In recent years, sustainability and ESG compliance have become pivotal factors in consumer purchasing decisions. The luxury fashion industry, as a significant contributor to CO2 emissions, faces increasing scrutiny in this domain. As sustainability gains prominence, the practice of “greenwashing”—creating a false or misleading impression of environmental friendliness—has proliferated.
The European Union is poised for major regulatory changes with the impending implementation of the European Directive on Empowering Consumers for the Green Transition by 2026 and the recent enactment of the Green Claims Directive. These measures are part of a global movement, with numerous jurisdictions introducing similar regulations to ensure transparency in environmental claims and combat greenwashing.
To help you navigate this complex and evolving regulatory landscape, we have compiled an overview of how various countries are addressing greenwashing. Here’s a closer look at the current handling of greenwashing in key regions including France, Italy, UK, Germany, the USA, and Australia.
France
Legislative landscape
The text systematically used by consumer associations is Article L.121-1 of the Consumer Code, which pertains to misleading commercial practices. This article addresses false or misleading claims that may lead to a substantial alteration of the economic behaviour of a reasonably attentive and informed consumer. The environmental impact is explicitly one of the elements covered by this offense. Violations of this provision are punishable by up to two years of imprisonment and a fine of 300,000 euros. The fine may be increased, proportionally to the benefits derived from the offense, to 10% of the average annual turnover, calculated based on the last three known annual turnovers at the date of the offense, or to 50% of the expenses incurred in carrying out the advertisement or practice constituting the offence. This rate is increased to 80% in cases of misleading commercial practices related to environmental claims.
Recently, a specific legal framework appeared:
- The AGEC Law (10 February 2020) regulates general claims and claims related to recycling (e.g. prohibition of the terms “biodegradable” and “environmentally friendly”). Specifically, the AGEC Law imposes new requirements on the textile and footwear sectors. Currently, it targets producers and importers with annual revenue exceeding €50 million, but by January 2025, it will expand to include all textile companies with revenue over €10 million. The measures include a ban on destroying unsold goods and mandatory logos on textile products related to recycling. Since 2023, consumer information on the environmental qualities of textile products has become mandatory. This includes details on recycled material, recyclability, presence of hazardous substances, traceability information (geographical indication of manufacturing countries), and the presence of microplastic fibers. The government has also introduced a free online tool, Ecobalyse, to assess a product’s environmental impact.
- The Climate and Resilience Law (22 August 2021) regulates claims related to carbon neutrality. Advertisers are required to publish on their website a summary report describing the carbon footprint of the product or service advertised, the intended reduction trajectory and the compensation modalities.
Public action on green claims
In 2021 and 2022, the DGCCRF (French General Department for Competition, Consumer Affairs, and Fraud Control) conducted an unprecedented investigation dedicated to monitoring environmental claims used to promote non-food products and services. Out of the 1,100 establishments inspected, one in four was found to have anomalies. The DGCCRF investigators issued 141 warnings, 114 injunctions, and 18 criminal or administrative reports. The alleged practices mainly involved broad claims that did not refer to a particular environmental impact but suggested an overall benefit for the environment (e.g., environmentally friendly, ecological, etc.), vague or ambiguous claims, and the use of terms like “100%” or “zero” when only one aspect of the product was concerned.
In May 2023, the National Consumer Council published a practical guide for environmental claims aiming to provide keys to understanding the various claims used. Also designed as a reference tool for professionals, it should enable them to communicate accurately and reliably, delivering to the consumer information considered relevant. While there is no penalty for non-compliance with this guide, the DGCCRF services may, as part of their monitoring mission, rely on its content to identify and sanction breaches or violations of current legal provisions, particularly with regard to misleading commercial practices.
On 24 July 2024, the fashion brand Lululemon was the object of a complaint filed with the DGCCRF, supported by the NGO Stand.earth. The complaint focused on Lululemon’s “Be Planet” campaign, which alleges a number of claims related to the environment and “restoring a healthy planet”. According to the NGO, such claims constitute a misleading commercial practice.
