CMA issues tailored green claims guidance for fashion sector

The Competition and Markets Authority (“CMA") has issued a practical guide for fashion retail businesses (the “Guide”), with the stated aim of driving compliance with consumer law in the context of making environmental claims and creating a level playing field between fashion businesses.  In parallel, the CMA has issued letters to 17 fashion brands, advising them to review their practices.

Background

In September 2021, the CMA published the Green Claims Code, which sets out guidelines for businesses on how to comply with UK consumer protection law when making environmental claims.  In July 2022, the CMA launched an investigation into three fashion retailers (ASOS, Boohoo and George at Asda), which resulted in those retailers giving undertakings to the CMA regarding how they make environmental claims, in March 2024 (the “Undertakings”).  At the same time, the CMA published an open letter to the fashion retail sector, which urged companies to review their practices in light of the undertakings, and signalled the provision of further guidance tailored to the fashion sector (see our previous blog post for further details).  

Tailored guidelines for fashion retail businesses: a level playing field?

The Guide sets out the CMA’s practical tips and some illustrated examples as to how fashion businesses should comply with their UK consumer protection obligations when making environmental claims.  In addition to reiterating some of the principles set out in the Green Claims Code, the Guide draws most of its content from the commitments given to the CMA in the Undertakings.  For example: 

• The Guide mirrors (in substance) the additional content requirements which the Undertakings applied to specific types of environmental claims (e.g. claims relating to only part of a product’s lifecycle or claims referring to fabric composition). Similarly, the Guide’s requirements regarding the presentation of such additional content online and in-store reflect (to a large extent) the requirements of the Undertakings in practice.

To illustrate this point, if companies make claims which are only true if consumers take specific action (e.g. disposing of a product in a certain way or washing an item in a certain way to prolong its life), the company must (unless it is self-evident) summarise clearly next to the claim the action which is required by the consumer, with any further information being provided via a clearly signposted drop-down menu (or equivalent) online or, in-store, on the reverse of the product tag (or on a second product tag immediately next to the first, provided that, in either case, the further information is clearly signposted).  This reflects the standards adopted in the Undertakings. 

• While the requirements regarding due diligence, training and internal policies are not as prescriptive as those in the Undertakings, the Guide does include some process requirements and emphasises that the onus is on companies to ensure that claims relating to third-party products are compliant. 

By mirroring these elements of the Undertakings in the Guide, the CMA’s stated aim is to "create a level playing field” and address the standards gap created by the specific Undertakings agreed to by the three fashion brands that were investigated by the CMA. 

The Guide also provides some examples of claims the CMA might consider “compliant”, which provide assistance to businesses when reviewing and producing consumer-facing statements.  However, the Guide still leaves a degree of ambiguity regarding what the CMA expects of businesses.  In the context of claims which do not fall into the specific types of claims for which the CMA provides prescriptive content and presentation requirements, the Guide expects claims to be clear and accurate and for “important information” to be: 

• in plain language and accurate;
• presented in a way that consumers can easily identify, read and understand the relevant information as a whole;
• 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; and 
• presented close to the environmental claim made.

However, there is of course scope for the CMA and businesses to disagree on what level or type of information is classed as “important”, particularly in the context of complex supply chains, or products and services which aspire to sustainability by design principles (and so may have complex explanations and evidence behind their headline sustainability claims).  In that scenario, businesses may wish to look to the additional detail in the Undertakings as an indication of how the CMA might approach such matters (in particular, the standards it set in the Undertakings for a claim not to be “Misleading”, which apply to all claims). 

Relevance for other consumer-facing businesses

As with the Undertakings, whilst the Guide is specifically tailored for fashion retailers, it is of interest to other consumer-facing businesses, as it provides additional colour beyond the high-level principles in the Green Claims Code as to how the CMA might assess compliance of environmental claims in other contexts in the future.  Although the Guide is not binding law, it does represent the CMA’s views on how and where to draw the lines. 

Looking ahead

The Guide provides some timely clarity for consumer-facing businesses ahead of the CMA’s enhanced enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (“DMCC Act”) entering into force, including the ability to impose directly fines of up to 10% of global turnover for consumer law breaches.  This new enforcement regime is expected to come into force in Spring 2025 (see our recent client briefings on this topic here and here).  In the context of these new fining powers, we could also see the CMA’s application of UK consumer protection law to environmental claims ultimately being scrutinised in the courts, which may, over time, provide further clarity to this area. 

In the meantime, consumer-facing businesses (in the fashion sector and beyond) should take note of the standards set in the Guide and consider whether an internal review of existing (and planned future) environmental claims is appropriate to help manage legal risk in this area.  Now, before the CMA’s new enforcement powers under the DMCC Act come into force, is also a good opportunity to reconsider internal governance of environmental claims.  This could involve revising internal approval processes and messaging guides for marketing teams, training individuals in relevant functions (e.g. marketing on the content and presentation of claims, procurement on supplier due diligence and legal on these requirements and related risks), and reflecting the increased risk of sustainability messaging in risk registers.