INSIGHT by the Competition and Markets Authority
〉Guidance to give firms greater clarity about agreements addressing environmental sustainability including climate change
〉CMA to offer open-door policy for businesses seeking guidance
〉Campaign includes roadmap and video to help businesses navigate different categories of risk
The new Green Agreements Guidance, published last week by the Competition and Markets Authority (CMA) following extensive consultation, explains how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain, to help them act on climate change and environmental sustainability.
The Green Agreements Guidance – formally, ‘Guidance on the application of the Competition Act 1998 to environmental sustainability agreements’ – sets out the key principles which apply, along with practical examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives. It explains that the CMA does not expect to take enforcement action against agreements that are in line with the guidance. There is also a chapter dealing specifically with how agreements tackling climate change will be considered.
The guidance follows the environmental sustainability advice the CMA provided to the UK government in March 2022. As part of that work, the CMA found businesses wanted more clarity about what is, and what is not, legal when working together towards environmental sustainability goals. The CMA publicly consulted on a draft of this guidance earlier this year, and this final version reflects the useful comments received from a wide range of interested people and businesses.
This is part of a wider awareness campaign which the CMA has launched last week which includes a video and a roadmap. The roadmap focuses on different categories of risk to help businesses navigate what they need to consider as a first step before reading the full CMA guidance document or seeking legal advice.
〉Example: The fashion sector agrees to set targets for gradually increasing the amount of sustainable materials used in their clothing ranges. The CMA’s guidance explains how this should be done so these businesses can be confident their agreement complies with competition law.
For companies which are in doubt, the CMA is operating an open-door policy where businesses (and representative bodies such as trade associations), non-governmental organisations and charities can approach the CMA for informal guidance on proposed environmental sustainability initiatives. You can read more about the CMA open-door policy here.
”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.”
-Sarah Cardell, CMA Chief Executive
The Green Agreements Guidance published last week is part of a wider range of documents on agreements between businesses at the same level of the supply chain (so-called ‘horizontal agreements’). This follows work from the CMA’s Sustainability Taskforce after it published its environmental sustainability advice to the UK government in March 2022.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
