CMA interview: Fashion's tricky issue of greenwashing and how the UK is fighting it

Greenwashing in fashion is one of the industry’s hottest topics at the moment as vague claims like “sustainable”, “green”, “eco”, and “environmentally friendly” are facing mounting scrutiny from shoppers seeking more transparent ways to buy more responsibly.

As consumer demand for less environmentally damaging clothing has grown, so too has pressure from regulators who are creating new guidelines for how brands should communicate their sustainability efforts, and enforcing stricter punishments for those not complying.

Last summer, British fashion giants Asos, Boohoo, and Asda made headlines when they were placed under investigation by the UK’s competition watchdog, which said it wanted to “get to the bottom” of whether the three companies were “misleading customers” over their products’ sustainability credentials.

The move by the Competition and Markets Authority (CMA) came just 10 months after the watchdog published The Green Claims Code, a new set of guidelines showing brands how to avoid greenwashing by communicating their green credentials in an honest and accurate way as to not mislead shoppers.

Nine months on from the launch of the ongoing investigation and the complex topic of greenwashing remains a mainstay in fashion news cycles, and one that will continue to evolve as regulators and legislators alike seek more power to effectively clean up the industry.

In an interview with FashionUnited, Cecilia Parker Aranha, the director of consumer protection at the CMA, spoke about the watchdog’s ongoing investigation, advice on how to avoid greenwashing as a brand, and what the future of greenwashing in fashion might look like.

Could you tell me a bit about what the Green Claims Code is and why it’s so important?

Aranha: The Green Claims Code is a piece of guidance developed by the CMA at the end of 2021. The idea is that it takes consumer law in the UK - so the rules that all businesses should be following - and it interprets them so that companies can more easily understand how they can make environmental claims and how to avoid falling foul of the legislation.

The aim of producing the code was to accomplish three things: One: To make sure consumers were being protected and getting the right information about the products they buy. Two: To make sure businesses who are truly focused on sustainability issues have the confidence to tell their stories without worrying about being accused of greenwashing. And three: To make sure businesses that are not so focused on sustainability but who are greenwashing are not gaining an unfair advantage over those doing the right thing.

After almost a year of the Green Claims Code being in force, are there any interesting findings/insights you could share?

When we started looking at the fashion industry we began by doing a compliance review, so we were effectively looking at a lot of fashion businesses across the sector to paint a picture of exactly what was happening.

One thing we noticed straight away was that while a lot of companies are making environmental claims, it's tricky to know whether they’re true or not until you start to dig behind them. For example, we saw many companies making claims that were vague and therefore could be misunderstood by customers unless they go away and do a fair bit of research to understand what is meant by them. That issue was widespread.

Another thing we noticed was that greenwashing can often be done unintentionally by businesses. While there are certainly brands and retailers out there deliberately greenwashing, many are actually acting in what they think is the best way possible - but not getting it quite right. So what we are trying to do with our guidance, with our enforcement work, and with our other engagement with the industry is to make sure businesses know exactly what is expected of them so they can drive change and allow consumers to confidently trust the claims they are making.

Talking of unintentional greenwashing, do you see any common mistakes fashion businesses are making, and perhaps have advice as to how they could avoid it?

Two main things come to mind: One is that companies don't always start with the evidence. Instead, they start by thinking ‘What can we say about this product that’s green?’ without having the facts to back it up. First of all it's important to have robust evidence in place to allow people to verify anything they say about their products.

Secondly, we see a lot of businesses making a claim about a particular aspect of their product where the harm flowing from that product, or the environmental impact of that product, may be quite significant but might not be connected with the one thing you're drawing attention to.

So, companies need to be more conscious about how consumers will interpret what they’re saying. For example, if a company says to consumers that a product is made with recycled fibres, are consumers then going to assume that's a good environmental choice? We see a lot of companies making such claims when there is in fact quite a low percentage of recycled fibres in the product they're talking about. It’s really important to think about the language being used in describing that product.

Another thing is that a product might be transported from halfway across the world, it might be using toxic dyes, it might be creating other environmental impacts that consumers might not know about. Companies need to be accurate and clear about what they're saying - if you're creating a product using 20 percent recycled materials, then tell consumers that's what you're doing rather than making a more general claim about it simply being ‘recycled’.

But also thinking about the broader implications and what consumers might understand. That's tricky for smaller firms because they obviously don't have a big research budget to go away and figure out what consumers are thinking. But my suspicion would be that a lot of companies would be surprised about how consumers interpret the claims that they're making and if those claims aren’t complete and accurate then that's where the problems arise.

