The food industry vs the green agenda

What’s next for eco-labelling and 'green' claims on food products?

In May 2024, the Digital Markets, Competition, and Consumers Act 2024 (DMCC Act) became law, heralding significant changes for businesses involved in eco-labelling and green claims. This legislation enhances the enforcement powers of the Competition and Markets Authority (CMA) to tackle consumer law breaches more effectively. While only the provisions related to the creation of regulations under the Act are currently in force, the impending changes demand attention from businesses engaged in environmental marketing.

Key provisions and CMA's new powers

The DMCC Act covers a broad range of topics, but its implications for eco-labelling and green claims are particularly noteworthy.

The act introduces criminal offences for traders who engage in unfair commercial practices through misleading actions or omissions. It also establishes a due diligence defence for businesses and classifies offences as 'either way', meaning they can be tried in either the Magistrates' Court or the Crown Court, with penalties including unlimited fines and custodial sentences​​.

A pivotal change is the CMA's new authority to serve enforcement notices and impose monetary penalties directly, without needing court intervention. Currently, the CMA can investigate, issue decisions and accept undertakings, but it must seek a court order to impose monetary penalties. Under the new regime, however, the CMA can impose fines up to £300,000 or 10% of turnover for certain breaches, and £150,000 or 5% of turnover for others, significantly increasing the stakes for non-compliance​.

Challenges in defining the 'average consumer'

One major challenge the CMA faces is the concept of the 'average consumer'. Determining what constitutes a misleading claim involves considering the perspective of an average consumer, but this is not only inherently subjective but a moveable feat as consumer views change over time.

The CMA must navigate questions about the knowledge and values of an average consumer and what they might find misleading. This ambiguity adds complexity both for those making claims, who must seek to make clear and accurate claims against this shifting backdrop, and to the CMA which must make enforcement decisions. What is compliant one day may be non-compliant the next.

The role of the Green Claims Code

The Green Claims Code remains the CMA’s benchmark for assessing eco-claims. This code stipulates that all environmental claims must be truthful, clear, up to date, substantiated by credible evidence, reflect the product's entire lifecycle, be accessible to consumers, and avoid misleading omissions or exaggerations​.

Adherence to these standards is rigorous, where even minor wording changes can alter a claim’s clarity or accuracy, posing compliance challenges for businesses.

Currently, adding an eco-label to a product remains voluntary in the UK, although the EU is considering making it mandatory in the future. The UK Government has provided guidance on the use of green claims, closely aligning with the CMA’s Green Claims Code. This code mandates transparency, accuracy and up-to-date evidence for any environmental claims made by businesses.

Despite the lack of mandatory eco-labelling, businesses must comply with these stringent guidelines to avoid accusations of greenwashing – a practice where companies falsely claim environmental benefits. It is noteworthy that greenwashing can also arise by omission, so saying nothing (greenhushing) can be equally problematic as making a false claim.

Efforts to standardise eco-labelling practices are underway. The Food Data Transparency Partnership (FDTP), a collaboration between the private sector and the UK Government, aims to standardise methodologies and data sources for reporting Scope 3 emissions within the food industry.

This initiative is crucial as it seeks to establish a mandatory methodology for voluntary eco-labels. Such standardisation would likely integrate into the Green Claims Code, enhancing the CMA’s decision-making process and providing greater certainty for consumers and businesses.

Implications for businesses

Businesses must prepare for the CMA's increased enforcement capabilities by thoroughly reviewing their environmental claims and labels to ensure compliance with the Green Claims Code. Misleading or unsubstantiated claims not only risk financial penalties but also damage consumer trust and brand reputation. Given the CMA's authority to impose significant fines, businesses are likely to opt for compliance over legal challenges.

To navigate the evolving landscape, businesses should avoid common mistakes such as making vague or generic claims like 'carbon neutral' without detailed evidence. Claims must be specific, backed by up-to-date, have credible evidence and be verifiable. Transparency and accuracy are critical, as misleading claims can lead to severe penalties, including fines and reputational damage.

The consequences of non-compliance can be severe. The CMA, along with local weights and measures authorities and Trading Standards, has the power to investigate and take action against businesses making misleading or false claims.

It is a criminal offence to make a misleading claim and businesses found in violation can face prosecution. Additionally, the Proceeds of Crime Act may be invoked in cases where a premium has been charged due to false green claims, potentially requiring businesses to surrender profits earned from such claims.

