (SDR) apply to the financial services sector in the UK. They introduce an anti-greenwashing rule to reinforce that sustainability-related claims must be fair, clear and not misleading, applicable from 31 May 2024.
Detailed information about the SDR is beyond the scope of this How-to guide but can be found on the FCA website.
2.3 Sustainability Reporting Standards
The UK government has also announced that UK Sustainability Reporting Standards (SRS) will set out corporate disclosure requirements for UK-registered companies and limited liability partnerships (LLPs) on the sustainability-related risks and opportunities that they face. They will form the basis of any future requirements in UK legislation or regulation for companies and LLPs to report on risks and opportunities relating to sustainability matters, including risks and opportunities arising from climate change. The SRS will be based on the International Sustainability Standards Board (ISSB) standards. In May 2024, the DBT published a ‘Framework and Terms of Reference for the Development of UK Sustainability Reporting Standards’, which sets out the process for assessing the suitability of the ISSB standards for endorsement in the UK.
Following the general election in the UK in July 2024, the UK government published guidance in September 2024 stating that if the assessment process concludes with an affirmative endorsement decision, it would result in the creation of the first two UK Sustainability Reporting Standards (SRS), which would be based upon the ISSB Standards. The technical assessment of the ISSB standards has now been completed and was delivered through two committees:
- the UK Sustainability Disclosure Technical Advisory Committee (TAC)
- the UK Sustainability Disclosure Policy and Implementation Committee (PIC)
The TAC recommended four minor amendments to the ISSB Standards in the draft UK SRS. The UK government is also proposing two additional minor amendments, based on PIC discussions. All proposed amendments are judged to be necessary in the UK context, rather than ‘nice to have’ amendments, to support the development of a global sustainability reporting baseline.
On 25 June 2025, the government opened a consultation on the proposed amendments in order to finalise UK SRS. The consultation closes on 17 September 2025.
Section 3 – Regulation in the EU
3.1 Empowering Consumers Directive
| Status | Entered into force on 27 March 2024 and applies from 27 September 2026. |
| Who is obliged to comply | Traders (ie, any natural or legal person who, in commercial practices covered by the Directive, is acting for purposes relating to his trade, business, craft or profession and anyone acting in the name of or on behalf of a trader). |
| Enforced by | EU member states (to be transposed to national laws by 27 March 2026). |
| Key requirements | Consumers should not be misled about a product’s environmental or social characteristics or circularity aspects, such as durability, reparability or recyclability, through the overall presentation of a product. Environmental and social characteristics, and circularity aspects have been added to the list of the main characteristics of a product in respect of which a trader’s practices can be considered misleading, following a case-by-case assessment. Environmental claims Environmental claims, in particular climate-related claims (eg, in relation to future performance in the form of a transition to carbon or climate neutrality, or a similar objective, by a certain date) are prohibited unless, following a case-by-case assessment, they are:
Such claims should also be verified by a third-party expert, who should be independent from the trader, free from any conflicts of interest, with experience and competence in environmental issues and who should be able to monitor the progress of the trader regularly with regard to the commitments and targets, including the milestones for achieving them. Benefits Advertising benefits to consumers that are irrelevant and not directly related to any feature of the specific product or business and that could mislead consumers into believing that they are more beneficial to consumers, the environment or society than other products or traders’ businesses of the same type, are also prohibited. Comparisons When comparing products based on their environmental or social characteristics or circularity aspects (such as durability, reparability or recyclability), traders are required to provide consumers with information about the method of comparison, the products which are the object of comparison and the suppliers of those products, and the measures to keep information up to date. Sustainability labels The displaying of sustainability labels that are not based on a certification scheme, or that have not been established by public authorities, is prohibited. Before displaying a sustainability label, the trader should ensure that, according to the publicly available terms of the certification scheme, it meets minimum conditions of transparency and credibility, including the existence of objective monitoring of compliance with the requirements of the scheme. The displaying of sustainability labels remains possible without a certification scheme when such labels are established by a public authority, or where additional forms of expression and presentation of food are used in accordance with article 35 of Regulation (EU) No 1169/2011 of the European Parliament and of the Council. Voluntary market-based standards and voluntary public standards for green and sustainable bonds are not covered by the Directive. In cases where the displaying of a sustainability label involves a commercial communication that suggests or creates the impression that a product has a positive or zero impact on the environment or is less damaging to the environment than competing products, that sustainability label should also be considered as constituting an environmental claim (for further information see ‘Environmental claims’ above). Generic environmental claims The making of a generic environmental claim is prohibited without recognised excellent environmental performance which is relevant to the claim. Examples of generic environmental claims include ‘environmentally