You currently have an ongoing investigation into Asos, Boohoo, and Asda. Could you tell me a bit about how that came about and how it is unfolding?

When we were carrying out our compliance review, we started to focus on these three particular fashion businesses because we had concerns about their conduct and wanted to make sure they had the evidence to back up all the claims they were making.

While we saw problems across a lot of different companies, we honed in on these retailers in part because of their size and visibility, as well as our concerns about their claims. Unfortunately, however, I cannot give you any more information about the investigations themselves as they are very much still ongoing, meaning we haven’t reached a conclusion yet about whether those businesses have broken the rules.

Are there any specific areas of the fashion supply chain or fashion segments where greenwashing is happening the most?

We have certainly observed from our conversations with the industry that there are challenges within the supply chain. Fashion businesses have told us that it can be difficult to get information from their suppliers about what they are purchasing and it actually requires quite a lot of diligence for companies to monitor their supply chains and make sure they understand what is going on to ensure they are not making false claims due to the false information they've been given.

In terms of segment, it is difficult to zero in on one particular area. So far we have focused primarily on high street fashion businesses, but that's more because we are trying to tackle the areas where we think it will make the biggest difference to consumers in the UK, and of course most Brits will buy from high street and online giants like Asos and Boohoo.

But I would say that while there are issues in high street and fast fashion brands, we also see concerns about what some of the designer labels are doing.

So will luxury brands be next?

At the moment our priority is to conclude the investigations that we've opened and then we will think about whether further action is needed. But it is certainly a possibility in the future to look at other sectors of the fashion industry.

What types of “further action” could be taken once your current investigations are concluded?

It’s not clear yet, but there could be more investigations, or we might need to produce more detailed guidance for the fashion sector that compliments the Green Claims Code. We always try to get the most we can out of the work we do so that often means that if we are concluding investigations and drawing conclusions about the way businesses need to comply in specific circumstances, then we’ll try to leverage that as much as we can to bring about change. That might mean publishing more information for businesses about what we've done, why we've done it, and what they need to do to address the issues that we've found.

The size of such an operation seems enormous and complex. How are you pulling it off?

With the CMA’s investigations we usually work with quite a small team, but then we pull in expertise from other areas like our legal team, our economics team, and our behavioural insights team who really understand what consumers are thinking.

We are also working with the International Consumer Protection and Enforcement Network (ICPEN), which is now composed of more than 70 consumer protection authorities around the world. We have a working group with the network where we are sharing intelligence and our experiences of tackling different companies in different countries.

Of course it is very complex because the issue of greenwashing is cross-border, so what we don't want to do is create a situation where businesses are expected to meet a certain standard in one country and perhaps a lower one in another, hypothetically allowing them to forum shop or try to get away with misleading consumers.

We are also associates of the UN’s Consumer Information Programme for Sustainable Consumption and Production (CI-SCP), so we have been working with them as well to develop their framework for communicating on fashion sustainability. To summarise, we are really trying to use what we are learning, share it with others, and also learn from others so we have the best possible approach to this in the UK.

What do you expect the future of greenwashing will look like?

My hope of course is that we will see an end to greenwashing and that companies will begin to understand that it’s not just about making profit from the idea of sustainability but that we actually have to all act collaboratively in a responsible way to ultimately achieve sustainable consumption. That way, consumers will be able to trust the information that they are seeing and that will drive us to a position where we will reach sustainable levels of consumption. That being said, we still have a long way to go.

And what steps are being made to make that a reality?

We have recommended the government to make some small changes to consumer protection legislation which we think would make things simpler. For example, that would include a common set of definitions of terms that are commonly used so businesses will know if they stick to these definitions and stick to the rules then they will be alright. This includes ambiguous terms such as ‘carbon neutral’, ‘biodegradable’, and ‘compostable’.

What we’ve seen is that businesses really want certainty, so we’ve recommended that the government go away and think about how they can give that certainty in the same way you find for example in the food industry where you can’t make a claim unless you meet certain standards. For example, where you can only claim food is organic where it contains 95 percent organic ingredients. We think it's vital that we come up with similar rules for other sectors so business can be confident about what they are saying.

The other thing is that we have suggested some additional rules to make it easier for us to take enforcement action against businesses who are greenwashing and make the consequences of that more significant in terms of financial penalties.