Fashionably dressed down – CMA targets greenwashing in the rag trade

Background

On 18 September 2024 the CMA published its guide on how fashion retail businesses can comply with the Green Claims Code^[2] when making environmental claims.

Issuing the guide is one of a series of CMA actions focussing on the fashion retail sector and how it communicates environmental messages to consumers. After publishing the Code (which applies to all businesses) in September 2021, the CMA launched a deep dive into the fashion industry, which revealed an uptick in the number of “green” claims that businesses were making in response to increasing consumer demand for environmentally sustainable options. This sparked investigations into the practices of “fast fashion” giants ASOS, Boohoo, and George at Asda, who between them make over £4.4 billion annually from UK fashion sales^[3]. The investigations culminated in the CMA securing undertakings from each of the brands about the way they display, describe, and promote their green credentials.

When these commitments were announced, they were hailed by Sarah Cardell, the Chief Executive of the CMA, as setting “a benchmark for how fashion retailers should be marketing their products”. So it is unsurprising that the new guide broadly tracks those commitments, addressing (among other things) use of imagery, “sustainable” product ranges and filters, environmental targets, and how to refer to accreditation schemes.

Scope

The guide applies to all parts of the fashion sector, from retailers and brands to manufacturers, suppliers and distributors. Following its publication, the CMA also issued letters to 17 (currently unnamed) big-name fashion brands, advising them to review their green claims in light of the new guide. The brands have not been named, and no enforcement action has been taken against them. Yet the issue of the letters is evidence that there is active monitoring by the CMA in this area.

Enforcement

So the guide should be taken seriously by the industry – not least because of the strengthened enforcement powers that the CMA will soon have under the Digital Markets, Competition and Consumers Act 2024 (the DMCCA)^[4], as expressly referenced in the guide. Expected to come into force in April 2025, the new enforcement powers will enable the CMA to fine businesses up to 10% of their global turnover for breaches of consumer law.

The key piece of consumer-protection legislation relevant to the Code and the guide is the Consumer Protection from Unfair Trading Regulations 2008 (CPRs)^[5]. The CPRs contain a general prohibition of unfair commercial practices, as well as specific prohibitions of misleading actions and omissions.

Guide

The guide sets out two overarching principles. Businesses in the fashion retail sector must:

1. ensure that environmental claims are clear and accurate; and
2. put processes in place to make sure that such claims are correct.

More specific guidance is then given under each of these headings, along with illustrated examples intended to make it easier for businesses to understand the principles and to apply them to their own practices.

1 - Clarity and accuracy of claims

The guide explains that this requirement applies to all environmental claims made about a fashion brand’s products, services, processes, branding or its business as a whole – whether the relevant claim is made directly on a product (including on labels) or in advertising materials, in store or online. It captures content appearing on a brand’s own website or app and on someone else’s (for example, on social media).

General requirements

The guide sets out how the general requirements of the Code should be applied specifically to the fashion industry, which can be summarised as follows:

• Don’t hide important information: it must be clear and prominent. It should be in plain language and accurate, and presented in a way that consumers can easily identify, read and understand the relevant information as a whole. It should also be clearly visible, and not hidden by other information shown to consumers (such as information displayed in signs, banners and as pop-up text and images that may be seen online). Important information should be presented close to the environmental claim made: customers should not have to take further action to access important information, such as following a hyperlink or scanning a QR code. ‍
• Avoid using unclear terms, such as “green”, “sustainable” or “eco-friendly”. Consumers are likely to assume from these terms that the product as a whole has a positive environmental impact, or at least no adverse impact. Specificity is key.‍
• Do not use imagery and icons in a misleading way. Businesses should consider whether additional information may be needed to explain or contextualise use of a particular image or logo, and whether the image or logo might contribute to an overall misleading picture.‍
• Ensure comparisons are clear. The basis of any comparison made within an environmental claim must be clear and prominent so that the consumer can make an informed choice. Businesses should consider whether like-for-like products are being compared, whether the basis of the comparison is fair, and whether this will be clear to consumers. Businesses should also be wary of terms such as “better” or “less harmful”, and should address “better than what?” and “what is being compared against?”.‍
• Explain clearly any action that a consumer needs to take. The guide gives an example of describing a child’s coat as “eco-friendly” because the sleeves have a hidden hem that can be unpicked to make them longer, meaning more wear for the item as it “grows” with the child. In that example, it must be made clear to the consumer that they will need to unpick the sleeve hems for the product to fulfil its “eco-friendly” potential. Not foregrounding that information is likely to be misleading.‍
• Be clear when using filters and other navigational tools. Filters should not adopt vague terminology such as “sustainable”, but instead should focus on specific characteristics. Only products meeting those characteristics should appear in the search results.

Product ranges, fabrics, affiliations and accreditations

The guide also sets out more specific information on certain industry-specific topics.