Soft law: the Advertising Trade Jury
Alongside this regulatory framework, the advertising sector has been trying to self-regulate for years. The Professional Advertising Regulatory Authority (ARPP) issues recommendations, including the “Sustainable Development” recommendation, which provides guidelines for action on environmental advertising. According to those rules:
- Claims must be based on truthful actions that are justified by the professional and verified, particularly in the case of scientific claims;
- Allegations must be fair, clear and proportionate; and
- Advertising must prohibit any representation likely to banalise or promote practices that are contrary to the objectives of sustainable development.
The Advertising Trade Jury receives all complaints made against advertisements that do not comply, in particular, with the aforementioned “Sustainable Development” recommendation. Since 2008, the JDP has issued several opinions involving the terms “carbon neutrality”, “sustainable” and “recyclable”. These opinions have no normative value but, in given the limited existing case law, constitute an interesting tool to better understand these notions. This Jury is very active in France: in 2022 and 2023, out of 150 decisions of the JDP, 78 were related to environmental claims and in 68 decisions, claims were considered fully or partially uncompliant.
Many companies in the fashion sector were involved in opinions from the Advertising Trade Jury: the brands Jules and Jules & Jenn in 2023, Etam, Patagonia, IKKS, Jules and Showroom Privé in 2022, IKKS, Calzedonia, Adidas, Benetton, Monoprix and Levi’s in 2021.
Italy
Under Italian law, green claims are regulated by the Consumer Code (“Legislative Decree n. 206 of 2005”), since they are aimed at influencing consumers’ purchasing choices toward more sustainable options. More specifically, the Italian legislator has so far considered green claims as unfair business practices to the extent that they are contrary to professional diligence and likely to appreciably distort the economic behaviour of the average consumer (according to Articles 20, 21, 22, 23 of the Consumer Code). The Italian Competition Authority (“ICA”) has the competence to investigate and impose sanctions on unfair business practices related to green claims.
Furthermore, green claims are also regulated by the Code of Self-Discipline of Commercial Communication (“Il Codice di Autodisciplina della Comunicazione Commerciale”, 70th edition of 1 June 12023), which provides that the claimed environmental benefits must be based on “truthful, relevant and scientifically verifiable data”, and the communication “must allow it to be clearly understood to which aspect of the product or activity advertised the claimed benefits relate”, generic boasts not being permissible (Article 12). The Advertising Self-Discipline Institute (IAP) prohibits direct and indirect environmental claims that are not based on truthful, relevant and scientifically verifiable data. In case of violations, according to Article 27, paragraph 7, 8, 9 of the Consumer Code, the ICA may impose the termination of the unfair practice and an administrative fine (ranging from 5,000 Euros to 10,000,000 Euros), taking into account the seriousness and duration of the violation and also the economic and asset conditions of the professional. According to Article 39 of the Code of Self-Discipline of Commercial Communication, the IAP can impose an injunctive measure to the professional.
On 25 September 2024, the ICA opened an investigation against Infinite Styles Services CO. Limited, which operates Shein’s Italian website (active in the fast fashion industry), for possible unfair business practices of some environmental claims contained on the shein.com website and possible misleading advertising through generic, vague, confusing and/or misleading environmental claims about “circularity” and the quality of products and their responsible consumption. The case demonstrates ICA’s interest in green claims and fashion sustainability and may result in a fine. Green claims and greenwashing are also the subject of the ICA case law in different sectors, other than fashion. See for instance Decision n. 31025 of 16 January 2024 - case PS12496, concerning well-known poultry breeding and feed manufacturing company for disseminating misleading claims about the environmental sustainability of its production.
