UK: Advertising regulator finds that bank’s adverts containing climate claims are misleading in precedent-setting case

The Advertising Standards Authority (ASA) has used a recent ruling to give guidance to banks and advertisers operating in the financial sector on how to communicate their climate and sustainability commitments. This decision will also be of interest more generally to businesses keen to minimise the risk of inadvertent greenwashing given the heightened scrutiny that continues to be given to green claims.

The ASA, in a ruling published yesterday, found that environmental claims made in certain poster advertisements were misleading on the basis that they omitted material information about the advertiser’s carbon emissions. While the ASA has taken similar action against businesses selling consumer products before, this is the first time the authority has acted against a financial institution in relation to environmental claims in marketing communications. The ASA has made clear that it is using this case to set a precedent and that it expects all banks to follow this example.

Factual background  

The poster-adverts were displayed in Bristol and London in October 2021. They contained imagery of waves crashing on a shore and tree growth rings, and made the following two claims:

• that the advertiser was aiming to provide significant financing and investment globally to help its clients transition to net zero; and
• that the advertiser was helping to plant a significant number of trees.

The complainants included Adfree Cities, self-described as a network of groups concerned about the impacts of corporate advertising, who challenged that the posters were misleading because they did not include information about the advertiser’s contribution to CO2 and GHG emissions.

The advertiser’s response explained that: (a) its policies were consistent with various international commitments and plans to transition to net zero; (b) the claims in question were short-to-medium term initiatives that were tangible and quantifiable; (c) the advertisements were published in the lead up to COP26 and such timing brought heightened media engagement on climate change, which meant that the average consumer was more informed; and (d) the advertiser’s website provided complete details of its climate strategy and initiatives.

Advertising Code rules

The ASA’s parameters governing print advertising are set out in the UK Code of Non-broadcast Advertising and Direct & Promotional Marketing (CAP Code).

CAP Code rule 3 prohibits marketing communications that are likely to be materially misleading (rule 3.1) and sets out that the omission, and/or manner of presentation, of material information can be considered misleading (rule 3.3).

CAP Code rule 11 specifically deals with environmental claims: it requires that the basis of all environmental claims be clear and sets out that unqualified claims that omit significant information can be misleading (rule 11.1).

The CAP Code is supplemented by the advertising guidance for environmental claims (see our previous blog post). In addition, the UK Competition and Markets Authority regulates environmental claims under its Green Claims Code (see our previous blog post).

ASA’s ruling

The ASA upheld the complaints (and notably took longer than is usual in coming to a decision), finding that the adverts breached CAP Code rules 3.1, 3.3 and 11.1. 

The ASA concluded that:

• consumers would understand the two unqualified claims as implying that the advertiser was making an overall positive contribution to the environment and the use of natural imagery would contribute to such impression;
• even though advertising around COP26 contributed to a growing public awareness of climate concerns, consumers were unlikely to understand the technical intricacies of the transition to net zero and so were unlikely to know that the advertiser was also simultaneously financing businesses with notable CO2 and GHG emissions; and
• consequently, failing to mention the advertiser’s involvement in such financing constituted an omission of material information which affected consumers’ understanding of the advert and made the advert misleading.

The way forward

This ruling follows a spate of recent ASA decisions holding businesses accountable for greenwashing, such as for green claims made in adverts by TIER scooters, Innocent Drinks and Tesco Stores, but this is the first time that the ASA has banned adverts by an advertiser operating in the financial sector. Earlier this year, the ASA decided not to investigate complaints made against two other financial institutions in relation to environmental claims on the basis that this decision would be used as a precedent. 

Advertisers operating in the financial sector should therefore take particular note and see this case as a direct indication from the ASA that they should carefully consider how they communicate their climate and sustainability commitments and initiatives.

The ASA’s decision shows how context and presentation (such as the use of images of nature) are relevant to how the ASA will interpret a consumer’s understanding of environmental claims. The ASA has also made clear that a company cannot advertise its green credentials without also drawing express attention to the company’s other non-green activities – it is not sufficient to rely on the fact that qualifying information is available to consumers elsewhere (e.g. on a website).

Businesses should therefore take a cautious approach to how their green initiatives are presented and communicated to ensure that any advertising (and public material) is appropriately nuanced and balanced, and that consideration has been given to how the claims may be interpreted through multiple stakeholder lenses. There should also be appropriate governance around this process to ensure that any advertising is consistent not only with disclosures made elsewhere but also with other activities/initiatives that may be carried out by the business. This is particularly important, bearing in mind the relative ease with which the ASA complaints procedure can be used as a gateway to allege greenwashing and, in the process, attract all the wrong sort of publicity.