To ask His Majesty’s Government what assessment they have made of the practice of ‘greenwashing’ by businesses; and what steps, if any, they intend to take to tackle it.
My Lords, green claims made by businesses should be clear and accurate and not mislead consumers, who are increasingly looking to make environmentally friendly choices. The Competition and Markets Authority and the Advertising Standards Authority have published guidance to help businesses to comply with the law when making environmental claims about their goods or services. If a business does not comply with consumer law, the CMA and other bodies, such as trading standards, can bring court proceedings.
Lord Howarth of Newport (Lab) [V]
My Lords, while many businesses are genuinely committed to the net-zero objective, should not there be zero tolerance when businesses puff their publicity and accounts with dishonest claims about their green credentials? Does the Minister accept that for those businesses self-regulation will not work, that tough regulation and penalties are needed to deal with these fraudulent practices, and that the Government must work urgently with international partners to establish standardised accounting rules, an end to bogus carbon offsets, rigour in the definition of ESG, and reliable and clear information for investors and consumers?
I understand the point that the noble Lord makes, but businesses do not self-regulate in this area. In September 2021, the Competition and Markets Authority published guidance on environmental claims on goods and services, to help businesses to understand how to communicate their green credentials while mitigating the risk of misleading consumers. The Advertising Standards Authority has also taken action against some businesses.
My Lords, I draw attention to my registered interest. Does the Minister accept that there is real pressure on productive agricultural land, particularly in Wales and Scotland, from the big businesses buying up such land and taking it out of production, so adding to food cost inflation? Does he accept that perpetual increased afforestation encroaching on productive land is not an acceptable answer, and that it needs land use that sustains food production in an environmentally acceptable manner?
That is a fascinating question, although I am not sure that what it has to do with the subject under discussion. However, it is a very real issue and certainly something that we need to keep under close examination, because we do not want productive land taken out of use.
Will my noble friend be able to give, now or later, an estimate of the cost of ESG reporting to British companies? The reason I ask is that an SEC commissioner recently stated that the cost to the 4,600 companies it regulates of providing ESG reporting is currently at $2 billion and expected to rise to $8 billion with the new regulations.
I know that my noble friend is very interested in this important subject; we have discussed it before. The problem we have is that many businesses make environmental claims about their sustainability and that others publish information in their annual reports—often voluntarily; there is, in some respects, no legal obligation to do so—so the question is about how investors can get transferability across different companies and compare one company against another. There may be a case for some standardisation and regulations in this space, but of course we need to look at the business impacts.
My Lords, does the Minister agree that if we are to take action on claims of greenwashing, we need clear criteria and standards against which to judge those claims? The Government have recognised that part of this is the need for a green taxonomy. Work has been done on this, yet it seems to have been paused. We were promised the results of the working party by the end of last year, so can he update us on progress on the green taxonomy? I declare my interests as in the register.
The noble Baroness is right that we need some consistency on these matters. The work on a green taxonomy is being taken forward by the Treasury and as far as I am aware it is proceeding.
My Lords, last year the Advertising Standards Authority ruled that HSBC’s greenwash ads were not adequately qualified and left out material information about its greenhouse gas emissions. Does the Minister agree that a ticking off from the ASA after an ad has gone out is not a deterrent? Will he request the CMA to incorporate this into its green claims code so that financial penalties can be imposed if firms breach the rules repeatedly?
The ASA has taken action against a number of companies, including one that made green artificial grass, over their environmental claims. I think this is a very real deterrent to businesses repeating unfair advertising, but I know that the CMA is looking at a number of different sectors: it has already published an investigation into the fashion sector and is moving its investigations on to other areas of the economy as well.
My Lords, the noble Lord mentioned that the Competition and Markets Authority has issued its green claims code, under which it has the power to take errant companies to court. Have any actually been taken to court?