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19 Feb 2023

Jon Ungoed-Thomas, The Guardian

UK to introduce penalties of up to 10% of global turnover for companies that make misleading environmental "greenwashing" claims

"‘Greenwashing’ firms face steep new UK fines for misleading claims", 19 Feb 2023

When the hydrogen-powered Hyundai Nexo car was launched in the UK in the spring of 2019, it was described as “so beautifully clean” that it “purifies the air as it goes”...

The Advertising Standards Authority (ASA) found that while the car does filter incoming air, it still releases pollutants from tyre and brake wear, with road tyres being a huge source of toxic particle pollution. Hyundai considered it had corroborated its claims, making clear it did not intend to suggest the vehicle left no particulates in the air, but the ASA ruled the ad was misleading and should not be used again.

Green claims routinely used to sell products, from cars and plane tickets to soft drinks and cleaning fluids, now face much greater scrutiny under proposed new laws – and risk fines of up to tens of millions of pounds for claims found to be unsubstantiated and misleading.

Under the digital markets, competition and consumer bill to be unveiled shortly, big companies face the threat of civil penalties of up to 10% of global turnover for breaches of consumer law. Individuals who breach these laws will face fines of up to £300,000...

Lawyers said last week that new powers for the Competition and Markets Authority (CMA) to impose direct civil penalties on companies will almost certainly cover misleading environmental claims, known as greenwashing...

The CMA published a green claims code in September 2021 and announced last July that it was investigating the eco-friendly and sustainability claims of three brands: Asos, Boohoo and George at Asda. The regulator said it would examine whether claims were misleading but has not reached a view on whether there have been breaches of consumer law...

The Financial Conduct Authority has consulted on its own package of measures aimed at “clamping down on greenwashing”. It proposes restrictions on how certain terms such as “green” or “sustainable” can be used in investment product names and for marketing.

The European Union is also to table a new law in the next few weeks proposing fines for companies making unsubstantiated environmental claims. France introduced laws in January requiring firms claiming a product is carbon-neutral to report on all the greenhouse emissions of that product for its entire lifecycle...

Hyundai did not respond last week to a request by the Observer to support the claim of the impact on carbon emissions of putting 10,000 Nexo cars on the road, but said the claim on its website had been removed.

Hyundai said in response to the June 2021 ruling: “Our own internal tests and the fundamental mechanics of the air purification system contained within the hydrogen fuel cell system of the Nexo corroborated relevant claims used in regard to Nexo.”

Officials say details of the new bill will be announced shortly.