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:
to put businesses on notice that the CMA will be focusing on green claims moving forwards. This will be highly relevant to the industry given the push for sustainability and accountability; and
set out extensive guidance to illustrate what is likely to be an infringement of consumer protection law, so as to help businesses navigate an extensive body of rules.
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:
claims must be truthful and accurate
claims must be clear and unambiguous
claims must not omit or hide important relevant information
comparisons must be fair and meaningful
claims must consider the full life cycle of the product or service
claims must be substantiated
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”
The bigger picture – does making a claim about one element of your product which is correct, mislead consumers in respect of the product as a whole?
Misleading a consumer is not limited to taking positive action – you can mislead consumers by what you don’t say just as easily as what you do.
It is possible for you to fall foul of consumer protection law not only by explicit claims, but also those that you leave to be implied by the consumer. It is not just the words that you use that are important – even things such as colours can be relevant.
As referenced above, consumer protection law will be infringed if a misleading claim is likely to have an effect on a consumer’s decision making process. As such it is not necessary that the misleading claim caused the consumer to buy the product.
Comparative advertising, aimed at both B2C and business-to-business, is covered by the Code and its accompanying guidance.
Look at the lifecycle of the product and your supply chain, so as not to mislead consumers by focusing on only one element of the product when making a claim. The CMA provides some helpful ideas as to how to comply with requirements where you are short of label space – this is likely to be relevant when looking at labelling. The use of QR codes and websites can assist in ensuring that key information and caveats to claims are not missed by consumers.
Whilst the principles overlap and the guidance to the Code is repetitive concerning how the principles are to be respected in practice, given the competition which exists in the industry, brands that are currently promoting green claims in a consumer compliant manner will no doubt welcome the upcoming scrutiny in this area.
Need more information about the above people and legal expertise? Talk to one of our lawyers: +44 (0)20 7628 2000
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