CMA tightens greenwashing enforcement across supply chains as Insurance Europe challenges EU dividend tax reform for pension institutions
The UK Competition and Markets Authority (CMA) has published guidance making clear that businesses repeating, relying on, or disseminating environmental claims made by third parties face direct enforcement risk — not merely the original claimant. Under the Green Claims Code, a retailer stocking a product labelled 'eco-friendly' without having verified that claim, or a brand promoting a supplier's materials as 'sustainably sourced' without documented substantiation, is now explicitly within scope for CMA enforcement action. The CMA has confirmed it will focus enforcement on the party best placed to remedy a misleading claim — typically the downstream business with the direct consumer relationship. This is a significant extension of liability beyond brand owners to retailers and distributors. The guidance requires businesses to implement documented processes for requesting, evaluating, and retaining supplier claim substantiation, and to build contractual frameworks that allocate responsibility between supply chain parties. For multinationals operating across the EU, the picture is complicated by Insurance Europe's concurrent call on EU lawmakers to amend the FASTER Directive — the EU's proposed reform of dividend withholding tax (WHT) relief mechanisms. Insurance Europe argues that workplace pension institutions regulated as insurers should receive the same fast-track WHT relief available to other pension providers, warning that the current draft creates an unlevel playing field. The CMA greenwashing expansion is the higher-impact story for City-advised clients given its direct enforcement consequences.
Why this matters
The CMA's extension of green claims liability to supply chain intermediaries creates immediate demand for compliance advisory work — specifically, gap analysis of existing supplier contracts, environmental claim verification procedures, and remediation plans. The legal risk is acute for consumer-facing clients in retail, FMCG (fast-moving consumer goods), and financial services, where ESG (environmental, social, and governance) marketing claims are pervasive. This sits alongside the EU's Green Claims Directive (currently in legislative progress), meaning firms advising multinational clients face a dual-jurisdiction compliance obligation. The 'why now' is enforcement escalation: the CMA has signalled it will move from guidance to active enforcement against downstream parties who fail to act on published warnings.
On the Ground
On a CMA greenwashing compliance matter, a trainee would be drafting compliance gap analysis memos comparing a client's existing marketing claims against the Green Claims Code standards, and updating a remediation tracker to flag which claims require supplier re-verification or removal. They would also review supplier contracts to identify whether indemnity provisions adequately allocate ESG claim liability.
Interview prep
Soundbite
The CMA now holds retailers liable for their suppliers' green claims — every supply chain contract needs an ESG indemnity review.
Question you might get
“A retail client sells a product labelled 'sustainably sourced' by its manufacturer. Under the CMA's current guidance, what steps should the retailer take to manage its enforcement risk?”
Full answer
The CMA has made explicit that downstream businesses — retailers and distributors — face direct enforcement risk for repeating unverified environmental claims made by their suppliers, not just the original brand owner. This matters commercially because it forces compliance investment across entire supply chains rather than at the point of manufacture, generating large-scale contract review and remediation mandates. The wider trend is convergence between the CMA's Green Claims Code approach and the EU's Green Claims Directive, creating a dual-jurisdiction compliance burden for UK multinationals. Firms advising consumer-facing clients should expect this to drive sustained regulatory advisory work through 2026.
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