What is Greenwashing?
A clear explanation of greenwashing — what it is, how regulators and customers identify it, and how SMEs can make credible sustainability claims without legal or reputational risk.
Key Takeaways
- Greenwashing means making misleading environmental claims that overstate a product's or business's sustainability credentials.
- The CMA's Green Claims Code sets out what UK businesses must do to make honest environmental claims.
- Vague terms like 'eco-friendly' or 'sustainable' without supporting evidence are high-risk under current guidance.
What greenwashing is
Greenwashing occurs when a business makes environmental claims — in marketing, on product packaging, or in corporate communications — that are misleading, unsubstantiated or exaggerated. It can be deliberate or unintentional. Examples include claiming a product is 'carbon neutral' based on low-quality offsets, labelling a product 'recyclable' when only part of it is, or describing a business as 'green' without any meaningful environmental programme to back it up. As consumer and investor scrutiny of sustainability claims has intensified, so has regulatory attention — greenwashing carries real legal and reputational risk.
The regulatory landscape
In the UK, the Competition and Markets Authority (CMA) published a Green Claims Code in 2021, which applies consumer protection law to environmental marketing claims. Claims must be truthful and accurate, clearly qualified, not mislead by omission, and substantiated with robust evidence. The Advertising Standards Authority (ASA) has upheld complaints against major brands for unqualified 'net zero' and 'carbon neutral' claims. From 2026, the EU Green Claims Directive will impose stricter pre-approval requirements for green claims in Europe. UK businesses trading in both markets should prepare for a more demanding standard.
How to make credible claims
The safest approach is to be specific, evidenced and honest. Instead of 'eco-friendly packaging', say '80% recycled content, recyclable in most council collections'. Instead of 'net zero', describe your actual reduction pathway and what residual emissions are offset with which verified standard. Avoid absolute claims ('completely sustainable') unless you can fully substantiate them. Be transparent about what you have not yet achieved as well as what you have — honesty about imperfection is rarely penalised, while exaggeration frequently is. Before making any significant green claim in advertising, sense-check it against the CMA Green Claims Code.