06 / 09 / 2026
The Legal Shift Towards Combatting Greenwashing
By Joséphine Björndal
This week’s key terms/concepts:
• Greenwashing: When a company makes false or misleading claims about the environmental impact of its products to appear more sustainable than it truly is.
• Digital Markets, Competition and Consumers Act 2024: Legislation granting the CMA power to issue fines of up to 10% of a company’s global annual turnover for deceptive practices without going to court.
• Strategic risk management: A proactive legal approach focused on identifying and mitigating long-term threats, such as climate-related litigation.
Increasing global warming effects, including wildfires, droughts and extreme heat, are intensifying pressure on corporate sustainability. As companies feel the pressure to distance themselves from these environmental disasters, many have fallen into the trap of overstating their green credentials, leading to a surge in greenwashing. In response, UK regulators are moving from guidance to aggressive enforcement.
Under the Digital Markets, Competition and Consumers Act 2024, the Competition and Markets Authority (CMA) can now fine companies up to 10% of their global annual turnover for deceptive environmental claims. Additionally, the Financial Conduct Authority’s anti-greenwashing guidance mandates that all sustainability claims must be “fair, clear and not misleading”, signalling the end of vague green marketing.
What is the significance of this?
These developments represent a shift from voluntary compliance to mandatory
accountability. The CMA’s new powers protect businesses genuinely investing in green initiatives while punishing those using false claims for competitive advantage. Crucially, under the Economic Crime and Corporate Transparency Act 2024, misleading the public for financial gain can now be prosecuted as fraud. Any reporting error, intentional or not, can result in catastrophic financial and reputational damage.
Alarmingly, a study from Durham University reported last month that companies with strong political connections are less likely to receive scrutiny, raising questions on the political influence over greenwashing and the need for independent oversight.
What does this mean for the legal sector?
The legal sector is transitioning from “compliance checking” to “strategic risk
management”, with firms increasingly establishing specialised “climate risk” departments. These teams help clients navigate current laws while anticipating long-term environmental shifts and potential litigation. The CMA’s power to impose fines will increase the demand for litigators to defend against regulatory investigations or represent shareholders after greenwashing scandals.
Ultimately, law firms must provide deeper due diligence to ensure green projects meet strict evidentiary standards.