The UK’s competition watchdog has introduced guidance on how businesses can collaborate on green goals without breaking the law.

The Green Agreements Guidance was published by the Competition and Markets Authority (CMA) on Thursday, following an extensive consultation with the business community.

The advice outlines how competition law applies to environmental sustainability agreements between firms operating at the same level of the supply chain – known as horizontal agreements.

The CMA set 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.

The watchdog also said it does not expect to take enforcement action against agreements that are in line with the guidance.

It also explains how it will generally consider agreements between firms aimed at tackling climate change.

Examples include the fashion sector agreeing to set targets for gradually increasing the amount of sustainable materials used in their clothing ranges.

The CMA guidance explains how this should be carried out so that fashion businesses can be confident their agreement complies with competition law.

The guidance comes after the watchdog’s Sustainability Taskforce provided advice on the subject to the Government in March last year.

It said businesses then wanted more clarity about what is, and what is not legal, when working together towards green goals.

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.”

The final guidance has been published after feedback received from a wide range of stakeholders and businesses on a draft published earlier this year.

It has been launched as part of a wider awareness campaign that includes a video and road map, which focus on different categories of risk to help businesses navigate what they need to consider as a first step before reading the guidance or seeking legal advice.

The watchdog said it is also operating an open-door policy so businesses and trade bodies, non-governmental organisations and charities can approach it for informal guidance on proposed environmental sustainability initiatives.