UK
The UK has a fragmented, and not yet ‘mandatory’ regime to regulate consumer-facing ‘green’ claims which is why greenwashing activity has typically taken place outside of England’s courtrooms. In recent years, the UK’s Competition and Markets Authority (“CMA”) and the Advertising Standards Authority (“ASA”) have been stepping up efforts to curb both deliberate and inadvertent greenwashing in business-to-consumer communications.
The ASA
The ASA is an independent advertising self-regulatory body which can investigate, in response to complaints or on its own initiative, advertising of a product or service that relates to the environment or climate change for suspected breaches of the Advertising Codes. Anyone, including members of the public or industry (and competitors), can make an anonymous complaint directly to the ASA regarding an advertisement published in the UK. Although ASA may only refer complaints to statutory enforcement bodies and is not entitled to impose financial penalties, it may resolve investigations formally or informally, both procedures resulting in publications on ASA’s website.
To this date there have been more than 30 greenwashing-related rulings spanning multiple sectors (e.g. energy, consumer goods, automotive). ASA’s recently updated Advertising Guidance on misleading environmental claims and social responsibility highlights that “[w]here businesses are responsible for a significant amount of harmful emissions or other environmental harm, ads which reference specific environmentally beneficial initiatives are more likely to mislead if they do not include balancing information about the business’ significant ongoing contribution to emissions or other environmental harm”.
The CMA
In September 2021, the CMA published its Green Claims Code: a set of six guiding principles intended to help businesses understand and comply with their obligations under consumer protection law when making green claims. The principles include ensuring that claims are substantiated and that they are truthful, accurate, clear and unambiguous. Subsequently, the CMA launched greenwashing investigations against three fast fashion chains, which just recently agreed to undertake CMA’s suggested steps in 2024. In 2023, the CMA expanded its focus to include misleading environmental claims in the fast-moving consumer goods (FMCG) sector, followed by a first concrete step by launching an ongoing investigation made by one specific UK-listed company.
In September 2024, the CMA issued practical guidance entitled "Complying with consumer law when making environmental claims in the fashion retail sector" (the "Guidance") applying to all businesses which make environmental claims about: clothing, footwear, fashion accessories, or related services for example packaging, delivery and returns. The CMA confirms that the Guidance is also relevant for manufacturers and suppliers (including third party branded suppliers), wholesalers and distributors and may be consulted by other consumer-facing businesses as well. The scope of the Guidance extends to a company’s sustainability claims about its products, services, processes, brands or business as a whole and sets out 11 rules for companies, including ensuring that their green claims:
- are clear and accurate,
- do not omit important information,
- do not rely on unclear terms,
- do not contain misleading imagery and icons,
- contain comparisons which are clear, fair and like-for-like and
- explain clearly any action a consumer would have to take in order for the claim to materialise.
The Guidance also stipulates rules around appropriate use of filters and other navigation tools, product ranges, and third-party affiliations and accreditations. The Guidance offers timely and needed clarity for consumer-facing businesses ahead of the CMA receiving its new enforcement powers under the Digital Markets, Competition and Consumers Act 2024 (“DMCC”) expected to enter into full force in the Spring 2025. The DMCC will empower the CMA to bring direct enforcement action against companies and to impose fines of up to 10% of global turnover for breaches of consumer law (including by engaging in ‘greenwashing’ conduct’). Therefore, the CMA’s Guidance lays the groundwork for future enforcement action it could take under its new powers. Future fining decisions of the CMA could also trigger defendant companies to challenge such decisions before the English courts which is expected to lead to caselaw as a legal basis for bringing a greenwashing action.
Case law
Greenwashing allegations have also emerged in UK competition litigation between competitor brands. In September 2021, a supplier of gowns made from recycled plastic bottles sued a competitor before the Competition Appeal Tribunal for abuse of dominant market position. In its counterclaim, the Defendant argued that the Claimant’s “100% recycled plastic bottles” claim amounted to fraudulent and/or negligent representation, and that as a result of this unlawful conduct, their lawsuit should be barred by the doctrine of illegality. Greenwashing allegations have also featured in UK class actions in the UK in the wake of ‘dieselgate’.
