Clifford Chance

Carbon Neutral, Net Zero, Climate Positive – it all sounds commendable, but do consumers actually know what these terms mean? Following a recent Advertising Standards Authority study into the issue, the answer appears to be... not yet.

The ASA has been monitoring the use of environmental claims in advertising for years, but it is increasingly looking at how it can use its role to regulate misleading or socially irresponsible claims in this space. Following a 2021 review of the ASA's regulation of environmental advertising, the ASA committed to undertake consumer research to better inform its application of the rules.

The Environmental Claims in Advertising report, commissioned by the ASA and published earlier this Autumn, was an important step in the monitoring of green claims, particularly for the automobile industry. However, many of the findings are relevant for all advertisers wanting to highlight their green credentials. The study investigated consumer understanding of environment-based terminology used in ads, focusing on 'Carbon Neutral' and 'Net Zero' claims, as well as sector specific terminology used across the electric and hybrid motor industry. The qualitative survey involved in-depth interviews with 75 participants, and will help guide the ASA on how best to regulate this area moving forward.

Study Results

The study found that while environmental claims could be useful, the current way they are used means they generally made little or no impact on consumers' choice. The study attributed this to the lack of consumer understanding as to what the claims and terms actually meant, overlapping terms causing confusion, as well as consumer wariness of 'greenwashing' diluting claim credibility.

A clear takeaway was the lack of understanding as to the terminology and technology involved with eco-friendly hybrid and electric vehicles, which many consumers found challenging. Many ads discussed general environmental benefits, but did little to educate the consumer about what these new technologies meant for them (e.g. driving range, charging infrastructure, and relative cost/environmental benefit), and the practical implications of the choice. While consumers appreciated that brands couldn't provide all the answers, many felt they should be responsible for bringing consumers on the education journey.

When looking at Carbon Neutral and Net Zero claims in particular, the study also found that many consumers were unaware as to the difference between these terms. Most participants assumed these claims referred to a direct reduction of carbon emissions, leading many to feel misled when it was explained that it often meant companies were relying on offsetting their carbon emissions (either partially or wholly), although some of the more engaged participants understood this distinction. Most participants also felt that the claims were overlapping and unclear, and there was agreement that these claims were expected to be standardised and policed at some level.

Moving forward

The study found that at this stage, environmental benefits were not influencing most participants' vehicle purchasing decisions, although it did find that the claims had a favourable impact on a brand's reputation. For more mainstream participants, the use of green claims when there was no additional cost or sacrifice could tip the balance, and for more environmentally aware participants these claims could have an even larger impact.

The study also found that depending on the creative approach used, these ads could have a stronger impact on consumer choice, particularly if the details supporting the claim or its impact on the consumer or employee were included. This means there is opportunity for businesses to harness consumer preference to 'do the right thing', but how this is conveyed through advertising is key. When the environmental claims used were broad and unsupported, consumers assumed it was greenwashing, and felt higher levels of disappointment when the claim was explained (e.g. reduction of omissions through offsetting rather than an absolute reduction).

The results of this study are important to advertisers across all sectors. There is real potential for environmental claims to be a distinguishing factor and a unique selling point for brands, provided the claims used resonate with and are clearly understood by consumers. However, whether or not brands decide to engage with consumers and ride off into the sunset together (in an environmentally friendly vehicle, of course) remains to be seen.

Key takeaways

• Environmental terminology is difficult for consumers to understand. Brands need to educate consumers on what environmental terms mean, if they want their green credentials to have an impact.  
• Green claims can be important to consumers, if they understand the claim and the details behind it are clear. High level claims (e.g. we are working towards being carbon neutral by 2050') are unlikely to be persuasive.
• Greater transparency from businesses is needed to build consumer trust in the brand. However, green claims can have a positive impact on a brand's reputation.
• Standardising environmental claims is key. It is currently unclear what organisation or governmental body will step in to regulate these claims, but watch this space.