In July 2022, the Competition and Markets Authority (CMA) undertook an initial review of the fashion sector. As a result of CMA's discovery of possible greenwashing, it investigated the claims behind the environmental ranges of three major retailers: Boohoo ('Ready for the Future'), ASOS ('Responsible Edit' (discontinued)) and Asda ('George for Good'). At the end of March 2024, the CMA's investigation culminated in Boohoo, ASOS and Asda voluntarily entering into legally binding undertakings to change the way they display, describe and promote their green credentials.
Why is this important?
According to the European Parliament, the global fashion industry is estimated to be responsible for 10% of global carbon emissions. Both Boohoo and ASOS rose to fame with online shops catering to cheap, fast-fashion during the Covid pandemic lockdowns, whereas Asda's George is a longer standing fast-fashion brand. These three companies alone made an eyebrow-raising £4.4 billion from UK fashion sales in 2022. The CMA investigation, and the resulting undertakings provided by Boohoo, ASOS and Asda, represents a landmark step on the fashion industry's journey to becoming more environmentally aware.
The CMA's Chief Executive, Sarah Cardell commented that:
"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."
This development for the industry comes at a time when the UK government is considering the Digital Markets, Competition and Consumers Bill. Should this become law, it is envisaged that penalties of up to 10% of global turnover could be imposed for breaching certain consumer protection legislation. It is therefore vital that fashion retailers take a careful note of the recent changes and prepare early.
What are the commitments?
The three retail giants have committed to a substantial (each document is around 17 pages) set of rules on green claims and a timeline for fulfilling the commitments (the "Undertakings"). The Undertakings, made pursuant to section 219 of the Enterprise Act 2002 (EA 2002), include, but are not limited to the following:
- Key information on green claims must be in plain language, easy to read and visible to consumers.
- Information regarding fabrics must be specific. Ambiguous terms such as 'sustainable' or 'eco' are to be replaced with clear wording such as 'organic' or 'recycled'.
- A product in an environmental collection can only be called 'organic' 'or 'recycled' if it fulfils certain requirements as set out by the retailer. It must be clear what this criterion is and only products which meet each requirement can be included in the environmental collection.
- 'Natural' imagery (green leaves/trees etc.) is not to be included in logos where it suggests a product might be more environmentally friendly than it is.
- Online search filters must be accurate. If a consumer searches 'recycled leggings' only leggings made from predominantly recycled materials should be included in the search results.
The CMA will oversee compliance by requiring the three companies to provide regular reports on the commitments they have undertaken to meet. Failure to meet these requirements, may result in the CMA (or a relevant enforcer under section 215 of the EA 2002) applying to the court for an enforcement order against the company.
An ASOS spokesperson has said, "Sharing clear and accurate information on the sustainability credentials of fashion products is crucial to empowering consumers to make fully informed choices".
Boohoo has also welcomed the CMA's investigation, noting it had "not intentionally misled customers", whilst Asda has said, "We support any measures aimed at improving consumers' understanding of environmental claims".
New Benchmark
Simultaneously, on 27 March 2024, the CMA published an open letter to the fashion retail industry. This emphasised that businesses making environmental claims should consider the Undertakings and must do so within the perimeters set out in the CMA's Green Claims Code (the "Code"), namely that claims:
- are truthful and accurate
- are clear and unambiguous
- do not contain omissions or hidden information
- compare products or services in a fair and meaningful way
- consider the full life cycle of the product
- are substantiated
Collectively, the Undertakings and the Code provide a benchmark for fashion retailers making environmental claims about their products or collections.
Conclusion
With consumers increasingly looking at a company's green credentials when deciding on a product, the CMA is cracking down on environmental claims in the fashion retail industry. Retailers need to be alive to this and would be well advised to review any green claims being made with reference to the Undertakings signed by Asda, ASOS and Boohoo, the CMA's Code and relevant consumer protection law to ensure compliance with the new benchmark requirements.
This article has been co-written by Robyn Watson (PSL Director) and Kerry Price (Trainee Solicitor).
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