Unilever Shares Fell Then Rose on CMA’s Greenwashing Claims

The Unilever plc (LON: ULVR) share price fell initially after the UK's Competition and Markets Authority (CMA) announced it will closely examine environmental claims made by the British consumer goods conglomerate Unilever, focusing on certain household products.

This action is part of a broader initiative to combat misleading environmental claims, commonly known as greenwashing.

Following an initial assessment, the CMA expressed concerns that Unilever, known for products like Dove soap, might be exaggerating the eco-friendliness of some of its products. “We'll be examining these claims closely to determine their accuracy,” stated Sarah Cardell, the CMA Chief Executive.

In response, a Unilever spokesperson expressed both surprise and disappointment at the CMA's decision, firmly denying any misleading nature of their claims. The spokesperson confirmed Unilever's intention to cooperate fully with the CMA and provide any necessary information.

The CMA has today launched a formal investigation into Unilever. Following this announcement, Unilever's shares in the London stock market opened with a 0.7% decrease.  

The CMA's action reflects a growing trend among regulators worldwide to scrutinize companies for potentially overstating their environmental credentials. These efforts aim to attract both eco-conscious consumers and significant investments from environmentally focused funds.

In January, the CMA launched a comprehensive investigation, aligning with similar efforts by regulators in the United States and Europe to address potential falsehoods in environmental, social, and governance-related (ESG) claims by businesses.

Last year, the CMA released a green claims code—a guideline to help companies and consumers ensure that environmental claims are substantiated and not misleading.

One concern is that Unilever's use of certain statements and language might be too vague or broad, potentially leading consumers to misunderstand the environmental impact of these products. Another point of contention is the way Unilever represents some ingredients, possibly overstating their ‘natural' qualities. 

The CMA is also scrutinizing claims that highlight a single aspect of a product's environmental friendliness, suggesting that the product as a whole is environmentally friendly. Additionally, there are issues with some of Unilever's green claims, particularly regarding recyclability. 

Unilever share price. 

The Unilever share price edged higher to trade at 3795.3p from Monday’s closing price of 3779.8p.