Regulatory innovations and anti-greenwashing: UK/EU strategic insights

Given the growing global concern for sustainability and environmental responsibility, the practice of greenwashing has emerged as a critical challenge. Greenwashing occurs when companies exaggerate or falsely represent their environmental efforts to stakeholders, creating a misleading image of sustainability that masks their true impact. The United Nations (UN) highlights the severity of this issue, defining greenwashing as the behaviour of “misleading the public to believe that a company or other entity is doing more to protect the environment than it is”[1]. This deceptive practice can present significant challenges in addressing climate change, undermine consumer trust, and disrupt the market.

In response to this issue, the UK and EU have implemented a series of rules and regulations guiding firms toward anti-greenwashing practices. The EU, for instance, formally endorsed the Greenwashing Directive on 17 Jan 2024, which requires companies to substantiate their environmental claims with clear, reliable evidence. The UK has also established guidelines to combat greenwashing, with oversight from the Competition and Markets Authority (CMA). Additionally, the Financial Conduct Authority (FCA) has introduced a new anti-greenwashing rule, effective since 31 May 2024, further strengthening the regulatory framework to ensure the integrity of environmental claims made by firms.

In this blog, we cover the latest anti-greenwashing regulations in the UK and EU, examining their strategic insights in respect of promoting transparency and authenticity in sustainable practices. We discuss the consistency of these regulations, while also highlighting key differences in their approaches. Finally, we suggest potential future developments in these regulatory frameworks.