friendly’, ‘eco-friendly’, ‘green’, ‘nature’s friend’, ‘ecological’, ‘environmentally correct’, ‘climate-friendly’, ‘gentle on the environment’, ‘carbon-friendly’, ‘energy efficient’, ‘biodegradable’, ‘biobased’ or similar statements that suggest or create the impression of excellent environmental performance. Such generic environmental claims are prohibited when recognised excellent environmental performance cannot be demonstrated. Whenever the specification of the environmental claim is provided in clear and prominent terms on the same medium, such as the same advertising spot, the product’s packaging or online selling interface, the environmental claim is not considered to be a generic environmental claim. Entire product or business claims Making an environmental claim about the entire product or the trader’s entire business is prohibited when it actually concerns only a certain aspect of the product or a specific, unrepresentative activity of the trader’s business. The ban should not prevent a trader from making environmental claims about its entire business, provided that those claims are accurate and verifiable and that they do not overstate the environmental benefit. Greenhouse gas emissions Claims based on the offsetting of greenhouse gas emissions, that a product, either a good or service, has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions are prohibited. Examples of such claims are ‘climate-neutral’, ‘CO2-neutral certified’, ‘carbon-positive’, ‘climate net zero’, ‘climate-compensated’, ‘reduced climate impact’ and ‘limited CO2 footprint’. Such claims should only be allowed when they are based on the actual life-cycle impact of the product in question, and not based on the offsetting of greenhouse gas emissions outside the product’s value chain, as these are not equivalent. Such a prohibition should not prevent companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they provide such information in a way that is not misleading and that complies with the requirements laid down in EU law. The Directive also addresses early obsolescence and durability practices, which encourage the sale of such goods which leads to higher costs for consumers and unnecessary use of resources, waste production and greenhouse gas emissions. |
| Sanctions | Member states are to ensure that adequate and effective means exist to combat unfair commercial practices in order to enforce compliance with the provisions of the Directive. |
3.2 Future developments – Green Claims Directive
In the European Green Deal, the European Commission committed to ensure that consumers are empowered to make better-informed choices and play an active role in the ecological transition. More specifically, the European Green Deal sets out a commitment to tackle false environmental claims by ensuring that consumers receive reliable, comparable and verifiable information to enable them to make more sustainable decisions and to reduce the risk of greenwashing. The 2023 Green Deal Industrial Plan reiterated the need to allow consumers to make their choices based on transparent and reliable information on the sustainability, durability and carbon footprint of the products, and highlighted that market transparency is a tool facilitating uptake of technologically and environmentally superior net zero products.
To complement the existing set of EU rules on consumer protection set out above, and to meet its obligations under the European Green Deal, on 12 March 2024 the European Parliament adopted its position on the Green Claims Directive. However, due to differing political positions on the directive and concerns about the burden on micro-businesses within the EU, on 20 June 2025 the European Commission announced its intention to withdraw the proposal for the Green Claims Directive. Although the final negotiations due to take place on 23 June 2025 were cancelled, the European Commission did not formally withdraw the proposal, leaving its legal status unresolved.
3.2.1 Scope
The requirements (if approved) of the Green Claims Directive are expected to apply to the majority of EU operating companies, except for companies that have fewer than 10 employees or generate less than €2 million annual turnover, and sectors that have existing or forthcoming rules on environmental claims (such as financial services) are also expected to be exempt.
3.2.2 Requirements
Under the Green Claims Directive, companies will need to substantiate environmental claims using life-cycle assessment, communicate them accurately and holistically, and have them externally verified. Certain phrases such as ‘net zero’, ‘carbon-neutral’ and ‘eco-friendly’ would be prohibited in advertisements, in social media posts or on packaging unless they were sufficiently substantiated and verified.
The Green Claims Directive, in its current form, will apply to claims made voluntarily to consumers in the EU about a product, service or organisation that state or imply a positive effect on the environment.
Section 4 – Greenwashing litigation
The focus of greenwashing litigation is not typically financial redress, but to change behaviour.
The London School of Economics and Political Science and the Grantham Research Institute on Climate Change and the Environment, in their 2023 report on Global trends in climate change litigation, state that there has been ‘an explosion of “climate-washing” cases filed before both courts and administrative bodies such as consumer protection agencies’ in the last few years.
4.1 Climate-washing litigation
Climate-washing involves misrepresentation, misstatement and false or misleading practices specifically associated with climate change. Such cases can relate to:
- Corporate climate commitments – challenging the truthfulness of corporate climate commitments, particularly where these are not backed up by adequate plans and policies. An example used in the report is a complaint against Australian mining giant Glencore that was lodged with the Australian Competition and Consumer Commission (ACCC) and Australian Securities and Investments Commission (ASIC). The complaint argues that Glencore’s continued expansion of coal production is inconsistent with its public commitments to net zero (PCWP and others v Glencore).
