Estimated reading time: 5 minutes
Key takeaways
- The CMA’s New Supply Chain Guidance stresses that accountability for environmental claims extends across all parties in a supply chain.
- Businesses must now substantiate environmental claims with robust data, regardless of the source of the information.
- Distributors must perform due diligence and ensure they can justify any green claims made to avoid regulatory scrutiny.
- Leadership should treat green claims as a cross-functional issue, ensuring collaboration across departments and careful oversight.
- Contracts should include provisions for information sharing and verification, reinforcing responsibility for substantiating claims.
Earlier this month the Competition and Markets Authority issued new guidance on making environmental claims across supply chains, building on the Green Claims Code first published in 2021. While the original Code focused on the substance and presentation of green claims, the latest guidance shifts attention decisively to how responsibility for those claims is distributed between suppliers, manufacturers, brand owners and distributors. For executives the message is clear: accountability for environmental claims no longer stops at organisational boundaries, and reliance on upstream or downstream assurances without scrutiny is unlikely to be defensible.
Why does this matter now?
The guidance reflects a broader regulatory and policy trend towards supply chain transparency and shared accountability. Sustainability claims are increasingly treated as a matter of consumer protection rather than corporate aspiration. As a result, any business that communicates environmental benefits to customers is expected to understand, test, and substantiate the underlying data, even where that information originates elsewhere in the supply chain.
From a governance perspective, the CMA’s position is that responsibility attaches to the party making the claim, not the party that originally generated the information. This applies equally to manufacturers providing specifications or certifications to their customers as it does to retailers promoting the environmental credentials of products on their shelves, to brands selling through third-party platforms. The guidance expressly cautions against assuming that another party’s statement is accurate or complete. Management should therefore assume that regulatory scrutiny will focus on what steps their businesses took to verify claims, rather than on where the information came from.
Practical implications for the supply chain
For suppliers, this creates a heightened expectation that environmental information provided to customers is robust, current, and capable of being explained. Data relating to sourcing, materials, emissions, recyclability or lifecycle impacts may be relied on by multiple downstream parties, each of whom may in turn communicate claims to consumers. Inaccuracies or over-generalisations at source can therefore propagate quickly, amplifying both legal and reputational risk. Suppliers should anticipate increased requests for supporting evidence and should expect customers to seek clearer explanations of methodologies, assumptions and limitations.
Distributors face a different but equally demanding challenge. Many operate at a distance from manufacturing processes and may have limited direct visibility over how environmental attributes are measured. The CMA guidance makes it clear that this distance does not reduce responsibility. Where a distributor chooses to repeat or amplify a green claim, it must be comfortable that it can justify that claim if challenged. This places a premium on due diligence, internal escalation processes and the ability to interrogate supplier information critically rather than passively.
Product journey diagram taken from the CMA guidance. “The raw material goes to the supplier, who adds an environmental claim. The next stages are, manufacturer, distributor and brand and retailer. The environmental claim remains on the product throughout all of these stages. The product journey ends with the consumer.”
Information flow
One of the most significant implications of the guidance is its emphasis on information flow within supply chains.
The CMA acknowledges that different actors hold different pieces of the evidential puzzle, but it expects businesses to take reasonable steps to bridge those gaps. For executives this raises questions about whether existing commercial relationships are structured to support the level of transparency now expected. In many cases, legacy contracts were not designed with environmental substantiation in mind! As a result they may offer only limited rights to request data, conduct audits or challenge assertions.
The guidance also underscores the importance of proportionality and accuracy in how claims are framed. Even where underlying data is sound, claims can become misleading if they are overstated, taken out of context or presented without clear qualifications. This is particularly relevant for executives overseeing brand strategy and communications, as marketing teams may understandably wish to highlight positive sustainability attributes without fully articulating their scope or limits. The CMA’s approach suggests that nuance and precision are not merely best practice but regulatory necessities.
What should businesses be doing now?
To guard against these risks, leadership teams should view green claims as a cross-functional issue rather than a marketing or compliance silo. Effective responses are likely to involve procurement, legal, sustainability, risk and communications functions working together. Senior sponsorship is critical in setting expectations that environmental claims must be treated with the same rigour as financial or safety statements, and that commercial pressure will not justify shortcuts in substantiation.
There is also a clear contractual dimension. While contracts alone will not eliminate regulatory exposure, they play an important role in allocating responsibility and enabling compliance. Provisions that support information sharing, verification and audit can help demonstrate that a business has taken reasonable steps to substantiate its claims. Similarly, clear consequences for inaccurate or misleading information can reinforce discipline throughout the supply chain, although they should be viewed as a backstop rather than a substitute for active oversight.
Finally, the CMA guidance should be read as part of a wider enforcement trajectory rather than a standalone document. Public warnings to retailers and brands indicate an increasing willingness to hold multiple actors accountable for the same claim. For business leaders, this means that green claims strategy should be informed not only by consumer expectations but by a realistic assessment of regulatory risk across the entire value chain.
Outlook
In practical terms, businesses that invest now in understanding where their environmental claims originate, how they are supported, and how they are communicated will be better placed to respond to scrutiny. Those that continue to rely on informal assurances or inherited assumptions may find that the regulatory environment has moved faster than their internal controls. The new CMA guidance does not require perfection, but it does require evidence of thought, care and governance. At board level, that expectation is unlikely to diminish.
Authors
Related legal expertise
Connect with us
