The Competition and Markets Authority (CMA) has published its first response to a request for informal guidance received under the open-door policy set out in the Green Agreements Guidance.
The guidance, published in October, explains how competition law applies to environmental sustainability agreements between businesses operating at the same level of the supply chain, to help them act on climate change and environmental sustainability. The CMA is operating an open-door policy where businesses, non-governmental organisations, trade associations and charities can approach the CMA for informal guidance on proposed agreements between businesses that promote environmental sustainability.
The Fairtrade Foundation request relates to its new Shared Impact initiative which aims to enhance sustainability and resilience in food supply chains. The food and drinks industry is responsible for nearly 10% of total emissions resulting from UK consumption. The initiative builds on existing participation by UK grocery retailers in Fairtrade initiatives.
One of the objectives of the proposed new scheme is to provide longer-term contractual stability that would enable producers the opportunity to invest in more environmentally sustainable farming practices, such as reducing monoculture. To achieve this, participating grocery retailers would agree to commit to purchase minimum additional Fairtrade volumes of bananas, coffee and/or cocoa from a pool of Fairtrade producers on long-term contracts.
The informal guidance confirms that, in the CMA’s view, the Fairtrade Foundation’s Shared Impact Initiative is unlikely to raise competition concerns.
This work forms part of the CMA’s wider work on environmental sustainability, in line with its strategic priorities to help accelerate the transition to net zero and support and encourage businesses and markets for new environmental products and services to innovate to achieve sustainability goals, whilst also ensuring consumers are protected.
Sarah Cardell, CMA Chief Executive, said:
The Green Agreements Guidance enables companies to be confident they can fulfil their green potential without breaking the law. The agreement on which we’re giving guidance today is the latest update related to our wider work on environmental sustainability and will help grocery retailers further improve the green credentials of the Fairtrade products they place on shelves.
We encourage businesses in any sector to get in touch if they are considering entering into an environmental sustainability agreement but are uncertain on how the guidance would apply. We can provide insights to help them reach their environmental goals, while making sure their customers are getting a fair deal.
Further details of the informal guidance for the Fairtrade Foundation’s Shared Impact Initiative can be found on the CMA’s website.
Notes to editors
- To discuss initiatives on environmental sustainability, and make use of the CMA’s open-door policy, please get in touch with the Sustainability Taskforce via sustainabilityguidance@cma.gov.uk
- In line with the CMA’s strategy there are three main ways the CMA is seeking to promote environmental sustainability and help accelerate the transition to a net zero economy. These are helping to ensure that: i) markets for environmentally sustainable products or services develop in ways favourable to competition and consumers (see for example the market study on electric vehicle charging points), ii) consumers are able to make informed choices about the environmental impact of the goods and services they use (see work on green claims) and iii) competition law is not an unnecessary barrier to companies pursuing environmental sustainability initiatives. The CMA’s Guidance on Green Agreements is part of this third area of focus.
- The CMA announced this week that it will be scrutinising environmental claims made by the consumer goods group Unilever, which is known for brands including Cif, Dove, Comfort and Lynx. The move comes as part of the CMA’s wider investigation into greenwashing and follows concerns around how Unilever is marketing certain products, within some brands, to customers as environmentally friendly. This week the CMA has also published draft compliance advice for businesses marketing green heating and insulation products to consumers, to help businesses in the sector understand and comply with their consumer law obligations – this follows the CMA’s review into consumer protection in the sector.
- The food and drinks industry is responsible for approximately 9% of the emissions associated with the consumption of goods and services by households in the UK. This figure includes estimates of emissions associated with each stage of the supply chain for those goods and services, regardless of where they occur. See the Office for National Statistics, Carbon footprint for the UK and England to 2020, updated in August 2023.
- For media enquiries, please contact the press office via press@cma.gov.uk or on 0203 738 6460.