• ‍Product ranges – There is an increasing trend for brands to offer a “green” range (for example, a collection, a capsule collection, or a limited release / “drop”), grouping products according to specific criteria relating to their environmental impact. That in itself is fine, but the way that the range is communicated to consumers must be clear, with the range criteria explained in full. Businesses must not mislead consumers with the name of the range (as noted, broad terms are likely to be misleading), and only products meeting the specified criteria should be included in the range.‍
• Fabrics – Fabrics should be described clearly and precisely, using objective terms relating to intrinsic characteristics, e.g. “recycled”, rather than “responsible”. Fabrics should not be described as, for example, “organic”, if they contain non-organic fibres (unless the proportion is negligible). Instead, the percentage of relevant fibres should be specified, and there should be evidence to support that percentage information.‍
• Affiliations and accreditations – There are affiliation and accreditation schemes within the fashion industry that provide certain assurances, such as about raw materials used in the fabric manufacture process. Businesses should not mislead consumers when referring to such schemes for individual products: the product in question should have the particular characteristics required. That does not prevent businesses from telling consumers about affiliations and accreditations more generally, or that purchasing a product may indirectly support an affiliation or accreditation scheme (for example, by contributing credits to a mass balance chain), as long as it is made clear that the product’s composition may not be affected by the relevant affiliation or accreditation (for instance, because the mass balance chain of custody arrangements cannot trace the fabric composition of individual products). Businesses should communicate further details about affiliations and accreditations to their customers, including:

1. a summary of properly associated environmental benefits;
2. details of any material connections with the relevant third party or scheme (which may, for example, have an impact on their independence);
3. a reference to where further information can be found; and
4. a clear and prominent link to the relevant scheme website

Product life cycles, environmental targets and overall presentation

The guide goes on to reiterate universal principles to be applied when making green claims, with which businesses may well already be familiar.‍

• ‍Product life cycle – It must be made clear if a claim is based on specific parts of a product’s life cycle, and that information should be clear and prominent. A claim that a garment is “environmentally friendly” because its fabric “minimises water usage and waste” is likely to be misleading if minimisation of water usage and waste occurs only in the raw material production stage.‍
• Environmental targets – Any environmental targets should be presented clearly. Businesses should only refer to their own corporate targets where they have a clear and verifiable strategy in place to meet those targets. Information should be included about what the target aims to achieve, the date on which it is expected to be met, and the main ways by which the business intends to achieve the target. Broad, aspirational and/or unsubstantiated claims should be avoided.‍
• Overall presentation – The guide encourages businesses to think about the overall presentation of any green claims, as well as considering each of the above issues separately. Different misleading claims could, when taken together, have an even greater impact on the consumer decision-making process, making a business and its products look more beneficial to the environment than they really are.

2 - Processes for correcting claims

The second overarching principle focusses on practice and procedure, explaining that businesses should put internal processes in place to make sure that any environmental claims made about themselves or their products and services are accurate and not misleading to consumers. That may include putting appropriate policies in place, conducting regular staff training, and implementing systems to check product listings, and to check that individual products meet any advertised range criteria.

Businesses should also:

• Ensure that their suppliers can back up claims with evidence (which will often include final scope certificates and final transaction certificates in the fashion industry). They should be able to do that on request. It is good practice to do regular spot-checks, to get written confirmation from suppliers about compliance with policies and contractual terms, and to obtain certificates or an appropriate declaration.
• Check any claims that third parties make about their products. If a business is selling third-party products, it is responsible for any claims made in relation to those products. Adequate processes should be in place to ensure that third-party suppliers can back up those claims. That may be done through a self-assessment questionnaire.

Comment

There is nothing especially surprising in the guide, which falls neatly into an ever-growing suite of rules, codes and guidance documents issued by regulatory bodies and aimed at reducing greenwashing. The increased scrutiny over green claims is itself a response to increased consumer demand for “green” products. The fashion industry is widely perceived as a substantial contributor to global greenhouse-gas emissions; many consumers are alive to that, and so are seeking out sartorial options that have less environmental impact.

The CMA – along with the Advertising Standards Authority and Financial Conduct Authority – wants to ensure that consumers are not being misled about products’ sustainability credentials and are in a position to make properly informed choices. The guide supports that aim, alongside the Code.

While it is unlikely that publication of the guide will spark a sudden change in the way fashion brands present themselves and their products, the express reference to forthcoming CMA enforcement powers under the DMCCA is notable, and it might focus corporate minds of big brands with hefty global turnovers – not least the 17 recipients of individual letters. A comparison could be made to the apprehension among businesses ahead of 25 May 2018, when similar enforcement powers became available to supervisory authorities under the GDPR.

Ultimately, the guide is just that – a guide. It is not legally binding. It may not contain any novel guidance, but it is a reminder to all businesses – in the fashion industry and beyond – that the CMA will soon have some real teeth to its enforcement powers. And those teeth are being bared.

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Written for Entertainment Law Review.