Following an investigation and compliance review carried out by the Competition and Markets Authority (CMA), which began in 2022, the CMA secured agreements with fashion retailers: ASOS, George at Asda, and Boohoo in 2024 regarding the way in which they display and describe their green credentials. The CMA is a non-ministerial department tasked with promoting competitive markets and tackling unfair behaviour and has recently set its focus on environmental claims that mislead consumers as to a company's green credentials. In October 2024, the CMA expanded on these agreements and its focus on tackling greenwashing by issuing a tailored guide for the fashion sector, aimed at clarifying best practices for brands when making green claims.
Many consumers around the globe are concerned about the sustainability of the clothes they wear, and in the coming years it is estimated that the number of consumers making purchasing decisions driven by sustainability could rise from approximately 15% to over 50%. The fashion industry will play an important role in reducing CO2 emissions and achieving net-zero. Many brands have introduced "eco ranges" and promote their sustainability in marketing campaigns to meet the increasing consumer demand for sustainable fashion. The CMA’s updated guidance acts as a gentle reminder to fashion brands that vague or unverified claims, such as “eco-friendly” or “sustainable,” must be substantiated with clear evidence.
Agreements reached with Boohoo, Asda and ASOS
The agreements related to a range of practices by fashion brands promoting their sustainability and requires each of them to commit to several undertakings when making green claims going forward. The fashion retailers have agreed to ensure that:
- all green claims are accurate and not misleading;
- key information is clear and prominent;
- statements regarding materials in green ranges are specified and clear and not ambiguous i.e., "recycled" or "organic" must meet certain criteria;
- they do not use natural imagery such as green leaves to suggest a product is more environmentally friendly than it actually is;
- any claims about environmental targets must be supported by clear strategy and customers must be able to access more information about it; and
- statements made about particular accreditations must not be misleading, for example, a business must clarify whether the accreditation applies to the entire range of products or simply one.
This is helpful guidance for all businesses looking to make environmental claims about their products to ensure they are complying with the evolving regulatory landscape. The agreements reached were coupled with an open letter by the CMA to the entire fashion retail sector warning them not to make misleading environmental claims. It comes under wider enforcement by the CMA and the Advertising Standards Authority on the need for accuracy when businesses make environmental claims, as further discussed in our previous blogs, here and here.
The CMA’s updated guidance for fashion brands
In late 2024, the CMA released a tailored guide for the fashion sector specifically addressing greenwashing practices, building on the agreements reached with Boohoo, Asda, and ASOS. This guidance focuses on compliance with consumer law and how fashion brands should communicate sustainability claims to avoid misleading consumers. The compliance guidance is based upon the CMA's Green Claims Code and aims to make it easier for brands to follow regulatory requirements. The guidance clearly defines what constitutes accurate and substantiated green claims in fashion.
The guidance states that fashion brands should:
- make all green claims accurate, clear, and backed by evidence, avoiding vague or unsubstantiated terms like "eco-friendly" or "sustainable" without detailed support;
- use prominent, clear language when describing eco-friendly products to prevent ambiguity around terms like “organic” or “recycled,” which must meet strict criteria to be used;
- avoid using misleading imagery or symbols (such as green leaves) that may imply a product is environmentally beneficial when it is not;
- disclose specific details about materials, production processes, and any environmental goals, ensuring that consumers can access in-depth information on a brand’s sustainability initiatives; and
- clearly specify when a certification applies only to specific items rather than suggesting an entire line has received eco-certification.
The Law
While green claims themselves are not specifically referred to in any legislation, they previously fell within the scope of the Consumer Protection from Unfair Trading Regulations 2008 and will now be covered by the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), which makes a number of updates to rules on unfair commercial practices in the UK and which we address in more detail in our previous blog here. The new rules on unfair commercial practices are expected to come into force in April 2025.
The DMCC Act seeks to further protect consumers from misleading and unfair commercial practices and specifically defines an unfair commercial practice as any practice that causes consumers to make transactional decisions they may not otherwise have made. Although the DMCC Act does not expressly refer to environmental claims or greenwashing, greenwashing is an inherently misleading practice and will be covered within the scope of unfair commercial practices under the DMCC Act.
CMA action
The CMA will also receive a handful of new enforcement powers under the DMCC Act, which we expect it will use to take action against greenwashing as an unfair commercial practice. Some of the CMA's proposed enforcement powers include (but are not limited to) issuing infringement notices and compliance directions, imposing fines of up to 10% of global turnover, and for breaches of directions and undertakings, imposing fines of up to 5% of global turnover for each day of a continued breach.
The CMA specified in its Annual Plan 2024/2025 that ''… with the ability to issue tougher fines, this considerably strengthens our ability to protect consumers from commercial harm and deter businesses which do not play by the rules'', and considering misleading environmental claims are highlighted as an ''area of focus'' in Part 6 of the Annual Plan., it is apparent that the CMA intends to use its new powers – and fines in particular – not only to improve compliance with consumer protection laws generally, but to tackle misleading environmental claims and greenwashing specifically. In the meantime, the CMA are evidently warning businesses of these powers with their recent issuing of 17 letters to well established fashion brands advising them to review their business practices, particularly regarding their green claims.
We have extensive experience advising clients on the advertising requirements and more generally, ensuring compliance with the CMA regulatory regime. Should you wish to discuss anything raised in this blog further, please contact Grant Strachan, Alison Bryce or your usual Brodies contact.
Contributors
Partner
Partner
Senior Solicitor
Solicitor
Trainee
