ESG in fashion (2) : the EU framework on greenwashing in the fashion industry

Brussels – Whereas more than half of the EU consumer population is found to be receptive to green claims, only one-fifth appears to actually trust the sustainability claims made by brands. More and more, the market is realizing that “sustainability” is more than a buzzword and green claims should be substantiated by clear and transparent data. The reputation and trustworthiness of the brand can be at stake.

Particularly in the fashion sector, consumers are expecting companies to reduce the pressure on primary raw materials, water as well as GHG emissions. Besides the reuse or recyclability of raw materials, the fashion sector is also responsible for releasing around half a million tonnes of plastic microfibres in the ocean (equivalent to more than 50 billion plastic bottles) resulting from the washing process of textiles. In addition to the environmental impact of the fashion industry, also ESG’s social component plays an important role in the sustainability efforts of this sector (cf. “wokewashing”). With regular reports of human rights violations, the exploitation of cheap labor forces in developing countries, gender discrimination and animal testing, customer’s are expecing fashion companies to spare no effort to behave ethically.

It therefore comes as no surprise that particularly with respect to textiles, garments and shoes the Consumer Protection Cooperation (CPC) Network found that most green claims were made (about 24 percent of all green claims were made in relation thereto). Cosmetics and personal care goods came in second (at 17 percent).

With other words, it is about time to dive deeper into the legal framework around greenwashing and green claims and to set out some do’s and don’ts to ensure that the reputation of your brand is not endangered.

The current legal framework

Although the issue of greenwashing is at the forefront of the EU’s Green Deal agenda, no specific legal framework has been set out thusfar. Fashion companies can therefore only resort to the general Unfair Commercial Practices Directive (2005/29/EC, “UCPD”) and Directive 2006/114/EC on Misleading and Comparative Advertising when making green claims.

Although neither instrument provides specific rules in relation to environmental claims, their scope of application extends to all claims made in the context of business-to-consumer commercial practices, including those related to the environment or to ethical considerations.

The general rule of the UCPD prohibits traders from presenting environmental claims in ways that are unfair to consumers, misleading them in any way by express communication or by omission. The UCPD also contains an annex with a “black list” of commercial practices which are in all circumstances considered unfair and prohibited by the UCPD. These blacklisted practices include for example displaying a trust mark, quality mark or an equivalent sign without having obtained the necessary authorization or without having been endorsed or approved.

In the 2009 UCPD Guidance Document published by the European Commission and in the 2016 Compliance Criteria for Environmental Claims, some specific principles with respect to green claims are clarified: environmental claims should be presented in a specific, accurate and unambiguous manner and scientific evidence must support the claim made, whereby the trader should be ready to provide it in an understandable way in case the claim is challenged.

Some of the principles included in these guidance documents require green claims:

To relate to aspects that are significant in terms of the product’s environmental impact and to moreover be clear on the specific aspect to which the green claim relates;

To be meaningful and relevant in relation to what already commonly exists on the market;

To not concern benefits that are off-set by other negative impacts and result in a total net loss for the environmental.

Furthermore, also the visual and overall presentation of the product (specifically including the layout, choice of colours, images, pictures, sounds, symbols or labels) should be a truthful and accurate representation of the scale of the environmental benefit, and should not overstate the benefit achieved. Even if factually correct, the way the claim is presented should not mislead the average consumer, for example by omitting material information that the average consumer needs in order to take an informed transactional decision.

Other specific legal instruments

Besides the general framework on unfair market practices, also some more (sector-)specific Directives and Regulations apply to green claims, like the Regulation (EC) No 66/2010 on the EU Ecolabel, Regulation (EC) No 834/2007 on organic production and labelling of organic products.

The Regulation on the EU Ecolabel aims at establishing a voluntary ecolabel award scheme intended to promote goods or services which are supplied for distribution, consumption or use on the EU market with a reduced environmental impact during their entire life cycle. Relying on the label depicted below, consumers are provided with accurate, non-deceptive, science-based information on the environmental impact of products.

