On 27 March 2024 the Competition and Markets Authority (“CMA”) published the outcome of its formal investigation into the green claims of three well-known fashion retailers. The CMA commenced its investigation in July 2022 in response to concerns about the way the retailers’ products were being marketed as eco-friendly. 

The CMA’s investigation explored its concerns including whether:

  • The statements and language used by the retailers are too broad and vague, and may create the impression that the retailers’ clothing collections are more environmentally sustainable than they actually are;
  • Clothing items met the relevant criteria to be included in the retailers’ environmental ranges;
  • The criteria used to decide which products to include in the retailers’ environmental ranges may be lower than customers might reasonably expect from their descriptions and overall presentation;
  • There is a lack of information provided to customers about the products included within these ranges for example, about what the fabric is made from; and
  • Fabric accreditation schemes and standings applied to particular products. 

Following the outcome of its investigation the CMA has obtained undertakings from each retailer to change the way they promote their green credentials when marketing their products. An undertaking is a voluntary agreement made to address an enforcement authority’s concerns and resolve an investigation. The undertakings given by the retailers to the CMA are legally binding which if breached, could result in the CMA applying to obtain an enforcement order. 

Each of the undertakings have been published by the CMA. The retailers have agreed, amongst other things, to:

  • Green claims: ensure that all green claims are accurate and not misleading (i.e. key information must be in plain language and visible to consumers);
  • Statements about fabrics: statements made about materials used in green ranges must not use ambiguous terms like ‘responsible’ without any further explanation. The percentage of recycled or organic fibres used must be clearly published and easy for consumers to see.
  • Criteria for green ranges: ensure that products will only be marked as included in the retailers’ environmental ranges where the product(s) meet all of the relevant criteria to be included in the range;
  • Use of imagery: the retailers must not use ‘natural’ imagery to suggest a product is more environmentally friendly than it actually is; and
  • Environmental targets: ensure that claims about environmental targets are supported by a clear and verifiable strategy and that consumers can access more information about it.

As part of the undertakings, the retailers have also agreed to undertake supplier due diligence and to provide regular updates to the CMA as to their compliance with the undertakings given. Of note:

  • The retailers will carry out supplier due diligence to ensure the accuracy of a product’s composition or manufacturing process where the retailer makes or intends to make a green claim in relation to it. The agreed due diligence process will require the retailers to:
    • Ensure that their suppliers provide relevant certificates on request (for example, final scope certificates to certify that the facility can produce the products, fabrics and/or fibres to the relevant standard);
    • Carry out annual spot checks of the relevant certificates based on samples;
    • Obtain confirmation that their suppliers have read, understood and will comply with the retailers’ policies and contractual terms relating to the making of environmental claims and requirements of specific ranges; and 
    • Before offering a product to consumers, it obtains all relevant certificates and/or a declaration from the supplier that the product information is accurate and correct. 
  • As detailed in the undertakings, the retailers are required to provide three (3) monthly reports for a period of two (2) years to the CMA to demonstrate their compliance with the undertakings given. The content of the reports must:
    • List all new environmental claims made during the relevant reporting period have been reviewed and that the retailer is not satisfied they are misleading;
    • Confirm that the retailer has complied with supplier due diligence;
    • Confirm that it has provided relevant training to staff involved in writing product descriptions, advertising etc. on environmental claims and compliance with the undertakings given; and 
    • Confirm that any misleading environmental claims identified during the reporting period have been removed or amended within ten (10) working days of being identified.

The CMA’s Chief Executive, Sarah Cardell, has said:

This also marks a turning point for the industry. The commitments set a benchmark for how fashion retailers should be marketing their products, and we expect the sector as a whole – from high street to designer brands – to take note and review their own practices.

At the same time, the CMA has also issued an open letter to the fashion retail sector highlighting the need for the sector to consider their obligations under consumer law when making green claims. The open letter draws attention to the CMA’s Green Claims Code and explains that the undertakings provided by the fashion brands build on the principles set out in the Code. The open letter advises that:

Business should familiarise themselves with the Code and with the commitments in the undertakings, and take all necessary steps to ensure that any environmental claims they make comply with consumer protection law, including that their processes to ensure compliance are robust.

The CMA emphasised that promoting environmental sustainability remained a priority for it and that it intends to issue further guidance for the fashion industry in due course.

The open letter also served as a reminder of the Digital Markets, Competition and Consumers Bill which envisages the introduction of significant monetary penalties for breaches of certain consumer protection legislation (which could be up to 10% of a business’ worldwide turnover). The Bill is currently in the final stages of the legislative process and the current expectation is that the Bill will receive Royal Assent (i.e. become law) in Spring 2024. 

The steps taken by the CMA are not only relevant to the fashion sector; businesses across all sectors should take note of the CMA’s approach to tackling concerns relating to green claims. Whilst some of the undertakings given will be specific to the fashion sector, the provisions relating to the use of imagery, environmental targets, supplier due diligence etc. will be of relevance to other sectors. Businesses would be wise to use this as an opportunity to review their processes for making / marketing green claims to ensure compliance with the CMA’s Green Code.

With our extensive environmental and retail expertise, we can support businesses navigating these legal considerations. If you want to hear more about how we can help you in this space, please get in touch with Victoria Barnes, or click here to find out more about our environmental and retail expertise. 

Written by Lisa Mulholland and Victoria Barnes.

CMA Press Release - 27 March 2024 - GOV.UK (www.gov.uk)