The Competition and Markets Authority launches a review of environmental claims in the fashion retail sector
On January 10, 2022, the UK Competition and Markets Authority (“CMA‘) has launched its first-ever review of environmental claims in the fashion retail sector, amid fears the sector is trying to ‘green’ shoppers. The CMA will look into whether companies are complying with the legislation relevant to consumer protection.
This follows the launch of the CMA’s “Green Claims Code” on September 20, 2021, which sets out six principles (including case studies) to help businesses understand and meet their obligations under consumer law. The principles provide that:
(i) claims must be truthful and accurate;
(ii) the claims must be clear and unambiguous;
(iii) claims must not omit or obscure materially relevant information;
(iv) comparisons must be fair and meaningful;
(v) claims must consider the full life cycle of the product or service; and (vi) complaints must be substantiated.
It seems that part of the reason the CMA chose the fashion sector is because of its size, with the CMA estimating that UK consumers spend around £54bn a year on clothing and footwear (a figure that expected to increase in the coming years). years) and that industry is responsible for 2-8% of global carbon emissions. Additionally, the CMA recognizes that consumers are becoming more environmentally conscious when shopping, increasingly trying to choose more sustainable options, and that more and more fashion companies are making environmental statements.
The CMA will focus on how claims about the environmental impact of products and services are made and whether they are supported by evidence – in particular, claims that individual items are sustainable or better for the environment, claims about the use of recycled materials and “sustainable” branded clothing lines. The CMA has requested information from anyone with experience of the types of issues covered by the Green Claims Code, and said it will take appropriate action against any company that it believes is making misleading environmental claims, or “greenwashing”. “.
Indeed, the CMA is the UK’s leading competition and consumer authority, with the aim of making markets work for consumers, businesses and the economy at large. It has consumer protection powers to protect consumers against unfair commercial practices and unfair contract terms. If the CMA finds a breach, it can seek an enforcement order against the companies or accept an undertaking to put an end to these breaches. Enforcement orders and undertakings may include “enhanced consumer measures”, such as the obligation to compensate those harmed by non-compliance, and measures to prevent similar infringements from happening again. ‘to come up.
This review of environmental claims in the fashion retail sector is the first of its kind and it is clear that the CMA considers ‘greenwashing’ to be a significant concern. He plans to review other areas in due course as the Green Claims Code applies to all businesses. When releasing the Green Claims Code last year, the CMA noted that “[f]After an initial run-in period, the CMA will conduct a full review of misleading green claims, both online and offline (e.g. claims made in-store or on labeling), in early 2022.” Others sectors that may fall under the may include travel and transport as well as fast-moving consumer goods industries (food and beverages, beauty products and cleaning products) The CMA also pointed out that it may choose to act outside of the fashion retail sector (during this review) where there is evidence of consumer law violations.
It is therefore important for any company with concerns about this to carefully monitor the developments of this investigation.