Case studies in the rise of ESG disputes: Greenwashing and social washing in focus

This week, it was announced that the Clean Clothes Campaign (CCC), together with four consumers, is filing a lawsuit against clothing brand Levi Strauss (Levi's). The case revolves around alleged misleading sustainability claims and labour rights violations at a factory in Turkey where Levi's manufactures. More than 400 workers lost their jobs there after striking for better working conditions and joining a trade union. Hundreds of workers are still awaiting compensation.

Both online and in its brick and mortar stores, Levi's made promises to consumers about responsible production and respect for workers' rights. According to the CCC, this is misleading because these promises lead consumers to believe they are buying from a brand that produces responsibly with respect for labour conditions. This is also known as 'social washing'. Social washing involves making misleading statements about human rights, supply chain working conditions and diversity policies. Companies engaging in social washing present themselves as socially responsible, while much is often wrong behind the scenes. For example, they advertise with campaigns about fair wages and good working conditions. Many brands claim their clothing is produced responsibly, while their suppliers may in reality have unsafe working conditions, poor employment terms or even forced labour.

Many clothing brands use commercial audits to substantiate their claims about working conditions. An audit verifies whether a supplier or manufacturer adheres to labour standards. The problem with these audits is that they are often not independent and are paid for by the client. Furthermore, the audits are announced in advance; auditors often do not speak with the workers; and the audit reports are not public, resulting in little transparency. In short, audits often cannot factually substantiate the claim that clothing is produced responsibly.

In recent years, the Dutch Register of Legal Professionals has observed a 215 percent increase in ESG-related disputes, with greenwashing being the most common category. This increase is linked to heightened public awareness, stricter regulations and the possibilities for collective action under the WAMCA (Act on the Settlement of Mass Damages in Collective Actions).

Consumers and interest groups no longer hesitate to initiate proceedings before the RCC or civil courts. Research from the University of Amsterdam shows that 78 percent of ESG proceedings between 2022 and 2024 related to greenwashing claims. Only 14 percent concerned social washing and 8 percent governance issues. This distribution is expected to shift as legislation such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) are further implemented. While the current focus in case law is on greenwashing, it is expected that more disputes over social washing will also arise.

The Greenwashing Directive and the Green Claims Directive will also play a crucial role in future enforcement. The Greenwashing Directive is expected to be transposed into national law in 2026. The Green Claims Directive is not yet in force and is currently being negotiated at the European level. These directives impose strict requirements on the substantiation and verification of environmental claims. Companies will soon have to provide scientifically substantiated evidence before they can make sustainability claims.

Greenwashing in fashion

Greenwashing is common in the fashion industry. A 2020 study by the European Commission found that a significant proportion of the sustainability and environmental claims examined (53.3 percent) provided vague, misleading or unfounded information about the environmental characteristics of products. This is problematic because it can deter consumers from making genuinely sustainable consumption choices.

Many brands use sustainability claims such as “organic cotton”, “eco”, “conscious” and “sustainably produced”. In the Netherlands, the Authority for Consumers & Markets (ACM) monitors for misleading sustainability claims and thus for greenwashing. The ACM can impose hefty fines or penalty payments on parties that make misleading sustainability claims.

In 2022, the ACM reprimanded retailers H&M and Decathlon, among others, for greenwashing. H&M and Decathlon sold products with claims like “Conscious”, “Ecodesign” and “organic cotton” without any factual basis. In 2025, the ACM addressed De Bijenkorf's use of unclear sustainability claims on its website. De Bijenkorf used general and vague claims on its website such as “sustainable products” and “lower environmental impact”, and a filter for “sustainable choices”, without sufficient substantiation. This mainly concerned clothing and cosmetics. After the ACM pointed this out, De Bijenkorf immediately amended and removed these claims.

These examples illustrate how even established brands face legal problems when claims are not backed by concrete facts and measurable performance.

The ACM has already addressed many companies for greenwashing but has hardly done so for social washing.

Guidelines on sustainability claims

Claims about sustainability must be correct, clear and complete. The ACM requires companies to substantiate their assertions with facts and keep them up to date. Specific claims require explanation and verifiable, independent evidence.

