Fashion brands account for a quarter of complaints relating to unsubstantiated green claims since new guidelines were introduced in the UK last year, new research has found.
The findings: Five out of 21 complaints made to the Competition and Markets Authority (CMA) since the Green Claims Code was introduced in September 2021 related to the fashion industry, according to research from international law firm RPC.
- Complaints made about fashion brands may relate to, for example, false or misleading claims about the use of recycled materials in a clothing line, claims that the clothing is manufactured in a "sustainable" way or that buying the product will be beneficial to the environment.
- Of the 21 complaints received since the publication of the Green Claims Code, six related to packaging, five to fashion and three to groceries.
The code: The Green Claims Code aims to stop businesses making inaccurate or misleading claims about their (or their products') environmental credentials.
- In April, the Government confirmed its plan to give the CMA greater powers to impose sanctions on businesses found to breach consumer protection laws, including the ability to fine businesses as much as 10% of their annual global turnover.
- These new powers could be used against businesses found to be making false or misleading environmental claims.
- By comparison EU legislation, the Omnibus Directive, requires Members States to introduce fines of at least 4% of annual turnover in the Member State in which the breach occurred or, where turnover information is not available, at least €2million (£1.7m).
- In addition to regulatory changes, businesses who engage in ‘greenwashing’ face a toughening litigation landscape in the UK.
- The increasing prevalence of class action lawsuits in the UK means that businesses found to have made false or misleading environmental claims could be forced to pay out enormous sums of money in compensation to customers.
The explanation:
Complaints to regulators about ‘greenwashing’ are likely to increase over the coming years in light of increasing regulatory scrutiny of green claims. We're also seeing regulators, such as the CMA and ASA, proactively investigating specific industries – this includes the fashion sector with the CMA recently announcing its plan to 'name and shame' the worst greenwashing offenders amongst fast fashion brands.
With the CMA being granted additional enforcement powers, this will significantly increase the risk for businesses who get environmental claims wrong. Given the potential scope of penalties, it would be prudent for businesses to ensure that any green claims can be appropriately substantiated at the time they are made.
With the US-style class actions becoming more prevalent in the UK and Europe, businesses will not only have to contend with greater regulatory scrutiny but could also find themselves having to ultimately pay out significant sums to disgruntled customers.
— Ciara Cullen
Partner, Retail & Consumer group
RPC
The compliance: In order to avoid greenwashing, businesses should comply with the principles in the Green Claims Code and ensure:
- Claims are truthful and accurate
- Claims are clear and unambiguous
- Claims should not omit or hide important relevant information
- Comparisons should be fair and meaningful
- Claims must relate to the full life cycle of the product or service
- Businesses can substantiate their claims
