Investigations have been launched by the Competition and Markets Authority (CMA) into the eco-friendly and sustainability claims made by fashion brands Asos, Boohoo and George at Asda. Tasked with the duty to protect consumers, the CMA have confirmed they won’t hesitate to take enforcement action against those found to be misleading or deceiving the public. This is the beginning of a crackdown on greenwashing – starting with the fashion industry. An effective whistleblowing policy will increase transparency within businesses and help to prevent environmental wrongdoings prevailing into the remit of regulators and the public eye.
The “E” in ESG
The climate crisis and growing expectations from consumers and investors has prompted businesses to focus on their Environmental, Social and Governance (ESG) credentials. The “E” element of these standards has resulted in companies rushing to be the “greenest” or “most sustainable” in their industry. If this is carried out correctly, a company’s reputation can be enhanced, profits boosted and the planet protected as a result.
Unfortunately, several businesses have been found to overstate their environmental credentials and appear more climate friendly and sustainable than they really are. This is known as “greenwashing” and results from marketing efforts being used to produce false or exaggerated claims which lack scientific evidence. For example, many businesses have failed to provide sufficient evidence regarding the full lifecycle of their products in order to substantiate their environmental claims. Both Tesco and Unilever have had ad campaigns banned by the Advertising Standards Authority for this.
Furthermore, the fashion brands are being investigated by CMA to assess whether they have incorrectly categorising products as sustainable, and whether their use of broad and vague labelling fails to provide customers with sufficient information to make ethical judgements.
The Green Claims Code
To combat such deception in the UK, the CMA published the Green Claims Code (the “Code”) in September 2021. The Code provides businesses with guidance on how to ensure their environmental claims comply with consumer protection law. The principles are as follows:
- claims must be truthful and accurate
- claims must be clear and unambiguous
- claims must not omit or hide important relevant information
- comparisons must be fair and meaningful
- claims must consider the full life cycle of the product or service
- claims must be substantiated
In conjunction with the Code, the CMA confirmed it would be carrying out a review of green claims in early 2022. With investigations now underway in the fashion industry, it is essential businesses urgently look inwards and review their environmental claims before they are subject to inquiries.
Importance of Whistleblowing
An effective whistleblowing procedure and Speak Up policy will help to ensure that your company’s ESG reporting is honest and accurate and greenwashing is avoided. If whistleblowers are given the confidence and correct channels to bring their concerns internally, businesses can address misleading claims before they are exposed by stakeholders, regulators, and the public. Transparency leads to best practice. To find out more about how employers can embed whistleblowing procedures within their ESG strategy, attend our specialist masterclass on Whistleblowing and ESG.