The ACM's Guidelines on Sustainability Claims contain five rules of thumb and practical examples to help companies formulate sustainability claims. Every sustainability claim must be tested against these five rules of thumb:

Use correct, clear, specific and complete sustainability claims.
Substantiate your sustainability claims with facts and keep them up to date.
Make fair comparisons with other products or competitors.
Describe future sustainability ambitions in a concrete and measurable way.
Ensure that visual claims and quality marks are helpful to consumers and not confusing.

Legal framework: self-regulation and civil enforcement

Greenwashing can be addressed by consumers or competitors through self-regulatory bodies such as the Advertising Code Committee (RCC) or the ACM, or through the civil courts.

The RCC is a body that rules on complaints from consumers or stakeholders based on the Dutch Advertising Code. For sustainability claims, there is a special regulation, namely the Code for Sustainability Advertising. The ACM and RCC collaborate on complaints about sustainability claims. Consumers must first submit complaints about greenwashing to the RCC before the ACM proceeds with an investigation.

For example, Primark was reprimanded by the RCC in 2023 for its advertising statements. The clothing chain used posters with text such as: “Reduce CO2 emissions by 50 percent. So the planet can breathe freely”. The RCC deemed this sustainability ambition insufficiently substantiated to assume that the ambition will be achieved. Primark also used text such as “Organic, recycled, sustainable and affordable cotton”. According to the RCC, it was not made sufficiently clear that these were Primark's ambitions and not results it had already achieved.

Another important greenwashing case in the Netherlands was the Fossielvrij/KLM case. Fossielvrij had first filed a complaint with the RCC against misleading advertising by KLM. The RCC ruled in 2022 that KLM was misleading consumers with statements such as 'CO2ZERO'. This is because it is an absolute claim that consumers interpret as a complete neutralisation of the flight's CO2 emissions, while KLM had not demonstrated that this promised result was guaranteed to be achieved in practice.

Fossielvrij did not leave it at that and also went to the civil court. This was a landmark case that provided much clarity on the assessment of sustainability claims under the Unfair Commercial Practices Act (Wet OHP). The court ruled in 2024 that 15 of the 19 disputed advertisements from KLM's Fly Responsibly campaign, with claims like “be a hero, fly CO2ZERO” and “CO2 neutral”, were misleading and therefore unlawful. The ruling in this case is special because it clearly sets out the normative framework for assessing sustainability claims. The judge used the ACM's Guidelines; the RCC rulings; the Dutch Advertising Code; and the European Commission's Guidance.

Prevention is better than cure

A company guilty of greenwashing or social washing risks administrative sanctions, civil damages claims and reputational damage.

The ACM can impose fines of up to 900,000 euros per violation and, in serious cases, 10 percent of the relevant annual turnover. In civil law, collective actions carry substantial risks. Damages can run into millions of euros when large groups of consumers are affected.

The reputational damage that occurs when a court confirms a greenwashing or social washing claim is significant. Research from Erasmus University Rotterdam shows that companies experience an average brand value loss of 32 percent over a two-year period following substantiated greenwashing claims.

Despite these risks, it should not be forgotten that making sustainability claims is permitted, provided that applicable laws and regulations are met. It was not the legislator's intention for companies to limit or avoid statements about their sustainability ambitions (so-called greenhushing). If the production of a garment can have a more positive climate or labour impact, it is beneficial for consumers to be informed correctly, completely, clearly and specifically. Based on that information, the consumer can make a more sustainable choice.

Prevention is still better than cure. Formulate sustainability and ESG claims carefully. Collect sufficient evidence for the accuracy of claims. Consult the Guidelines on Sustainability Claims and the European Commission's guidance. If in doubt, have marketing campaigns preventively reviewed by a specialist for compliance with applicable laws and regulations.

Written by Margot Span of Spargo Legal. Margot specialises in intellectual property law and commercial contracts, and she regularly discusses current legal issues in the Case Law column. www.spargolegal.nl

This article was translated to English using an AI tool.

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