Consumer expectations and greenwashing

Consumer interest in environmentally friendly products has surged, prompting businesses to highlight their environmental credentials through eco-labels and green claims. However, the rise in such claims has also led to an increase in greenwashing, where businesses exaggerate or falsify their environmental impact to attract eco-conscious consumers​​. This deceptive practice undermines genuine sustainability efforts and erodes consumer trust.

Under the Green Claims Code, one of the key requirements is that businesses must have up to date and credible evidence to support their environmental claims​​. This evidence must be robust and verifiable to withstand scrutiny from both regulators and consumers. Businesses should establish clear, transparent documentation and auditing processes to substantiate their claims effectively.

Looking ahead

As the DMCC Act's full provisions come into force, the landscape of eco-labelling and green claims will be significantly reshaped. Businesses must proactively ensure their claims comply with the Green Claims Code to avoid hefty penalties and legal scrutiny. The CMA's enhanced powers underscore the importance of transparent, accurate environmental marketing. Companies are advised to consult regulatory experts to navigate these changes effectively and maintain compliance with evolving legal standards.

Allergen legislation and its impact

In addition to changes surrounding eco-labelling and green claims, businesses must equally navigate heavily stringent allergen legislation.

The Food Information (Amendment)(England) regulations 2019, commonly known as Natasha’s Law, came into effect in October 2021 and severely affected the food outlets it applies to.

Named after Natasha Ednan-Laperouse, who tragically passed away after suffering an anaphylactic reaction to the hidden sesame seeds baked into the dough of a baguette, the law mandates full ingredient and allergen labelling on pre-packed for direct sale (PPDS) foods.

Natasha’s Law mandates that any establishment selling PPDS foods is required to provide a comprehensive ingredient list on their packaging labels. The regulation aims to protect the estimated 2m people in the UK who suffer from food allergies and intolerances, and give them greater confidence in the food they buy.

Non-compliance with these requirements can lead to consequences for food businesses, materialised by significant fines and reputational damage, unless sellers take the necessary steps to implement robust allergen management practices.

The increased focus on allergen transparency aligns with broader consumer protection goals, reflecting growing consumer demand for detailed product information. As with eco-labelling, accurate and clear labelling is paramount, and businesses must ensure they adhere to the highest standards of transparency and accuracy.

The UK Government continues to review and strengthen allergen legislation. Following Natasha’s Law, further measures are being considered to improve allergen safety, such as clearer labelling for non-prepacked foods and enhanced training for food handlers.

FSA’s new advice on vegan labelling

The Food Standards Agency (FSA) also issued new advice at the beginning of the year, highlighting the risk of food labelled as ‘vegan’ to people suffering from allergies.

The FSA’s research found that 62% of such consumers are confident that products labelled ‘vegan’ are safe to eat. The agency advises that vegan labels cannot be relied upon due to the risk of cross-contamination with animal-based allergens if produced in the same factory as animal-based products.

The advice from the FSA to food businesses producing vegan products is to use a precautionary allergen label (PAL) alongside the ‘vegan’ label if there is any doubt. Previously, the FSA advised that PALs should only be used where there is a genuine and known risk of cross-contamination. While this could be open to abuse, a PAL is currently the only way for food businesses to safeguard consumers and themselves.

A changing landscape

The landscape of eco-labelling and green claims is evolving rapidly with the DMCC Act's enhanced regulatory framework. Businesses must ensure their claims are truthful, clear, and backed by credible evidence to comply with the Green Claims Code and avoid significant penalties.

The CMA's strengthened enforcement powers highlight the need for diligence in environmental marketing and, indeed, any marketing of products, services and the business itself. Consulting with regulatory experts can provide valuable guidance to navigate this complex regulatory environment effectively.

The new and proposed laws relating to green claims and the complex rules concerning allergen labelling are just two examples which highlight how complicated food labelling law is. Consumers now expect accurate, reliable information as standard.

As consumer expectations continue to grow, we will see ever greater obligations placed on businesses to meet these demands. Food businesses must rise to the challenge as, leaving aside the risks of failing to meet these stringent legal requirements, consumers are likely to ‘vote with their feet’. Those businesses who fail to meet consumer requirements will find themselves exposed.