CMA greenwashing investigation: Is the tide beginning to turn?

Are we finally seeing the death of greenwashing?⁠

In August, Charged broke the news that the CMA was launching investigations into ASOS, Boohoo and Asda, scrutinising their misleading sustainability claims.

Sustainability is arguably the biggest and most contentious issue confronting the fashion industry today. Almost unbelievably, fashion accounts for 10% of global carbon dioxide emissions and emits about the same quantity of greenhouse gases per year as the entire economies of France, Germany, and the UK combined, according to McKinsey.

With environmental issues very much at the forefront of public discourse, brands have made sure to tout their eco credentials. With 67% of shoppers considering sustainable materials to be a factor in purchasing a fashion item, the incentive is clear.

As part of its investigations, the CMA will be looking into eco-friendly and sustainability claims made by the three brands about their fashion products, including clothing, footwear and accessories. Ultimately, it will determine if these companies are really invoking eco-positive change or simply making misleading claims.

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“People who want to ‘buy green’ should be able to do so confident that they aren’t being misled,” says CMA chief executive Sarah Cardell.

“Eco-friendly and sustainable products can play a role in tackling climate change, but only if they are genuine.

“We’ll be scrutinising green claims from ASOS, Boohoo and George at Asda to see if they stack up. Should we find these companies are using misleading eco claims, we won’t hesitate to take enforcement action – through the courts if necessary.”

But is this investigation long overdue? And will it set a new precedent, in making sure any future sustainability claims are backed up with clear evidence?

What does the CMA investigation entail and how will it help shoppers?

The watchdog is concerned the brands are using broad, vague language to market items as eco-friendly, and weak criteria to determine if products are sustainable.

It is also looking into whether the criteria for what is considered ‘green’ is too low and whether items being included in the ‘green’ collections actually meet those criteria.

“As the demand for green products has increased, it’s been too easy for companies to say something vague about their products being environmentally friendly, but without having hard evidence or figures,” HPS director Peter Elgar tells Charged.

“So it’s important that it is policed in some way otherwise it’s going to get out of hand.”

Elgar also suspects many consumers have been guilty of taking the easy way out, as most shoppers generally trust larger, well-known brands.

“If there’s some sort of green statement on a product, we trust it without thinking too much about it or looking any more deeply into it,” he adds.

Will the greenwashing investigation set a new precedent for retailers?

Although the investigation is expected to last up to two years, it has already set some wheels in motion.

Firstly, the government has granted the CMA enhanced powers to fine retailers as much as 10% of their annual turnover if the watchdog finds them guilty of greenwashing. In addition, both Asos and Boohoo have been targeted by leading hedge funds who have been betting on their demise. Since the investigation was announced, short sellers boosted their bets that saw both companies’ share prices tumbling.

With tangible consequences for companies that overstate their green credentials, the tide seems to be turning. However, The Modernity Group director Michael Boyle still has concerns about how brands will respond to the investigation.

“Unscrupulous fast fashion businesses need to be made examples of by the regulators, but as we’ve seen before, with recent modern slavery and worker exploitation scandals, accused companies will try and pass the blame onto third party supply chains and external procurement partners,” he says.

“Pretending to be blind to their production process and pointing a sausage-shaped finger at their overseas manufacturers, whilst pleading they were unwittingly unaware of any possible deception.”

With misleading communications around a company’s sustainability achievements likely to have real repercussions, the investigation will likely trigger a wider clampdown on how items are branded to consumers.

“It is very easy to make green and environmental claims. Especially vague ones,” Elgar says.

“But it takes effort, research and investigations to come up with facts and figures to realistically gather evidence, quantify and qualify these claims in meaningful terms.

“I think now it is more likely that marketing and advertising departments will talk to their sustainability heads or product development people to double check what they are saying can be backed up, or perhaps more sensibly, ask them first what claims they can make that are quantifiable.”

While many believe the CMA probe is long overdue, VantagePoint partnership manager John Fuggles believes the investigation should be seen that as a positive step forward, rather than asking if they should have done it sooner.

“Let us hope it brings into focus what all retailers are doing and allows companies with better ESG credentials to flourish as a result. My only concern is any fine won’t be incentive enough to stop these kinds of activities,” he says.

The government has published a ‘Green Claims Code’ to help businesses abide by consumer law and help people who want to ‘buy green’ to do so with confidence – although Michael Boyle believes that it may be too late for those under investigation, as they “may have stained the UK’s fashion industries integrity”.

Ultimately, compliance is key to trust and trust lies at the heart of a consumer’s buying decisions. The investigation has already set off significant industry ripples and could be a huge step forward in tackling greenwashing.

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