Businesses may better understand how to work together to achieve environmental sustainability goals without infringing the law with the help of new guidelines released by the CMA.
Providing Clarity:
CMA Offers Guidance on Sustainability Agreements, Focusing on Climate Change.
Open-Door Policy:
CMA Welcomes Businesses Seeking Environmental Guidance
Navigating Risks:
CMA’s Campaign Offers Roadmap and Video Support for Businesses
After a thorough consultation process, the Competition and Markets Authority (CMA) published the new Green Agreements Guidance. It clarifies how agreements between businesses operating at the same level of the supply chain that promote environmental sustainability and combat climate change are subject to competition law.
Formally known as “Guidance on the application of the Competition Act 1998 to environmental sustainability agreements,” the Green Agreements Guidance outlines the relevant principles and provides useful examples for businesses to utilise informing and guiding their own decisions when collaborating with other businesses on environmental sustainability initiatives. It clarifies that agreements that comply with the guidelines will not be subject to enforcement action by the CMA. Additionally, there is a chapter that addresses the specifics of how agreements addressing climate change would be taken into account.
Building on environmental sustainability recommendations submitted to the UK government in March 2022, the CMA now offers guidance. During its research, the CMA discovered a demand from businesses for clearer distinctions between legal and non-legal collaboration in pursuit of sustainability objectives. After a public consultation on the draft, the final guidance incorporates valuable feedback from diverse stakeholders and businesses.
The CMA has initiated a comprehensive awareness campaign featuring a video and a roadmap. The roadmap is designed to address various risk categories, aiding businesses in identifying crucial considerations before delving into the complete CMA guidance or seeking legal counsel.
n a notable example, the fashion industry commits to establishing targets for the progressive incorporation of sustainable materials in their clothing lines. The CMA’s guidance outlines the proper procedures, ensuring these businesses can proceed with confidence, assured that their agreement aligns with competition law.
Companies facing uncertainty can take advantage of the CMA’s open-door policy. This allows businesses, including representative bodies like trade associations, as well as non-governmental organizations and charities, to seek informal guidance from the CMA regarding their proposed environmental sustainability initiatives. Further details on the CMA’s open-door policy can be found 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 is a component of a larger set of documents on agreements—known as “horizontal agreements”—between companies operating at the same supply chain level. This is in response to recommendations made by the CMA’s Sustainability Taskforce to the UK government in March 2022 on environmental sustainability.
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