EC proposes ban on greenwashing as CMA recommends similar reforms

What's the issue?

Both the EC and the EU are looking to build sustainability into the product supply chain in order to help achieve environmental targets.  At the same time, there is considerable confusion and a lack of regulation around environmental claims made about consumer products.  

What's the development?

The EC has adopted a package of measures as part of the Circular Economy Action Plan published in March 2020.  The measures are intended to build in sustainability across the product lifecycle. 

The most notable of the legislative proposals is a Directive which will amend the Consumer Rights Directive (CRD) and the Unfair Commercial Practices Directive (UCPD) to:

• require additional pre-contractual information to be given to consumers about the durability and repairability of goods
• amend the blacklist of automatically unfair commercial practices to cover greenwashing and other misleading or inaccurate claims around sustainability of goods.

Proposed amendments to the CRD

New pre-contractual information requirements will be added to the CRD on the issue of product durability and repairability. These include:

• Consumers will have to be informed about any durability guarantees longer than two years (for distance contracts concluded by electronic means this will have to be given immediately prior to the conclusion of the contract). 
• For energy-using goods, sellers must inform consumers if the producer did not provide any information about a commercial guarantee of durability (this will have to be given immediately prior to the conclusion of the contract for distance contracts concluded by electronic means).
• Information will be required about repairs including any available repairability score and other relevant repair information such as availability of spare parts or a repair manual. 
• For smart devices, digital content and digital services, consumers will need to be informed about software updates provided by producers.  This will include information about the length of time producers commit to providing software updates (where they do so) unless the contract provides for a continuous supply of digital content or services over a period of time.

All information will need to be provided before purchase in a clear and comprehensible manner.

Proposed amendments to the UCPD

These include:

• expanding the list of product characteristics about which a trader cannot mislead consumers to cover environmental or social impact, durability and repairability
• expanding the list of "material information", the omission of which will be misleading to consumers, to include information about the methods of comparison used to compare sustainability of products
• expanding the list of practices which may be considered misleading (following a case-by-case assessment) to include: making a claim related to future environmental performance without clear, objective and verifiable commitments and targets and without an independent monitoring system; and to advertise benefits to consumers which are considered common practice in the relevant market.

Changes will also be made to the 'blacklist' of commercial practices which are automatically considered to be unfair. These will include:

• failure to inform about features introduced to limit durability, eg software which downgrades or stops working after a period
• making generic, vague, environmental claims about the performance of a product which cannot be demonstrated
• making an environmental claim about an entire product when it really only concerns an aspect of the product
• displaying a voluntary sustainability label not based on a third-party verification scheme or one established by public authorities
• failure to inform that a good has limited functionality when using consumables, spare parts or accessories not provided by the original producer
• claiming a good has a certain durability when it does not
• failure to inform the consumer that a software update will negatively impact the use of goods with digital elements or certain features of those goods, even though it might positively impact other elements.

UK developments

The UK government published a consultation on reforming competition and consumer policy in July 2021, in which it asked the CMA for advice on how competition and consumer law can better support the UK's transition to an environmentally sustainable and net zero economy.

In March this year, the CMA responded. The CMA suggested the government consider making legislative changes in relation to consumer law to:

• create standardised definitions of commonly used environmental terms
• require mandatory disclosure of certain relevant information (including premature or built-in obsolescence and information around durability and repairability)
• require provision of better environmental information in the supply chain
• ban misleading and/or unsubstantiated environmental claims (including around durability and repairability)
• provide extended consumer remedies.

Some of these changes could be made by amending the Consumer Contracts Regulations (CCRs which implement the CRD), but the CMA also says there may be room for new legislation.

What does this mean for you?

While many (but not all) of the EC's proposals align with recommendations made by the CMA, the EC is considerably further along, having already produced draft legislation.  It is unlikely that changes will run completely in parallel which means we are looking at further diversion between the EC and UK regimes, particularly between the CRD and the CCRs, and the UCPD and the UK's CPUT Regulations.

Once adopted (whether in their current form or amended), the EC's proposals will impact traders and producers selling to EU consumers or placing consumer goods, digital content and digital services on the EU market, even though they will not apply directly in the UK.

Conversely, of course, any new UK consumer protection rules will apply to anyone selling to UK consumers regardless of their location.

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Other elements of the package are:

• a proposed Regulation on Ecodesign for Sustainable Products which includes new requirements to make products more sustainable, as well as requirements to supply environmental impact assessments and digital product passports for certain regulated products
• an Ecodesign and Energy Labelling Working Plan
• a Communication on the EU Strategy for Sustainable and Circular textiles. This aims to tackle the environmental impact of 'fast fashion' by making textiles more durable, repairable, reusable and recyclable.  It also seeks to prevent destruction of unsold textiles, the use of hazardous substances, and ensure textiles are produced respecting social and environmental rights
• revision of the construction Products Regulation to create a harmonised framework to assess and communicate the environmental and climate performance of construction materials.

In the UK, we await the outcome of the consultation on consumer and competition law reform for more concrete proposals.