CMA urges fashion retail businesses to review green claims and practices

The Competition and Markets Authority (CMA) has announced that it has accepted voluntary undertakings from three fashion retailers - ASOS, Boohoo and George at Asda - to ensure that their green claims are accurate, clear and not misleading when they display, describe and promote products. The CMA first launched an investigation into the fashion retailers' green claims in July 2022, following an initial review of the fashion sector.

At the same time, the CMA has published an open letter to the fashion retail sector as a whole regarding green claims urging businesses to review their claims and practices in light of the undertakings, which “set a benchmark for the industry”.

Voluntary undertakings by three fashion retailers

The three fashion retailers have each signed undertakings that commit them to an agreed set of rules around the use of green claims, including:

• Green claims: the firms must ensure all green claims are accurate and not misleading. Key information must be clear and prominent, meaning it must be expressed in plain language, easy to read, and clearly visible to shoppers.
• Statements regarding fabrics: Statements made about materials in green ranges must be specific and clear, such as ‘organic’ or ‘recycled’, rather than ambiguous – e.g., using terms like ‘eco’, ‘responsible’, or ‘sustainable’ without further explanation. The percentage of recycled or organic fibres must be clearly displayed and easy for customers to see. A product cannot be called ‘recycled’ or ‘organic’ unless it meets certain criteria.
• Criteria for green ranges: The criteria used to decide which products are included in environmental collections must be clearly set out and detail any minimum requirements. For example, if products need to contain a certain percentage of recycled fibres to be included in the range, this should be made clear. Products must not be marketed or labelled as part of an environmental range unless they meet all the relevant criteria.
• Environmental targets: Any claims made to consumers about environmental targets must be supported by a clear and verifiable strategy, and customers must be able to access more details about it. 
• Accreditation schemes: Statements made by the companies about accreditation schemes and standards must not be misleading. For example, statements must make clear whether an accreditation applies to particular products or to the firm’s wider practices.

All 3 firms have also committed to provide the CMA with regular reports on how they are complying with the commitments.

Open letter to the fashion sector

The CMA's Open letter to the fashion sector emphasises the importance of its Green Claims Code in articulating “how consumer protection law applies to environmental claims and provides a framework for businesses to make environmental claims that help consumers make informed choices”. The Code sets out six principles that businesses must comply with to ensure
that their green claims are not misleading. The claims must:

• be truthful and accurate;
• be clear and unambiguous;
• not omit or hide important information;
• compare goods or services in a fair and meaningful way;
• consider the full life cycle of the product or service; and
• are substantiated.

The CMA's letter explains that the fashion retailers' undertakings build on these principles and urges businesses to familiarise themselves with the Code and the undertakings, and take all necessary steps to ensure compliance with the law. The letter also notes that the CMA intends to publish further guidance for the fashion industry in due course.

More to come?

The legitimacy of consumer-facing green claims is an area of focus for the CMA and it has already announced a second “greenwashing” investigation in the fast-moving consumer goods sector. Its teeth are also set to be sharpened in the coming months when it gets new powers putting enforcement of consumer protection law in the UK on a par with the sanctions it can levy for competition law breaches (with penalties of up to 10% of a business’ worldwide turnover).

In addition to the CMA, a wide range of other regulators in many different jurisdictions, including other consumer protection authorities (such as the Australian ACCC) and financial regulators (including the UK’s FCA, the US SEC, Australia’s ASIC and Germany’s BaFin) have taken high profile action against potentially misleading green statements. An overview of the current greenwashing risk landscape and how to ensure that your sustainability strategy is resilient to greenwashing is available here.

Slaughter and May represented ASDA in the CMA’s investigation.