CMA publishes guidance on how firms can make sustainability agreements



Competition and Markets Authority (CMA) publishes guidance on how firms can make agreements addressing environmental sustainability including climate change.

The new Green Agreements Guidance, published today by the CMA following consultation, explains how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain.

Formally, “Guidance on the application of the Competition Act 1998 to environmental sustainability agreements”, the Green Agreements Guidance 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.

An example the UK Government provides is if the fashion sector agrees to set targets for increasing the amount of sustainable materials used in their clothing ranges. The CMA’s guidance explains how this should be done so the agreement complies with competition law.

This is part of a wider awareness campaign the CMA has launched 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.

We have developed the Green Agreements Guidance for all companies who are considering collaborating.

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 on 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 guidance follows the environmental sustainability advice the CMA provided to the UK government in March 2022. As part of that work, the CMA says it 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 in 2023 and says this final version reflects the comments received from people and businesses.

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