Also on a national level, EU member states and the UK have taken various initiatives to tackle greenwashing. Most recently, the Competition and Markets Authority (CMA, which is the UK’s primary competition and consumer authority) has published detailed guidance for businesses making environmental claims about their “goods, services, processes or brands”. The guidance particularly outlines that no information should be omitted or downplayed to deceive consumers about the characteristics of a product. Moreover, all relevant information regarding the impact of a product should be made available to the consumer before they decide on a product or service. Comparisons with other products should furthermore be fair and informative.

Finally, in this regard also the ICC (the International Chamber of Commerce) Framework for Responsible Environmental Marketing Communications (2019) is worthwhile mentioning. This elaborate document addresses the most common environmental claims as well as some more guidance on the consumer’s perception and interpretation of a green claim, which is central to ensuring that the product as advertised meets the consumer’s expectations. On the basis of an environmental claims checklist and specific guidance on the application of the general principles in environmental marketing communications, the ICC Framework provides a practical instrument to scrutinize any green claims made by your company.

The European Commission’s agenda with respect to greenwashing

As one of the European Commission’s key goals, the aim is to empower EU consumers to play an active role in achieving a more sustainable economy. Therefore, the European Commission is planning to publish a proposal for a Directive to strengthen the role of consumers in the green transition and a proposal for a Regulation on substantiating green claims.

The latter will require companies to substantiate claims they make about the environmental footprint of their products/services by using standard methods for quantifying them, whereas the Directive aims to ensure that consumers obtain reliable & useful information on products, e.g. on their lifespan and repair options. The European Commission announced that it will tackle the proliferation of logos and labels claiming green characteristics, thus further protecting consumers from deceptive and misleading information.

Do’s and don’ts when making green claims

On the basis of the aforementioned legal framework, and while awaiting some further specific legislative instruments from the European Commission, the following principles can be deduced:

To the extent you are making a claim with respect to the sustainable or ethical characteristics of your product, your communication constitutes a “green claim”. Any such green claims should be relevant and meaningful in relation to the effect of the product (a component thereof) or its packaging (materials) and should clearly and transparently state on which aspect of the product lifecycle or its packaging the claim relates. Eg. when stating that a product is carbon-neutral and this effect is obtained by off-setting carbon emissions, the claim should be transparent about this.

Any express claims, but also indirect claims using sound or visual presentations or imagery can be deemed to be green claims and should therefore accurately represent the material characteristics of the product.

Green claims should not be too broad or general (eg. referring to “sustainable” or “eco-friendly”) and should be verifiable based on appropriate test methods or scientific data. The claim (or further information that is readily available to a consumer) should be transparent on the test method used, the circumstances in which the test has been performed and should clearly present the results thereof.

To the extent you are making a comparative claim, it should be clear in relation to which the comparison is made, eg. an earlier version of the product, component or package, or a competitive product, component or package. The comparison should be moreover made in substantially identical circumstances and conditions of use.

In case the customer should access external facilities to obtain the claimed environmental benefits (eg. recycling or composting facilities), the availability thereof or any limitations on the ability to use such facilities should be identified.

The consumers’ perception, impression and reasonable environmental knowledge should be assessed and taken into account. The consumers’ concern for the environment should not be exploited.

To the extent you are using labels, names or logos in environmental advertising, it should be clear which procedures are used to obtain approval (by an independent third party) or which environmental benefits are covered by the label.

Claims should be current and therefore be periodically reassessed to make sure they are true at the moment of communication.

Conclusion

More than ever, consumers are perceptible to sustainability characteristics when deciding to purchase certain products or services. Even more so, the European Commission explicitly aims at empowering consumers to steer the green transition on the basis of their purchase and demand power. In order to do so, the consumer needs to be better informed and dispose of the tools to verify and scrutinize any claim made in that regard.

Of all sectors, the fashion industry has a particularly significant impact on the environment and is looking to transition to a more sustainable system. Fashion companies thus have all the more benefit to gain from making their products more sustainable and informing their consumers about their efforts. Green claims and unfortunately also greenwashing are therefore widespread in this industry. The aforementioned guidance with respect to the current and future legal framework on greenwashing as well as the do’s and don’ts for communications on sustainable or ethical characteristics of fashion products aim to provide some clarity.