Regulators across the world crack down on greenwashing before it gets worse

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LONDON – In 2021, a series of HSBC advertisements started appearing on bus stops around the UK. Part of a campaign centred on the slogan “Climate change doesn’t do borders,” the posters paired images of trees and ocean waves with statements about the bank’s efforts to finance the transition to net-zero and help plant 2 million trees. 

Adfree Cities, a campaign group that targets street ads, wasn’t having it. The group complained about the HSBC campaign to the Advertising Standards Authority (ASA), a UK industry regulator. In its review of the complaint, the ASA found that HSBC had sent US$130 billion (S$177 billion) of financing to fossil fuel companies in recent years. The agency banned the ads for greenwashing.

An HSBC spokesperson says the financial sector “has a responsibility to communicate its role in the low-carbon transition,” adding that the bank has “made good progress, including publishing an updated energy policy and expanding our financed emissions targets to more sectors.”

But Mr Guy Parker, chief executive officer of the ASA, says HSBC needed to be clearer with consumers about its fossil fuel funding. The ads were nixed “not because what they were saying in the ads was untrue,” Mr Parker told Bloomberg Green. “But because of what they weren’t saying.” 

HSBC isn’t alone: Since 2021, the ASA has banned three fossil fuel advertising campaigns on the same grounds, plus ads from companies as varied as Oatly (oat milk), Unilever (laundry detergent) and Lufthansa (air travel). The ASA isn’t alone, either. Globally, regulators are starting to fight back against greenwashing, or the practice of misleading consumers on sustainability. 

In the UK, where the ASA operates, the Competition and Markets Authority (CMA) is investigating major fashion brands over vague green claims. The Australian Competition & Consumer Commission (ACCC) lists sustainability communication among its key priorities, and in Italy an oil company was fined €5 million (S$7.3 million) for calling its diesel “green.” The US Federal Trade Commission (FTC) is currently updating its guidelines on sustainable claims, and last year fined Kohl’s and Walmart for marketing rayon fabric as bamboo. 

“This is an important moment in greenwashing regulation, essentially because there hasn’t been one before,” says Mr Jonathan White, a lawyer at ClientEarth, an environmental law charity. “If you look across jurisdictions, from the UK to the EU to the US, even elsewhere to Asia, you get the very clear sense that legislators and regulators are doing something about this and want to be seen to be doing something about this.”

The range of agencies tackling greenwashing is indicative of its ambiguity and breadth. Dubious sustainability claims can be found in TV commercials, print ads, online ads, product descriptions and on packaging, not all of which are regulated by the same bodies. 

There’s also evidence that the prevalence of green claims is increasing. A 2014 study by the European Commission found that 76 per cent of non-food products carried an environmental claim, either implicitly or explicitly. According to a report by UK consumer research agency Mintel, 46 per cent of beauty and hygiene products carried environmental or ethical claims in 2019, up from 27 per cent in 2015. Another study by Australia’s Consumer Policy Research Centre (CPRC) found that a consumer in Australia might see 122 green claims within a 24-hour period. Less than a third had any verification or detail to allow someone to assess their accuracy. 

The boom in green claims reflects growing consumer attention: In one recent survey, 68 per cent of Americans said they would choose a more environmentally friendly product even if it cost more. That enthusiasm presents a big opportunity for advertisers, and a big challenge for regulators – who don’t always have mechanisms in place to push back on incomplete claims. 

Australia, for example, prohibits companies from misleading or deceiving consumers, and from engaging in “unconscionable conduct.” But Ms Erin Turner, chief executive officer at the CPRC, says many advertising claims don’t meet that high a bar – they’re more likely to be vague, or minimally justified, than actively deceptive. One company, for instance, claimed “Our freezers are greener” in an ad, begging the question: Greener than what?

“My sense is that the Australian regulators are looking to use their powers to the limit on greenwashing,” Ms Turner says. “But the powers [that] regulators have aren’t fully going to deal with the problem.” Ms Turner describes greenwashing as an unfair trade practice that does repeated low-level harm to a wide population of customers, something local laws aren’t currently equipped to tackle.

In Hong Kong, some of the most successful greenwashing regulation has focused on energy-efficiency claims. After the Hong Kong Consumer Council (HKCC) conducted tests that found certain dehumidifiers were less efficient than claimed when used with Hepa filters, the dehumidifiers were recalled by the government. In the US, successful FTC cases have likewise focused on the materials and properties of products – think rayon labelled as bamboo, or paint marketed as “emissions-free.”

“When we look overseas, there are a number of things we can learn,” says HKCC Chief Executive Officer Gilly Wong, citing the FTC’s Green Guides in the US and the CMA’s Green Claims Code in the UK. “The pace has to be in sync and can’t be slowed down and even has to be accelerated, to attack all of these kinds of claims.”

While regulation is the order of the day in Europe, in the US some green claims are scrutinised through legal action. In June, Oregon’s Multnomah County sued a handful of oil companies over a 2021 heat dome it described as a “direct and foreseeable consequence” of the companies’ decision to publicly downplay fossil fuel pollution. Oil majors have called the suit unproductive.  

EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email [email protected]

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