The Competition and Markets Authority (CMA) has released its inaugural informal guidance in response to a request under its open-door policy, aimed at facilitating environmental sustainability agreements among businesses. This guidance clarifies how competition law applies to such agreements, encouraging businesses to engage in initiatives that combat climate change.

The request for guidance came from the Fairtrade Foundation regarding its Shared Impact initiative, which seeks to bolster sustainability and resilience within food supply chains. Given that the food and drinks sector accounts for nearly 10% of the UK's total emissions, this initiative aims to enhance existing Fairtrade participation among UK grocery retailers.

A key goal of the Shared Impact initiative is to provide long-term contractual stability, allowing producers to invest in environmentally sustainable farming practices. Participating grocery retailers would commit to purchasing minimum additional Fairtrade volumes of products like bananas, coffee, and cocoa from Fairtrade producers through long-term contracts.

The CMA's informal guidance indicates that the Shared Impact initiative is unlikely to raise competition concerns, aligning with the CMA's broader strategy to promote environmental sustainability. Sarah Cardell, CMA Chief Executive, emphasized that the guidance empowers companies to pursue their green objectives without violating competition laws.

The CMA encourages businesses across all sectors to seek guidance if they are considering environmental sustainability agreements, ensuring that such initiatives do not compromise consumer rights. This guidance is part of the CMA's ongoing efforts to support the transition to a net-zero economy and foster innovation in sustainable products and services.