- Product attributes – the largest group of identified climate-washing cases involves challenges to statements about the environmental impact of particular product lines. Numerous cases were identified that challenge claims that products are ‘climate-neutral’, ‘carbon-neutral’ or ‘CO2-neutral’ (many in Germany – see eg, Regional Court of Oldenburg’s decision on climate neutral claims regarding meat products).
- Overstating investments in or support for climate action – an example used in the report is a group of institutional investors filing a case against Volkswagen for the inconsistency between its climate pledges and its anti-climate corporate lobbying (Church of England Pensions Board and others v Volkswagen AG). Another example is a complaint filed by Global Witness against Shell before the US Securities and Exchange Commission. Global Witness alleges that Shell misled investors by overstating its investments in renewable energy – 1.5% was spent on solar and wind power, instead of 12% as claimed by the company (see Global Witness report).
- Obscuring climate risks – cases alleging failures to disclose relevant climate risks to investors and customers, and several requests for disclosure by banks and financial institutions (Abrahams v Commonwealth Bank of Australia (2021)).
A landmark case in March 2024 involved a verdict against KLM that deemed many of the airline’s claims regarding its use of carbon offsets and biofuels to be inaccurate and therefore illegal. This case not only has implications for the aviation sector, but also sends a warning to all companies making net zero commitments (see ClientEarth report). In another pivotal case, Australia’s Federal Court issued a ruling against Vanguard Investments Australia that found the company’s claims about an ethical bond fund to be false and misleading. The case was initiated by a corporate regulator, the Australian Securities and Investments Commission, setting a critical precedent for sustainable investment claims (see ASIC website).
In its research (published in 2023) ‘On the rise: navigating the wave of greenwashing and social washing’, RepRisk found that one in every four climate-related environmental, social and governance (ESG) risk incidents globally was tied to greenwashing, an increase from one in five in RepRisk’s 2022 report. RepRisk found that the banking and financial services sectors had seen a 70% increase in the number of climate-related greenwashing incidents in the period September 2022 to September 2023, which is potentially related to the increase in greenwashing regulation. However, RepRisk’s 2024 report on greenwashing shows an overall decrease in greenwashing cases for the first time in six years, although high-risk cases of greenwashing surged by over 30%. Nearly 30% of companies linked to greenwashing in 2022-2023 were repeat offenders in 2024. In the EU’s banking and financial services sector, climate-related greenwashing incidents declined by 20% in 2024, which RepRisk consider a likely consequence of stricter regulations.
4.2 Social-washing risks
RepRisk also reports that 31% of publicly listed companies linked to greenwashing from September 2018 to September 2023 were also linked to ‘social washing’. Social washing occurs when ‘companies make misleading claims about their social responsibility (the ‘S’ in ESG), painting themselves in a positive light while obscuring an underlying social issue’. According to RepRisk’s 2023 findings, the most common social washing issue in both the UK and United States is in relation to human rights abuses and corporate complicity, which accounts for 26% and 25% of each nation’s incidents respectively. This guide does not cover social washing in detail, but organisations will have to consider this potential risk at the same time as greenwashing.
Section 5 – Management of greenwashing regulatory and litigation risk
The best defences for organisations against greenwashing-related liability risk lie in good practice in governance, disclosure and due diligence, in conjunction with a comprehensive understanding of the sustainability profile of the product, activity or transaction at hand, and an understanding of the regulatory regime that they may be subject to.
There are many tools available to help manage such risks, most are focussed on businesses, but some are focussed on the consumer (eg, World Wildlife Fund), which are also useful. All will emphasise the need to have a robust framework that focuses on integrity, transparency and verification of data.
There are other steps that can be taken as a business to mitigate greenwashing risk. Kristina Marusic, in the Harvard Business Review, suggests that the most powerful way for businesses to prove they are not greenwashers is to support meaningful regulations to ensure that their entire sector or industry will ‘do the right thing’.
Further information about how to mitigate greenwashing risks can be found in Checklist: Greenwashing risk assessment.
Additional resources
Edie.net – EU Probes Airlines for Misleading Environmental Claims
Grantham Research Institute on climate change and the environment – Climate-washing litigation: towards greater corporate accountability?
ClientEarth – Judgment in greenwashing verdict against KLM
Badvertising – Misleading Saudi Aramco ads in the Financial Times reported to ad watchdogs
United Nations – Greenwashing – the deceptive tactics behind environmental claims
WWF – WWF Guide to Greenwashing
Gov.uk – ASOS, Boohoo and Asda: greenwashing investigation
CMA - Guide for fashion businesses - Green claims code
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How to understand and implement the ‘E’ in environmental, social and governance (ESG)
How to consider and navigate the consequences of ESG risks
Overview of climate legislation and regulation in the UK and Europe
How to comply with climate-related regulations applicable to the financial services sector in the UK
How to comply with climate-related regulations applicable to the financial services sector in the EU
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Quick views:
An overview of current ESG pressure points (Global)
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