The guidance stems from environmental sustainability recommendations provided by the CMA to the UK government in March 2022.
The Competition and Markets Authority (CMA) has released a guide, ‘Green Agreements Guidance’, to help businesses collaborate on environmental sustainability goals without violating competition law. The initiative empowers businesses to take proactive steps towards climate change and environmental sustainability.
Formally titled ‘Guidance on the application of the Competition Act 1998 to environmental sustainability agreements’, the guide outlines key principles and provides practical examples that businesses can utilize when engaging with other companies on environmental sustainability initiatives.
Importantly, the CMA assures that agreements aligned with the guidance are not expected to face enforcement action. Additionally, a specific chapter addresses how agreements targeting climate change will be evaluated.
The guidance stems from environmental sustainability recommendations provided by the CMA to the UK government in March 2022. Through this process, it became evident that businesses sought greater clarity on what is legally permissible when collectively pursuing environmental sustainability objectives. The final version of the guidance has been shaped by valuable feedback from a wide spectrum of interested parties and businesses.
In tandem with the guidance, the CMA has launched a broader awareness campaign, featuring a video and a roadmap. The roadmap categorizes various risk factors to guide businesses in their initial considerations before delving into the full CMA guidance or seeking legal advice.
In the fashion sector, businesses agree to establish targets for gradually increasing the utilization of sustainable materials in their clothing ranges. The CMA’s guidance elucidates how this can be achieved, providing assurance to these businesses that their agreement aligns with competition law.
For companies in doubt, the CMA has instituted an open-door policy. This allows businesses, as well as representative bodies like trade associations, non-governmental organizations, and charities, to seek informal guidance from the CMA regarding proposed environmental sustainability initiatives.
Sarah Cardell, CMA Chief Executive, commented:
“We know that tackling climate change and promoting environmental sustainability matters, and supporting businesses to do this is a priority for the CMA. So, we have developed the Green Agreements Guidance for all companies who are considering collaborating so they can understand how to agree green goals without breaking the law.”
“The guidance goes further than before – it gives firms greater certainty about when agreements that genuinely contribute to addressing climate change will be exempt from competition law. Our open-door policy means we can work with companies to give them tailored informal guidance on how they can work together to boost the green economy.”
The Green Agreements Guidance is part of a wider range of documents covering agreements between businesses at the same level of the supply chain (referred to as ‘horizontal agreements’). This follows the CMA’s Sustainability Taskforce’s environmental sustainability advice to the UK government in March 2022.