When the Hyundai Nexo hydrogen car was launched in the UK in spring 2019, it was described as “so beautifully clean” that it “cleans the air as it goes”.
Hyundai Motor UK claimed that if 10,000 of its cars were on the road, the reduction in carbon emissions would be “equivalent to planting 60,000 trees”.
The suggestion that the new car – with a starting price of around £60,000 – could be driven pollution-free sounded almost too good to be true, and in June 2021 the advertising regulator decided it was.
The Advertising Standards Authority (ASA) found that while the car filters incoming air, it still releases pollutants from tire and brake wear, with road tires a huge source of toxic particles. Hyundai felt it had backed up its claims by making clear it did not intend to suggest the vehicle did not release particulate matter into the air, but the ASA ruled the ad was misleading and should not be used again.
Green claims commonly used to sell products from cars and airline tickets to soft drinks and cleaning fluids now face far greater scrutiny under proposed new laws – and risk fines of up to tens of millions of pounds for claims found to be unfounded and misleading .
Under the soon-to-be-disclosed digital markets, competition and consumer bill, major companies face the threat of civil penalties of up to 10% of global turnover for breaches of consumer law. People who break these laws will face fines of up to £300,000. The prime minister, Rishi Sunak, said passing the new bill was a priority for the government.
Lawyers said last week that the Competition and Markets Authority’s (CMA) new powers to impose direct civil penalties on companies will almost certainly cover misleading environmental claims, known as greenwashing.
Richard Reichman, regulatory investigations and enforcement specialist at BCL Solicitors, said: “Greenwashing is in the crosshairs of regulators and I think we will almost certainly see large fines for companies if they ignore the warnings.”
Stuart Ponting, regulatory and compliance partner at law firm Walker Morris, said: “The CMA is limited in consumer protection matters and this will expand their powers. It’s a bigger stick and they’ll be more willing to use it if they have to.”
The CMA published a green claims code in September 2021 and announced last July that it was investigating the eco-friendliness and sustainability claims of three brands: Asos, Boohoo and George at Asda. The regulator said it would look into whether the claims were misleading, but has not reached a view on whether there were any breaches of consumer law.
The CMA announced last month that it will also look into the accuracy of environmental claims made about household essentials such as food, drink and toiletries.
In August last year, an ad for Persil, a brand owned by Unilever, was banned by the ASA after it ruled that the basis for the “kindest on our planet” claim had not been made clear. Unilever said last week it had led the way with environmental improvements and was surprised by the ASA’s decision because the ad had been approved for broadcast.
The Financial Conduct Authority has consulted on its own set of measures aimed at “tackling 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 set to table a new law in the coming weeks that will propose fines for companies that make unsubstantiated environmental claims. France introduced laws in January requiring companies that claim a product is carbon neutral to report all of that product’s greenhouse emissions over its entire life cycle.
George Harding-Rolls, campaign director at sustainability charity Changing Markets Foundation, said companies had not previously been properly tested on their green claims and should be required to provide all relevant evidence to support any of their claims.
He said: “It’s easy to make money by saying, ‘If you buy these products, then you can make a difference.’ Many of these claims are misleading and unsupported by evidence.”
Any serious offenses of greenwashing would be breaches of the Consumer Protection from Unfair Trading Regulations 2008. Under proposed laws to be introduced soon, the CMA would be able to impose civil fines for breaches of ‘core’ consumer laws .
Hyundai did not respond to a request last week Observer to support the claim of the carbon impact 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 decision: “Our own internal testing and the fundamental engineering of the air cleaning system contained in the Nexo’s hydrogen fuel cell system confirmed relevant claims used in connection with the Nexo.”
Officials say details of the new bill will be announced soon.