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UK Competition Authority Targets Greenwashing with New Fashion Compliance Rules

By  |  September 18, 2024

The UK’s Competition and Markets Authority (CMA) has introduced a new compliance guide to assist fashion brands and retailers in adhering to the Green Claims Code when making environmental claims about their products and services in order to avoid greenwashing. The guide is part of a broader push to combat misleading sustainability claims in the fashion sector, an issue that has become a significant focus for regulators in recent years.

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    According to ESG Today, the release of the compliance guide is accompanied by letters sent to 17 well-known fashion brands, urging them to reassess their business practices. The CMA highlighted several areas of concern regarding the companies’ green claims, such as the use of vague terminology and the potential misrepresentation of products in so-called “eco” ranges. This move comes as the regulator steps up efforts to ensure that environmental claims made by companies are both clear and accurate.

    This initiative follows a 2022 investigation by the CMA into greenwashing in the fashion industry, part of its broader probe into whether consumers are being misled by environmental sustainability claims. The investigation raised concerns about how companies market their products, particularly with claims around the use of recycled materials without offering adequate information on the validity or relevance of these assertions.

    Read more: Michael Kors Points to TikTok and Taylor Swift in Defense of Luxury Handbag Market in FTC Case

    Per ESG Today, earlier investigations by the CMA led to significant changes within the industry, with major fashion retailers like ASOS, Boohoo, and George at Asda signing formal agreements to amend their advertising strategies. These agreements, secured earlier this year, aim to ensure that these brands only make clear, accurate claims regarding their environmental sustainability credentials. The CMA hailed these changes as “landmark” in promoting transparency in the fashion sector.

    The new letters sent to fashion brands warn that stricter enforcement powers are on the horizon. The CMA noted it would soon have the authority to impose fines of up to 10% of a company’s global revenue if they violate consumer law. This has prompted the regulator to emphasize the need for companies to verify the accuracy of their green claims, ensuring they are not misleading consumers.

    Key elements of the new compliance guide include advice for brands on how to present clear, accurate, and complete information about their products. It also advises companies to clearly define the criteria used for including items in “green” collections, and to ensure transparency when using filters or tools that help shoppers find environmentally friendly products. Moreover, the guide highlights the importance of specifying which aspects of a product’s lifecycle are covered by any green claims.

    Hayley Fletcher, Interim Senior Director of Consumer Protection at the CMA, commented on the importance of the new guide, stating: “We’ve cautioned a number of well-known brands to take a close look at their practices, consider this guide, and make sure they’re not overstepping the mark when they promote their green credentials.” Fletcher stressed that all fashion companies, from luxury labels to budget brands, must remain transparent and honest with their customers to avoid potential enforcement action.

    Source: ESG Today