Post - Blog
Greenwashing has just become a much more serious issue – is the energy sector ready?
- 13 days ago (2026-03-22)
- Junior Isles
Katrina Anderson , Principal Associate, and Rachel McDonnell, Partner, at national law firm Mills & Reeve
World Utilities Congress 2026
In 2025, the energy sector was the largest source of global greenhouse gas (GHG) emissions, with the power industry alone accounting for roughly 29% of all emissions. It is therefore unsurprising that energy companies are continuing to face scrutiny for any environmental claims made.
Regulators now have unprecedented and enhanced powers to investigate and penalise misleading environmental claims – and beyond that, greenwashing could also be prosecuted under a new criminal offense of failure to prevent fraud.
The green claims in energy and elsewhere have been in regulators' crosshairs since the Competition and Markets Authority (CMA) introduced the Green Claims Code in September 2021. But two significant developments are set to make the implications far more serious this year.
The Digital Markets, Competition and Consumers Act 2024 (DMCCA) has equipped the CMA with dramatically enhanced enforcement powers. Simultaneously, greenwashing could now be prosecuted as a criminal offense under the "failure to prevent fraud" (FTPF) provisions of the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which came into force in September 2025.
The expanding regulatory landscape
The regulatory focus on greenwashing stems from a 2021 Europe-wide review led by the CMA, which found that 40% of green claims made online could be misleading. The CMA has subsequently stated that environmentally motivated consumers may be particularly vulnerable to misleading claims.
To make matters worse, the CMA’s definition of environmental claim is deliberately broad, including any claim, whether implicit or explicit, "which suggests that a product, service, process, brand or business is better for the environment." This encompasses suggestions of positive environmental impact, neutral impact, improvements over previous versions, or superiority to competing products.
Why energy is in the spotlight
The energy sector has long been under scrutiny for environmental claims, and in 2026 that attention shows no sign of easing. High-profile cases highlight both the reputational and regulatory risks of overstating climate credentials.
TotalEnergies’ advertising campaigns promoting its clean energy business illustrate the stakes and how the industry has had to adapt its message in face of regulatory scrutiny. In April 2025, the ASA banned one campaign for failing to contextualise the company’s renewable and low-carbon investments in light of their overall business: 90% of TotalEnergies’ sales in 2023 arose from petroleum and gas products. The ASA advised TotalEnergies that they should ensure any future ads that focussed on their environmental initiatives include context about how that fits in to their overall business picture. This demonstrates that transparency and nuance are critical to avoid regulatory penalties.
The decision by the ASA also illustrates both the breach of scrutiny and high standard that the industry is being held to. The ad was shown on X (formerly Twitter) and TotalEnergies used keywords to target the ad to users interested in energy, technology and innovation, “business opinion leaders”, and investors. On this basis they argued that the ad should be judged on the basis of what would be misleading to this informed and sophisticated audience.
The ASA disagreed and said the ad should be judged by the higher standard used for consumer ads, due to the imprecision of the keyword method used. This illustrates how regulators are looking beyond traditional ads and energy companies need to be mindful that the rules apply whenever they make public statements about green credentials. Which means information to investors and shareholders, B2B sales materials, social media posts, and LinkedIn content should all be reviewed for compliance in the same way as more obvious “ads”.
A new era of direct enforcement
When the DMCCA's consumer protection provisions came into force in April 2025, they fundamentally transformed the UK's enforcement landscape. For the first time, the CMA can directly enforce consumer protection law through administrative proceedings without needing to go through the courts.
The regulator's newly increased arsenal is formidable; it has the power to investigate suspected breaches and conclude there is a breach which means it can force business to make changes, and crucially, issue direct financial penalties of up to 10% of global group turnover. This is in addition to its existing power to prosecute through the courts for egregious breaches of the law.
In its Annual Plan 2025/2026, the regulator stated it will use its "new, direct consumer protection powers under the DMCCA to help grow the economy through promoting consumer trust and confidence, while deterring poor corporate practices." In July 2025, the CMA issued an information notice to Euro Car Parks and despite several attempts for a response they did not respond until after the CMA informing them that they were proposing a fine. The CMA ultimately deemed that the reasons provided by Euro Car Parks were not a reasonable excuse. The first DMCCA fine followed shortly afterwards in December 2025 for failing to respond to multiple requests which delayed the CMA’s work causing additional time and resources to be spent – the penalty was £473k (75% of the maximum fixed penalty available). Signalling the CMA’s intent to use its powers actively and it is currently determining whether a case should be opened. In November 2025 the CMA also opened consumer enforcement investigations against three companies around their presentation of mandatory fees.
Importantly, intention is irrelevant under consumer protection law; an innocent or unwitting breach can still be a breach. However, genuine attempts to comply may be considered a mitigating factor when assessing penalties.
The criminal dimension
Compounding the regulatory enforcement challenge, FTPF provisions could also see greenwashing prosecuted as a criminal offence. In broad terms, the offence applies to organisations meeting two or more of the following criteria: over 250 employees, more than £18 million in total assets, or more than £36 million turnover.
Two specified fraud offenses are particularly pertinent to greenwashing: fraud by false representation and fraud by failing to disclose information. These could encompass green claims relating to environmental impact and materials used in production.
The government guidance on FTPF even provides an example involving greenwashing – an investment fund provider promoting an investment in a "sustainable" timber company despite knowing the credentials are fabricated.
Previously, such cases would fall solely under regulatory scrutiny. Now, organisations face potential investigation by the Serious Fraud Office and/or other authorities, unlimited fines, and the severe reputational damage that accompanies criminal conviction. The only defence is proving that "reasonable procedures" were in place to attempt to prevent fraud.
It is worth noting that greenwashing resulting from accidental overstatement of sustainability achievements would, most likely, fail to meet the ‘dishonesty’ threshold needed to establish fraud by false representation. However, that distinction offers cold comfort for organisations facing investigation.
How should energy companies react?
The government guidance sets out six principles for a fraud prevention framework, including top-level commitment from leadership, regular risk assessments, proportionate procedures, thorough due diligence, staff training, and ongoing monitoring.
For environmental claims specifically, businesses making claims are responsible for making sure they gather the evidence needed to substantiate them. The CMA's recent guidance emphasises that where a business relies on third parties, they have obligations to collect this and keep it under review. Ultimately it remains the company who makes the claim’s responsibility to verify accuracy.
The Green Claims Code's six core principles remain the benchmark to operate against – claims must be truthful and accurate, clear and unambiguous, not omit important information, make fair and meaningful comparisons, consider the full lifecycle, and be substantiated with robust evidence.
Protecting against a dual threat
While greenwashing may not be a fundamentally new issue, the enforcement landscape and risk has changed.
Energy companies now face a dual threat of the CMA's enhanced civil enforcement powers and the potential for criminal prosecution under FTPF. Against that backdrop, it’s never been more important for environmental claims to be accurate, clear, substantiated, and consider full lifecycle impact. Robust compliance systems that take account of CMA expectations regarding working with the supply chain must also be in place and clearly evidencable.
One silver lining to end on – this more stringent regime will likely benefit ethical and principled brands who do their compliance properly by cracking down on those trying to gain an advantage through inaccurate and unfair claims.