The Competition and Markets Authority (CMA) recently announced investigations into a number of fashion companies – Asda (George), ASOS and Boohoo – to assess the authenticity of environmental claims each has made in respect of its fashion products. With the spotlight on ‘greenwashing’ increasing, interim chief executive of the CMA, Sarah Cardell, stated that if ’these companies are using misleading eco claims, we won’t hesitate to take enforcement action – through the courts if necessary’.
Greenwashing: A background
It is well known that, over recent years, consumers have been paying more attention to the items they purchase to ensure these are good for the planet. This has seen a rise in products proclaiming their “green” credentials. However, at the same time, the CMA has shown concern that some organisations are misleading their customers by greenwashing – i.e. leading them to believe that the products they sell are more sustainable and ethical than they actually are. For example, an organisation might use vague language and describe items as 'recycled', without giving any insight into the authenticity of the claim. In practice, the item may be less than 20% recycled.
Although greenwashing can be a malicious activity, it is entirely possible for organisations to greenwash even where they have good intentions and intend to be environmentally friendly. This is often due to a lack of research or from taking a relaxed approach to green guidance in consumer protection law.
Furthermore, while the CMA investigation is focused on the fashion sector, other sectors are also affected by green claims, such as the energy sector, travel and transport, food and drink, cosmetics and the household equipment sectors.
The Green Claims Code
In an attempt to clean up organisations and mitigate greenwashing, the CMA published The Green Claims Code (the Code) in September 2021 as guidance to help understand and comply with their existing obligations under consumer protection law. The Code focuses on environmental claims and a wide range of sustainability claims. The Green Claims Code is based on six key principles:
- Claims must be truthful and accurate
- Claims must be clear and unambiguous
- Claims must not omit or hide important information
- Comparisons must be fair and fair and meaningful
- Claims must consider the full life cycle of a product
- Claims must be substantiated
The Code is not an exhaustive guide to making environmental claims. It covers areas the CMA considers the most relevant and likely to be of concern for enforcement purposes.
Interestingly, the Green Claims Code key principles seem to take inspiration from the Advertising Standards Authority’s (ASA) Committees of Advertising Practice’s advertising code (CAP Code), Section 3 of which sets out rules intended to prevent misleading advertisements more generally. The Code takes similar core principles and directs them specifically to environmental claims.
Furthermore, while the guidance is designed to help businesses, it is not legal advice and it is not binding. It is the organisations responsibility to ensure compliance with the law.
The CMA investigation
On 10 January 2022, the CMA confirmed it had initiated its review and that it would focus on environmental claims in the fashion retail sector. In particular, the investigation is targeting brands that use vague and evasive language to market items as environmentally friendly and uses intentionally low criteria to determine if products are sustainable.
This has led to the recent probe into environmental claims made by ASOS, Boohoo, and Asda’s fashion brand, George. The CMA has stated that it will scrutinise the claims made by the three fashion brands by analysing several issues, including:
- Statements made and vague language used with the effect of creating the impression that products are more sustainable than they actually are.
- Whether the criteria used to determine which products are included in eco-friendly collections are lower than customers might reasonably expect. For example, some products may include only 20% recycled material.
- The authenticity of statements made about fabric accreditation schemes and standards and if they are potentially misleading.
- Whether all products actually meet the green criteria adopted by the brands.
- If an adequate amount of information is being provided to consumers.
Consequences of greenwashing
The CMA has confirmed its commitment to raising action against organisations that are guilty of greenwashing. This may include the enforcement of sanctions, such as securing undertakings from brands to change how they operate, fines and court action.
The key consumer protection legislation relevant to the CMA’s investigation and for enforcement purposes is the Consumer Protection from Unfair Trading Regulations 2008 (2008 Regulations), which contains a general prohibition against unfair commercial practices and specifical prohibitions against misleading actions and misleading omissions, making these kinds of misleading actions and omissions a criminal offence.
As greenwashing is a criminal offence, this means that, in Scotland, the Crown Office of the Procurator Fiscal Service on behalf of the Lord Advocate will conduct prosecutions.
Furthermore, greenwashing claims may stain an organisation’s reputation and result in its customers losing trust. A tainted public image can be difficult to clean up and could ultimately result in a loss of revenue for an organisation.
How can you protect your organisation?
In light of the CMA’s recent activity and its commitment to future investigations, if you are operating in the fashion industry, you should carefully consider the Green Claims Code and actively ensure that your environmental statements are clear, substantive and factually correct. It would also be good practice to consider the ASA’s Cap Code.
It would be wise to keep the CMA’s key investigation points in mind; therefore, you should review previous statements you have already made as well as the criteria you have used to assess the greenness of your products so far. You should also review the extent to which your products actually meet green criteria and whether you have given your customers an adequate amount of information.
Moving forward, other ways you can avoid damaging greenwashing claims include but are not limited to having enough data to support your claims, being transparent and honest with your customers and any other stakeholders, making it easy for them to find any relevant information, and having a third-party expert evaluate your sustainability measures.
If you have any questions about advertising compliance or marketing the greener aspects of your business, please feel free to contact us and we will be delighted to help.
This article was co-written by Ussamah Nasar, Trainee Solicitor.
