Major UK Bank Penalized by the ASA for Greenwashing
On December 18, 2024, the Advertising Standards Authority ("ASA"), the UK's regulator of advertising, issued a ruling against Lloyds Bank plc ("Lloyds") following a complaint by Adfree Cities, a network challenging corporate outdoor advertising. The complaint centered on four advertisements created by the bank as part of a campaign promoting environmental initiatives in May 2024.
Details of the Advertisements
The four advertisements at the center of the complaint were:
- Poster Advertisement: Featured an image of a person handling seaweed, with text suggesting the rapid growth of a business using seaweed for packaging.
- First LinkedIn Post: Showcased an image of grass, wildflowers, and butterflies, highlighting a partnership with "Projects for Nature" to support nature recovery in England.
- Second LinkedIn Post: Similar to the first post, but detailing specific nature recovery projects funded by the bank, including flood management and biodiversity enhancement projects.
- Third LinkedIn Post: Focused on the bank's efforts to accelerate the transition to a low carbon economy, featuring a video with imagery of renewable energy and electric vehicles.
Complaint and Response
Adfree Cities alleged the advertisements were misleading, as they omitted significant information about the bank's contributions to carbon dioxide and greenhouse gas emissions. Lloyds defended the ads, stating they were factually accurate and focused on specific partnerships and projects. The bank argued that the ads did not make broad claims about its overall environmental impact.
ASA's Assessment and Ruling
The ASA investigated the four advertisements in turn, upholding the complaint in respect of one and dismissing the other three. The key points of the decision were:
- Poster Advertisement: The ASA concluded that consumers would interpret the advertisement as a case study of Lloyds supporting business growth, not as a broader environmental claim. Therefore, it was not misleading.
- First and Second LinkedIn Posts: These were seen as making limited claims about Lloyds' contributions to specific nature recovery projects and therefore did not mislead about the bank's wider environmental impact.
- Third LinkedIn Post: The ASA ruled that this advertisement breached the CAP Code (Edition 12) rules on misleading advertising and environmental claims and must not appear again in its current form. It was held to be misleading because it omitted material information about Lloyds' investments. The ASA noted that while Lloyds was taking steps to reduce its operational emissions, the advertisement gave the impression that renewable energy formed a significant part of the bank's investments. However, Lloyds' 2023 Sustainability Report revealed substantial financed emissions and ongoing investments in carbon-intensive industries. The ASA instructed Lloyds to ensure future advertisements do not omit significant information that would provide context to its environmental claims, such as the proportion of its business activities that are lower carbon.
Implications for Financial Institutions
- Increased Scrutiny and Accountability: The ASA's decision is a clear signal to financial institutions about the importance of transparency in environmental claims. Advertisements must accurately reflect institutions' environmental impact to avoid misleading consumers. This ruling underscores the need for banks to provide a balanced view of their environmental initiatives, including any ongoing investments in carbon-intensive industries.
- Trend of Anti-Greenwashing Litigation: The ruling is part of a broader trend of increased regulatory scrutiny and litigation against greenwashing. In 2022, the ASA banned HSBC adverts for similar reasons, highlighting the bank's investments in natural gas and oil production despite claims of supporting the transition to net zero. This trend is not limited to the financial sector; other industries, such as retail and consumer goods, have also faced regulatory action for misleading environmental claims.
- Regulatory and Consumer Pressure: Regulatory bodies like the ASA and the Competition and Markets Authority ("CMA") are intensifying their efforts to crack down on greenwashing. The CMA has secured agreements from companies like ASDA, Boohoo, and ASOS to amend their green claims.
To avoid similar pitfalls, financial institutions should adopt best practices for environmental advertising:
- Transparency: Clearly disclose the extent of investments in both renewable and carbon-intensive industries.
- Substantiation: Ensure all environmental claims are backed by verifiable data and reports.
- Contextual Information: Provide context to claims, such as the proportion of business activities that are lower carbon.
- Regular Audits: Conduct regular audits of marketing materials to ensure compliance with advertising standards.
The ASA's ruling highlights the growing regulatory focus on greenwashing. Financial institutions must be diligent in ensuring their environmental claims are transparent, substantiated, and contextualized to avoid misleading consumers, especially in the context of increased regulatory and consumer demand for genuine and verifiable environmental commitments.
* Philippa Prendergast-Coates, a trainee solicitor in Jones Day's London Office, assisted with the preparation of this article.
