UK ad and competition watchdogs take action against 'greenwashing' hydrogen claims
Published on 24th Oct 2023
Businesses and advertisers in the UK are under increased scrutiny from regulators for inaccurate green advertising claims
The UK Advertising Standards Authority (ASA), as part of its most recent wave of investigation adjudications, has yet again focused on advertisers making environmental claims that are considered disproportionate to the environmental impact of their overall business activities.
The UK Competition and Markets Authority (CMA) has also taken new steps to further increase its scrutiny of suspected greenwashing, specifically in relation to claims that companies make in relation to renewable hydrogen.
The recent focus highlights the ongoing work of both regulators to reduce misleading green claims used to influence consumers' purchasing decisions.
Repsol's renewable hydrogen claim
Spanish energy group Repsol released a paid-for online ad in the Financial Times on the 12 July 2023. It featured imagery of a water droplet with text saying: "Renewable hydrogen, another alternative to reduce emissions. At Repsol, we are committed to renewable hydrogen as an energy source that offers up different uses such as zero net emissions synthetic fuel production”.
The campaign group Adfree Cities challenged whether the ad was misleading as it omitted information about Repsol's overall environmental impact through its business activities.
In response, Repsol emphasised the steps it was taking to invest in new technology such as renewable hydrogen – and the fact that it is transforming its seven industrial complexes in Spain, Portugal and Peru into multi-energy hubs to aid in the production of renewable hydrogen by 2030;
It outlined the steps it was taking to cut emissions generally across its business – including its commitment to reduce emissions from operated assets and net emissions by 55% and 30% respectively by 2030 and the fact that they are largest operator in the Spanish electric vehicle (EV) charging network.
The Spanish energy group also highlighted the fact that the ad was targeted at potential investors not the general public, and it was aimed at increasing the visibility of renewable hydrogen and highlighting Repsol’s commitment to renewable hydrogen rather than selling a specific product.
The format and medium of the ad, which was constrained by time and space, meant it had been unable to add more information about their general business activities in the ad copy, it argued.
The ASA considered the ad gave the overall impression that a significant proportion of Repsol’s business comprised of lower-carbon energy, such as renewable hydrogen. And the UK advertising regulator was unconvinced by Repsol's arguments.
In particular, the ASA considered that the wording in the ad, including references to renewable hydrogen, would be understood by consumers to mean that a "significant proportion" of Repsol's overall energy production was aimed at helping achieve net-zero emissions. The use of icons such as solar panels, an electric vehicle, a wind turbine etc strengthened this impression.
While noting that Repsol was in the process of transforming several of its complexes to aid in the production of renewable hydrogen by 2030, the ASA said that the operation would not commence until 2024 and Repsol was not yet producing any hydrogen. Moreover, Repsol has a substantial oil and gas exploration strategy, which forms the vast majority of its business interests.
Ad deemed misleading
As the significant proportion of Repsol's business was not comprised of lower-carbon energy and information about its other business activities were omitted, the ad was deemed to be misleading in breach of the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing.
Repsol was instructed to make sure significant information about the proportion of business activities which are not based on renewable energy must not be omitted in similar future ads, or equally, make it clear the role renewable energy actually plays in the overall business activities of the company.
This is another ASA ruling that has enforced the theme of "proportionality" within advertising campaigns that reference the environmental impact or goals of the advertiser.
This theme has been a clear consideration in ASA adjudications considering the impression environmental claims give to consumers and which we have seen since the well-publicised adjudication against HSBC in October 2022. This adjudication reinforces that this is, therefore, a lens through which advertisers need to view their "green" ad copy before signing it off.
'Hydrogen-blend ready' boilers
The CMA recently announced it has launched an investigation into Worcester Bosch over concerns it may be misleading consumers when marketing boilers as "hydrogen-blend ready". The UK competition regulator is looking into whether a range of boilers mislead consumers into thinking they are more environmentally friendly than they are.
The CMA's investigation will primarily look at statements saying the boilers can run on 20% hydrogen and natural gas, which may give the impression that this is a special feature when in fact it has been a legal requirement for all boilers in the UK since the mid-1990s;
It will look at the information and messaging on using hydrogen to heat homes – given this is not currently available and is potentially years away from being possible (which in any case would be subject to government decisions and other factors such as boilers which operate with heat pumps).
And it will look at the information provided by Worcester Bosch that states the environmental benefits of "hydrogen-blend ready" boilers, which may falsely lead consumers to think they will reduce a household's carbon footprint.
The action is part of the CMA’s wider work looking at consumer protection issues in the green heating and insulation sector. The regulator has also written to 12 other businesses that sell "hydrogen blend" boilers, after reviewing their marketing materials, to warn that they could be breaching consumer protection law and to remind them of their legal obligations.
Osborne Clarke comment
The ASA ruling against Repsol is a reminder to advertisers that it is important to ensure that any green agenda in an ad is highlighted in respect to the proportion of total business activity of the company as a whole.
If an ad suggests that the environmental benefit being showcased is a significant part or impact of the advertiser's business, that needs to be the case or else more balanced information needs to be provided in the ad itself.
For example, where a company is taking steps to invest in technology that helps produce lower-carbon energy, such as hydrogen, but a significant proportion of its other business activities involve oil and gas exploration, this should be disclosed in the ad so as not to mislead the consumer. This is particularly important for companies that consumers will clearly recognise as being involved in more traditional forms of energy such as oil and gas.
In respect of the CMA investigation, similarly to the ASA, it is clear that the UK competition regulator is pushing for businesses to be clear and transparent around the environmental credentials of themselves or of the products they are advertising.
Advertisers need to be aware that unsupported green claims or exaggerated environmental benefits of products run a high risk of enforcement action. The CMA's enforcement of the 2021 Green Claims Code continues, with sector investigations into fast fashion and fast-moving consumer goods on the CMA's current action list. This latest announcement indicates that the CMA is taking a close look at a number of sectors where they feel the risk of widespread consumer harm is a real risk.
It will be interesting to see how these investigations play out alongside the development of technology in hydrogen energy and against the backdrop of the debate as to whether heat pumps or hydrogen are the future in terms of how homes are heated – and just how much consumers understand these alternatives.