This article was first published on Eye on ESG.
Following the UK Competition and Markets Authority's ("CMA") recent investigation regarding 'Green Claims' in the fashion industry (discussed here), the CMA has now published a Compliance Guide to help fashion businesses "stay on the right side of consumer law". This is part of the CMA’s “essential” work to ensure consumers can make informed choices based on environmental claims that they can trust.
In short, all of your environmental claims must be clear and accurate. The Compliance Guide is full of concrete examples of green claims in the fashion industry, which are not compliant with consumer law and explanations of how they can be made compliant. It seems to be deliberately drafted to be accessible and broad in application (a similar approach has been adopted in the CMA's guidance on green collaborations between competitors: CMA Guidance on Environmental Agreements | Insights | Mayer Brown).
Firms at all levels of the supply chain should take note
The CMA emphasises that each business in the fashion supply chain has a responsibility to ensure that its claims are accurate and substantiated. While the focus of the Compliance Guide is on fashion retail (including sales of a retailers own or third-party products via a marketplaces), the CMA notes that it will also be relevant to manufacturers and suppliers (including third party branded suppliers) and wholesalers and distributors (referring to paragraphs 2.20 and 2.21 of the Code).
What is a Green Claim?
These are claims that show how a product, service, brand, or business provides a benefit, or is less harmful to the environment.
Green Claims are used by many businesses to market their products or services – this is an area of growing importance for the increasingly eco-conscious consumer. This also ties in to the CMA priorities set out in its annual plan of working so that the whole UK economy can grow productively and sustainably, as well as people being confident they are getting great choices and fair deals.
CMA's Dos / Don'ts
Do ....
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Don't ....
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- Ensure that all Green Claims are clear and accurate, including important information prominently displayed in this manner and having regard to the overall presentation of any claims.
- Ensure that any criteria for product ranges are clear and available (e.g. include minimum thresholds that are part of the criteria), ranges should be named accurately, and criteria applied correctly to products.
- Ensure that any criteria for product ranges are clear and available (e.g. include minimum thresholds that are part of the criteria), ranges should be named accurately, and criteria applied correctly to products.
- Make sure that any comparisons are clear, e.g., between competing products and businesses, or between different versions of a similar product.
- Explain clearly any action a consumer needs to take, e.g., if you make a claim which is only true if the consumer takes certain action, that action needs to be clearly stated.
- Make sure that any navigational tools or filters are clear and only return qualifying products, e.g. ensuring the filters refer to specific characteristics such as ‘50%+ recycled’ instead of ‘sustainable’.
- Make sure your suppliers can back up claims.
- Put in place internal processes to make sure all environmental claims are accurate and do not mislead customer.
- Ensure environmental targets are presented clearly, including at least what the target is aiming to achieve, the date on which the target is expected to be met, and the main ways by which you intend to achieve the target.
- Make it clear if a claim is based on specific parts of a product’s life cycle.
- Describe fabrics clearly and precisely, e.g. including the composition of the fabric and what the percentage make up is.
- Provide supporting information regarding any affiliations and accreditations, including summary of associated environmental benefits, your connection to the organisation (if any), link to further information, and link to the provider/ scheme’s website.
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- Hide important information, such as qualifying or other important information that is needed to ensure a claim is not misleading. Examples of hidden information include: placing information away from the claim itself – e.g. the other side of a tag; through a hyperlink or scan of a QR code; or expanding a drop down list.
- Make a claim if there is not enough space for the necessary important information, where the claim could be misleading without it.
- Use unclear terms, such as broader, general or absolute claims – like ‘green’, ‘sustainable’ or ‘eco-friendly’ which are much more likely to be inaccurate and to mislead customers.
- Use imagery and icons in a way which could lead consumers to believe a product is more green than it is.
- Refer to affiliations and accreditations in a way that could mislead customers, e.g. referring to an accreditation relating to product characteristics in respect of an individual product that does not have those characteristics.
- Rely entirely on third parties, because retailers are ultimately responsible for any claims made relating to third-party products they sell and need to satisfy themselves that such claims are not misleading. Adequate supply chain due-diligence is therefore of key importance.
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This new Compliance Guide is a clear signal that the CMA is willing to resort to stronger intervention in this space going forward, bolstered particularly by direct consumer enforcement powers and possibility of severe financial penalties following the introduction of the Digital Markets, Competition and Consumers Act 2024 ("DMCC"), with relevant provisions set to come into force around the end of Q1 2025. For further information regarding the DMCC, further reading is here.
