Introduction
The fashion industry has faced significant criticism for some time about its impact on the global environment. With stakeholders focusing on the ESG principles of a business, it is no surprise that fashion brands are increasingly keen to promote sustainability and “eco” products” so as to go some way to fulfilling their ESG promises.
However, the issue is, as we highlight in this article, that in the rush to tick the “green box” and promote the ESG values of the business, fashion brands can find themselves in hot water if they fail to have the evidence to back up their claims.
Companies throughout the industry, from High Street to the luxury market, are anxious to burnish their green credentials and consumers are now greeted by these “green claims” messages which suggest that a product or service is beneficial or less harmful to the environment.
However, the industry is allegedly rife with green washing – where the sustainability credentials of a company’s product is overstated. It was no surprise therefore that the Competition and Markets Authority (“CMA”) highlighted the fashion industry when announcing its Green Claims Code (the “Code”) and accompanying guidance last month to ensure companies are not overstating the sustainability credentials of their products.
So what is the Code about?
First, the law that regulates green claims, and in fact all advertising claims, is not new!
Second, the purpose of the guidance “is to help businesses understand and comply with their existing obligations under consumer protection law when making environmental claims”.
Third, the objective of the CMA in publishing the Code and providing guidance appears to be:
Whilst the guidance is not legally binding, it is guiding businesses on the underlying binding law. It therefore needs to be taken seriously – and will be by the CMA.
Because the law is not new, there is no timeframe in which businesses need to ready themselves to comply – you should be complying with these rules already.
What does the Code say?
Whilst the Code and accompanying guidance is focused on green claims, the underlying law relates generally to claims made by businesses in respect of the products and services they put on the consumer market.
As such, the recap given by the CMA of the position of consumer protection law within the guidance will be welcomed by the business-to-consumer (“B2C”) market generally. That said, consumer protection law is not limited in its application to B2C relationships. Anyone in the supply chain that is making a claim that is targeted at the consumer will need to ensure it acts in a consumer-compliant way.
The Code sets out six principles that are relevant to green claims made by businesses directly or indirectly to consumers. Advertising, marketing, and legal departments in fashion businesses will likely be familiar with these principles, as they have their origins in the legislation used by the Advertising Standards Authority in respect of advertising generally.
The principles are:
Whilst it is easy to see the benefit of putting green products onto the market, care needs to be taken by those throughout the supply chain that in making green claims you are not at risk of breaking the law.
Why should fashion businesses be concerned?
The test for infringing the law is low – is a misleading claim likely to have an effect on a consumer’s decision making process? The misleading claim does not need to have caused the consumer to buy the product.
Further it is not simply the CMA which may act. The Advertising Standards Authority and Trading Standards, as well as consumers, can act against you if you do. This action is not limited to civil claims in court, but also criminal enforcement.
What should fashion businesses take into consideration when making “green claims”