The Competitions and Markets Authority has embarked on a major crackdown of misleading green claims made by fashion brands – but can it deliver?
Last week, the fashion industry was put on notice by the Competition and Markets Authority (CMA) with the announcement it is to embark on a major crackdown against spurious green claims made by clothing retailers. The campaign could ultimately see companies that fail to substantiate environmental marketing claims slapped with hefty penalties.
The investigation marks a first for the CMA and comes less than a year after the watchdog first announced it would be taking a more proactive stance in tackling greenwashing across the British economy. The CMA will be testing fashion players’ green claims against its new Green Claims Code for business, which stresses that all environmental marketing must be truthful and accurate; clear and unambiguous; include all relevant information; only make fair and meaningful comparisons; consider the full lifecycle of the product; and be substantiated by robust, credible, and up to date evidence. It represents a pretty demanding and comprehensive checklist for an industry that has frequently been accused of exaggerating its sustainability credentials.
Cecilia Parker Aranha, director of consumer protection at the markets authority, warned fashion businesses that failed to ensure the environmental marketing claims attached to their products stood up to scrutiny could soon find themselves in hot water with the regulator. “Now is the time for the fashion industry to take a fresh look at what they’re telling customers and make any changes needed to comply with the law,” she said. “Businesses that can’t back up their claims risk action from the CMA and damage to their reputation in the long-run.”
The watchdog has argued that false, unsubstantiated or overzealous green claims are both a consumer protection issue and integral to fair competition, because greenwashing misleads consumers while also undermining investments made by those progressive firms that are genuinely developing more sustainable business models.
Explaining the CMA’s plan to initially focus its anti-greenwash campaign on the fashion sector, Parker Aranha said the watchdog’s research had suggested there “could be issues” with greenwashing within the sector.
Recent evidence suggests this could prove to be a major understatement. The fashion industry is notorious for its huge environmental impact, and campaigners have warned the avalanche of ‘green’ claims made by fashion brands in recent years often fail to stand up to scrutiny. An investigation into the sustainability claims of 46 major European fashion brands concluded that more than half – 59 per cent – were unsubstantiated or misleading. As such, the NGO behind the study, Changing Markets, delivered a far more blunt assessment of the scale of false environmental marketing within the fashion industry, concluding the sector was “addicted to greenwashing“.
George Harding-Rolls, a campaigns manager at the charity, said greenwashing was “absolutely rife” within the fashion industry, noting that shoppers must currently wade through a “sea of green claims” when browsing for clothes in physical shops and online stores. “Dodgy” certification schemes for fashion sustainability have abounded in recent years, he warned, as have misleading claims about the recyclability of synthetic fibres or the sustainability of clothes made out of recycled bottles – a practice that takes plastic bottles away from a beverage industry that is far better equipped to recycle them, according to Changing Markets.
Indeed, as green claims from fashion companies have flourished in an attempt to appeal to an increasingly climate concerned clientele, the industry’s environmental footprint has grown as demand for fossil-fuel based fabrics has soared. The United Nations Environment Programme estimates the fashion industry is responsible for 10 per cent of global carbon emissions due to its long supply chains and energy intensive production methods, as well as 20 per cent of global wastewater pollution. The sector is also the cause of mountains of waste, with a recent EU report calculating that that 87 per cent of clothing material ends up incinerated, landfilled, or dumped in nature, much of it after barely being worn.
As such, Harding-Rolls said the CMA would have its work cut out for it as it embarked on the first phase of its anti-greenwashing crusade. “The scale of the problem is so vast,” he said. “Our study revealed that 60 per cent of claims made about 4,000 products were unsubstantiated. That’s a vast number of products across the whole market to look at.”
Parker Aranha confirmed the watchdog would be looking closely at claims made around the eco credentials of particular fabrics or manufacturing processes, as well as claims that promote the ‘green’ credentials of one particular component of a product without disclosing details about the impact from the rest of its materials. More broadly, it will be scrutinising any vague, unsubstantiated claims and assertions around ‘carbon neutrality’, she said.
The CMA has a number of enforcement measures at its disposal to ensure compliance with its rules and will start by looking at larger fashion brands with the biggest hold on the market, Parker Aranha explained. “We’ll examine the claims being made by big fashion brands marketing to UK customers and we’ll consider the harm that we think the business is likely to be doing, based on their practices and the size, and reach, of the business,” she said. “We can then issue warning letters, follow up with information notices, which force businesses to provide evidence for their claims, and launch targeted investigations.”
In extreme cases, the CMA has the power to take companies that fail to comply to court, although Parker Aranha told BusinessGreen last June that most companies challenged by the CMA are likely to agree undertakings to improve their marketing practices before this avenue is explored.
Graham Wynn, assistant director for consumer, competition, and regulatory affairs at the British Retail Consortium, a trade body which represents many of the UK’s largest high street and online retailers – including Boohoo, Gap, Zara, Asos, Primark, and Abercrombie & Fitch – said the group welcomed the increased scrutiny of its members’ marketing practices.
“Overall, we welcome the latest CMA guidance to tackle ‘greenwashing’, which our members made a significant contribution towards developing,” he said. “The BRC continues to work with the CMA to make sure retailers understand what is expected, ensuring their often-detailed claims are not misleading and helping consumers understand their ‘green’ claims. We expect manufacturers to do the same regarding their claims, which we currently have to accept on trust.”
A spokesperson from the UK Fashion and Textiles Association told BusinessGreen that some companies had already started making necessary changes to how they promoted their goods in response to the CMA’s new programme of work. But they warned the reforms required to meet the CMA’s expectations could prove challenging for many players within the industry, whose cash positions and resources have been strained by supply chain disruptions wrought by Brexit, rising raw material prices, and the impact of Covid lockdowns. The Green Claims Code requirement for firms to back up their claims with robust, credible and up-to-date evidence in particular is expected to present a challenge for smaller businesses, given that reliable data that covers the fashion industry’s complex and extensive supply chains can be hard to come by.
It remains to be seen how successful the CMA’s interventions will be, with its effectiveness depending on a number of variables, ranging from the scope of the investigation, the resources available to investigators, the size of the financial penalties, and whether everyday consumers have an opportunity to report claims to the regulator, according to Harding-Rolls. “There’s a lot of details that remain hazy that could tell us whether it’s going to be toothless or actually something of a punishment for these brands,” he noted.
But whatever the outcome of the investigation, Harding-Rolls hailed the CMA’s plans as a significant moment in the drive to introduce tougher environmental regulation that can curb the emissions, water and waste impacts of the fashion industry. It may not lead to companies actually boosting the sustainability of their products, but it could open the door for more stringent policies that crackdown on the use of synthetic fibres made from fossil fuels and some of the other wasteful practices of the fast fashion industry, he said.
“I think what it has done is put the fashion industry on notice, saying that customers aren’t tolerating this and legislators aren’t tolerating it either,” he argued. “It also shows that policy is catching up and that regulators are moving into the fashion space. Fashion is currently one of the least regulated global industries, but is one of the most wasteful, and is responsible for between two and eight per cent of emissions.”
The launch of the CMA’s first anti-greenwashing campaign is also hugely significant for the broader economy. For starters, it is a clear recognition from UK authorities that companies’ environmental credentials are a competitive issue that serve to shape commercial markets. It is also a loud warning to other industries across the UK that the fight against ‘greenwashing’ has just cranked up a gear. Fashion might be first in line for the CMA’s greenwashing microscope, but all consumer-facing firms that fail to corroborate their sustainability claims are opening themselves up to the risk of costly, public, and reputationally damaging spats with a government regulator.
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