The new Green Agreements Guidance published by the Competition and Markets Authority (CMA) will help businesses understand how they can collaborate on environmental sustainability goals without breaking the law.
Environmental sustainability agreements are agreements between competing businesses that involve cooperation to achieve green outcomes, such as tackling climate change.
For example, businesses may decide to combine expertise to make their products more energy efficient. Or they might want to use packaging material that meets certain standards to reduce waste.
Following extensive consultation, the CMA’s new guidance on the application of the Chapter I provision of the Competition Act 1998 to environmental sustainability agreements between businesses operating at the same level of the supply chain will provide clarity. The green agreements guidance includes additional practical examples that businesses can use to inform and shape their own decisions when working with competitors on environmental sustainability initiatives.
It will give firms greater clarity about agreements addressing environmental sustainability, including climate change, and includes a roadmap and video to help businesses navigate different categories of risk. The CMA has an open-door policy for businesses seeking guidance.
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.
Sarah Cardell, CMA Chief Executive, said:
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.
Our analysis of The CMA’s draft guidance on environmental sustainability agreements can be found exclusively for members in issue 6 of BMA Insights.