UK consumer regulator, the CMA, has concluded its investigation into three fashion retailers on misleading green claims, with the retailers undertaking to change their practices.  The CMA also sent an open letter to the sector, which identifies a number of practices it expects retailers to avoid when making environmental claims about their products and organisations.  The CMA has thus given further clarity to businesses in the fashion sector (and beyond) on what green claims are acceptable, and which claims are likely to attract unwanted regulatory attention. 

Undertakings from Retailers

As mentioned in our previous update, the CMA opened its investigation into the green claims of the fast fashion sector in early 2022, as part of its broader focus on ensuring that businesses’ environmental claims are clear and accurate.  Just before the Easter break, the CMA announced that it has secured undertakings from the fashion retailers at the centre of its investigation. These voluntarily given but legally binding undertakings commit those companies to follow a set of obligations governing how they display, describe and promote green credentials of their products and organisations.  The three businesses are required to provide regular reports to the CMA on the steps taken to comply with the undertakings.

Some aspects of the undertakings will come as no surprise to those familiar with the CMA’s guidance on environmental claims, published back in 2021.  However, the undertakings do provide greater clarity as to the CMA’s stance on the following aspects of environmentally themed advertising:  

1. Criteria for “green” product ranges – the CMA’s investigation included consideration of the practice of branding an entire product range as in some way more environmentally beneficial.  The undertakings require the businesses to detail and communicate to consumers minimum requirements that a product must satisfy in order to fall within such a “green” product range or collection.  For example, if the product must be made from a certain percentage of recycled material to fall within the range, this should be spelled out, and products should not be included in such ranges unless they comply with such requirements;
2. Search filters for products – where retailers provide product filters enabling consumers to whittle their searches down by reference to environmental criteria, these filters must be accurate, and searches should only show items that meet the filter requirements (e.g. if the filter is “recycled”, only products made from predominantly recycled materials should be shown). The CMA has not expressly stated that businesses must set out the minimum requirements for an item to fall within a search filter; however, it follows from their statements on “green” product ranges (see above) that it is prudent for businesses to set these out;
3. Accreditation schemes – whilst the CMA has acknowledged that accreditation schemes may be referenced and marketed, it has noted that references to such schemes must not be misleading. For example, it must be made clear whether the scheme applies to specific products only, or a business’ wider practices.

The Undertakings also reconfirm the CMA’s approach to tackling misleading green claims, as set out in its earlier guidance:

1. Key information within green claims must be clear and prominent;
2. Statements about environmental characteristics of fabrics must be specific and clear, avoiding ambiguous terms such as “eco” and “sustainable”;
3. Natural imagery, logos or icons should not be used to suggest a product is more environmentally friendly than it is;
4. Environmental targets that are claimed should be specific (setting out the business’ goal, the expected date to achieve this, and the methods to be used for achieving this).

The Open Letter 

At the same time, the CMA also issued an open letter to the fashion sector, drawing attention to the undertakings, and stating that it will publish further guidance for the fashion industry which will build on its Green Claims Code.  

The DMCC

The UK’s Digital Markets, Competition and Consumers Bill (“DMCC”) has had its third reading in the House of Lords, and is reaching final stages for approval. The DMCC will give the CMA significantly wider enforcement powers (in relation to misleading consumer practices in general, not just environmental claims), for example allowing them to impose very significant monetary fines without having to bring proceedings before the courts.

Specifically, the current version of the DMCC would enable the CMA to issue fines without court approval in certain circumstances of up to 10% of the company’s total global turnover. 

Given the CMA’s continued sharp focus on misleading green claims (which was reaffirmed in the CMA’s recently published 24/25 Annual Plan), it is to be expected that it would look to deploy these new powers in its enforcement activities against such claims. 

CMA’s next steps and other sectors

Although the CMA’s open letter was addressed to the fashion sector, it is important to note that the new guidance that will be published, alongside the commitments in the undertakings, are of potentially wider application (e.g. the issues of green “ranges” of products or services and use of accreditations are clearly relevant to a wide range of sectors). The CMA’s letter noted that “any business” making environmental claims should review its practices.  As we discussed last year, the CMA has also been investigating misleading environmental claims in the FMCG sector, and therefore the CMA’s findings will also be significant to FMCG businesses.  More broadly, businesses should ensure they take steps to carefully plan, control and vet their marketing statements relating to environmental issues so as to comply with the developing regulatory requirements.