Germany
Greenwashing and its legal consequences are not yet specifically regulated under German law. Currently, the issue falls under the “Gesetz gegen den unlauteren Wettbewerb” (“UWG”), which governs German competition law.
Section 5, paragraph 1 of the UWG states that “anyone who carries out a misleading commercial act that is likely to cause the consumer or other market participant to make a commercial decision that they would not otherwise have made is acting unfairly”. The key criterion is whether advertising statements are “misleading” for consumers or other market participants in their purchase decisions. A violation of Section 5 UWG may result in obligations to remove the claim and cease and desist orders.
Regarding greenwashing, the German Federal Court of Justice (FCJ) recently ruled that the use of the term “climate neutral” may mislead consumers if the term is not accompanied by additional information explaining its basis. The term “climate neutral” could imply either the reduction of CO2 emissions or their mere compensation, which, according to the FCJ, do not have the same environmental impact. Therefore, this distinction must be highlighted to properly inform consumers and enable informed purchase decisions.
This case law will influence how the fashion sector advertises its products in Germany. Consequently, many companies are now avoiding product-specific sustainability claims and are instead promoting their overall commitment to sustainability.
USA
In the US, enforcement actions addressing “greenwashing” are primarily led by the Federal Trade Commission (“FTC”) and the Securities and Exchange Commission (“SEC”). The FTC brings green claims under the Federal Trade Commission Act and, depending on the industry, under specific sector regulations, such as the Textile Fiber Products Identification Act for the textile sector. The SEC addresses these issues as violations of the Securities Act and the Exchange Act.
Enforcement peaked in 2021-22, prompting the SEC to establish the Climate and ESG Task Force (“ESG Taskforce”) in March 2021, comprising 22 members from its headquarters, regional offices, and enforcement units. Around the same time, the FTC began considering updates to its “Green Guides” to include terms like “organic” and “sustainable”, as well as to expand guidance on claims related to carbon offsets, renewable energy, recyclability, and biodegradability. The “Green Guides”, designed to help marketers ensure their environmental claims are truthful and non-deceptive regarding environmental marketing, were first issued in 1992 and revised in 1996, 1998, and 2012. However, the momentum waned. In September 2024, the SEC quietly disbanded the ESG Taskforce, and the FTC has yet to release its updates to the “Green Guides”. Furthermore, FTC enforcement actions related to green claims have significantly decreased, with zero cases in 2023-24, according to public data.
Australia
While the Australian Competition and Consumer Commission (ACCC) has not issued specific guidance on green claims in fashion, monitoring environmental claims and sustainability is an enduring focus for the regulator, including this priority in its Compliance and Enforcement Priorities since 2022-23. This priority is reflected in work across the ACCC, including in consumer protection, competition enforcement and exemptions, product safety and market inquiries.
In December 2023, the ACCC published guidance on the application of the Australian Consumer Law (“ACL”) to environmental and sustainability claims. “Making environmental claims: A guide for business” sets out the ACCC’s views on good practice for businesses to ensure their environmental and sustainability claims are not misleading. The guidance contains eight principles supported by examples to guide businesses as to what the ACCC views as acceptable or otherwise. Broadly, the examples indicate that the ACCC sees a need for greater specificity in environmental claims and will not tolerate broad brush statements or representations that are only partially true. The guidance follows an internet sweep conducted by the ACCC in October/November 2022 to identify misleading environmental and sustainability marketing claims. The ACCC published its findings in March 2023.
The sweep reviewed 247 businesses and found 57% made “concerning” environmental claims, including using vague or unclear environmental claims; not providing sufficient evidence for their claims; setting environmental goals without clear plans for how these will be achieved and using third-party certifications and symbols in a confusing way.
In publishing its final guidance, the ACCC reissued its previous public warning for businesses to be prepared to substantiate their environmental claims, as false or misleading claims undermine consumer trust and confidence in the market.
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