Unilever faces 'greenwashing' probe by UK watchdog

The UK's antitrust regulator is investigating "green" claims made by the British arm of Unilever Plc, saying it wants to ensure that consumers aren't being misled by a company that has touted social responsibility as a selling point for goods ranging from shampoo to ice cream.

The maker of Dove soap and Cif cleaner may have been overstating the environmental qualities of certain products through the use of "vague and broad" claims, unclear statements and natural looking images and logos, the Competition and Markets Authority said Tuesday.

Consumer goods makers have used eco-friendly marketing to make their products stand out as shoppers tighten their belts and switch to supermarket own brands. But a crackdown in the UK and European Union, designed to prevent baseless claims and protect consumers, has exposed Unilever and its peers to greater scrutiny. The EU this year reached a provisional agreement to amend consumer rights laws to incorporate greenwashing protections.

The CMA action is part of a deeper investigation into so-called greenwashing. Earlier this year, it launched a review of a wide range of essential items used by people on a daily basis and repurchased regularly, such as food and drink, cleaning products, toiletries, and personal care items.

The regulator did not provide details of Unilever's green claims but is expected to provide a further statement later Tuesday.

In January, the CMA also launched an investigation into fast fashion companies Asos, Boohoo and Asda's clothing brand George to scrutinize eco-friendly marketing. Asos had dubbed one of its fashion lines "responsible" while Boohoo touted a "ready for the future" range. The vast majority of fast fashion ends up in landfill.

Shares were largely flat when the market opened in London, having fallen nearly 10% since the start of the year. Over the last three years, Unilever investors have lost around 3% when reinvested dividends are taken into account, while Nestle has returned 7% to shareholders on the same measure, and Procter & Gamble has returned 15%.

Possible outcomes of the CMA probe could include securing undertakings from Unilever that commit to change the way it operates or potentially even taking it to court.

Unilever said it was disappointed by the CMA's investigation and disputed the claims. The Anglo-Dutch company said it only makes responsible, transparent and clear statements about the benefits of its products and has processes in place to ensure they can be substantiated. It added that it provides shoppers with information on how to dispose of its packaging. The company said it will cooperate fully with the CMA review.

Social Purpose

Unilever has previously faced complaints from some investors that it prioritizes a politically-correct image over the success of its business. Fund manager Terry Smith said in 2022 that a company that feels that mayonnaise needs a "purpose" has "clearly lost the plot." Former boss Alan Jope had said that all Unilever's brands should have a social purpose, a policy rowed back on by current CEO Hein Schumacher.

The CMA probe will be a further challenge for Schumacher as he attempts to turn around a group whose performance has underwhelmed in recent years.

The regulator said it's concerned that claims in some of Unilever's packaging and marketing may exaggerate how "natural" a product is. It's also looking at statements that focus on a single aspect of a product and suggest it is environmentally friendly as a whole.

Assertions about the "recyclability" of products and the use of images such as green leaves to make a product seem more natural are also to be examined.