Why should the fashion industry pay attention to climate change litigation and upcoming legislative proposals on environmental claims

Brussels - In recent years, many NGOs and citizens brought legal action against governments in the EU and multinationals for either failing to sufficiently reduce their Greenhouse gas (“GHG”) emissions (so-called “climate change litigation”) or for misleading consumers when making environmental or sustainability claims.

While climate change litigation to date mainly concerns governments (see e.g., the Urgenda case initiated against the Dutch government for ineffective action against climate change, included in the source list, Ed.) or multinationals (see, e.g., cases against Shell ordering the company to do more to fight climate change, or to sanction the company for omitting information or providing misleading information to consumers on the climate change risks generated by their activities, see case against ExxonMobil), fashion companies are not exempt from this type of litigation case. Although there has not yet been climate change litigation cases against fashion companies, legal proceedings could be brought in the near future should NGOs or citizens notice that fashion companies mislead them about the effects of their operations on climate change.

Such cases could impact the fashion industry as governments may be subject to sanctions for not setting out strict requirements in terms of recycling or reusability of fashion apparels. In addition, this risk of sanction could also lead governments to adopt strict and stringent requirements that would also apply to the fashion industry and thus directly affect the financial profitability of these businesses.

Importantly, litigation for misleading consumers on the basis of sustainability or environmental allegations made on products, including clothes, are already on the agenda of the courts and authorities in various European countries. We will highlight some of these cases in this article.

Below, we first explain the initiatives from the fashion industry aimed at fighting climate change, then we focus on sustainability claims.

Impact of the Fashion Industry on Climate Change

Environmental changes have a direct impact on the fashion industry. These shifts affect important water sources, pollution levels, as well as agricultural practices that are used in the production of various materials, all of which have a significant impact on ecological balancing of the planet.

Since the repercussions of the environmental effects are tremendous, the fashion industry has committed to the Fashion Industry Charter for Climate Action of the UN. This campaign lays forth 16 pledges to significantly reduce GHG emissions, fostering practices of a sustainable nature, and pushes for legislative changes. This acts as a cornerstone in motivating the fashion industry to navigate its policies towards better ecological decisions for the future.

Fashion businesses are changing abruptly as a result of climate change. The industry faces pressure to change their long-standing norms and act on implementing different production methods. Methods of manufacturing are under scrutiny for their widely recognised contribution to carbon emissions. Particularly, the fashion industry produces 1.2 billion tonnes of GHG emissions annually – more than the emissions of international travel and maritime combined. Estimates indicate that by the year 2030 the industry emissions could increase by more than 60 per cent. In order to mitigate the contribution of fashion to climate change and the impact on the environment, stakeholders must use renewable energy sources and reevaluate their methods of production.

Fashion enterprises face significant challenges related to climate change. The industry is primarily responsible for GHG emissions, water pollution, and resource depletion due to its reliance on resource-intensive practices. This is best illustrated by the fast fashion industry and massive amount of textile waste. Remarkably, this industry is the second biggest user of water; to produce a single cotton shirt, some 700 gallons are needed, or up to 2,000 gallons to produce a pair of trousers. Further, the second-biggest global source of water pollution is the dyeing process, which is essential to the textile manufacturing. The imprint on the environment is highlighted by the fact that the leftover dye ends in the natural water bodies like streams or rivers.

Sustainable practice adaptations are now essential for the survival of successful industries. In order to be sustainable and successful in the long run, the fashion industry needs to adopt environmental practices of a holistic nature along with ethical behaviour. By encouraging ethical behaviour the fashion industry with its sustainable creativity may be more appealing to consumers by simultaneously mitigating its detrimental impact on the planet.

Status of Cases for Misleading Environmental Claims in the Fashion Industry

The fashion industry has already faced numerous cases for misleading environmental claims. Below, we highlight some recent cases in Europe.

In the Netherlands, the Dutch Authority for Consumers and Markets (“ACM”) has found that the fashion company H&M has been wrongfully using the sustainable claims by using the words ‘Conscious’ and ‘Conscious Choice’, without fully explaining the true meaning associated with the description of the ecological benefits from the products. On the same note, the sporting goods chain Decathlon has been found to not specify the environmental benefits from their sustainability label ‘Eco design’. As a consequence, these fashion brands have committed to making donations of EUR 400,000 and 500,000 towards environmental friendly causes in order to make up for their unclear and insufficient sustainable claims.

Fashion company H&M was under scrutiny also by the Norwegian Customer Authority (“NCA”) for misleading practices on the company’s ‘Conscious Collection’ which did not include any legal definition for the words “sustainable”, “green”, “environmentally-friendly”.

Other market regulators, such as the UK’s Competition and Markets Authority (“CMA”) recently announced that as part of a larger investigation into greenwashing it is looking into fashion retailers such as ASOS, Boohoo, and George at the large retail store Asda.The investigation aims to determine whether consumers are being misled by companies using eco-friendly and sustainability claims. Other important factors are being taken into account, such as the type of materials used in the products, lack of clarity regarding fabric accreditation schemes and its target, also the language used in the statement of a broad and vague nature conceiving how environmentally sustainable the products actually are.

The green claims from other fashion companies, such as Mango, Primark, Tesco F1F and Zara with different sustainable claims such as “committed”, “made faithfully”, “join life” are under scrutiny for providing consumers with confusing labels, lack of public information, transitioning to only slightly better materials, and still producing large volume of clothing.

Other fashion companies are under scrutiny for their environmental claims which fall short on the transparency and certification for their textiles such as Japanese clothing brand Uniqlo.In the U.S., cases related to sustainability are on the rise, in the civil case of Lee v. Canada Goose the New York judge denied a motion to dismiss Canada Goose’s lawsuit for allegedly deceiving customers about the ethical source of the fur used in their jackets. The court rules in favor of the plaintiff despite noting that the plaintiff’s allegations were not strong enough but still finding that the company’s promises to be of a misleading nature to their customers.

Different market regulators are publishing advisory opinions on how companies may approach environmental claims. The UK ASA with its report on green claims has given its opinion on the fact that the sustainability declarations are needed to be clear in also taking into consideration the full life cycle of the advertised product unless stated so, or that the sustainable statements are not to be deemed universal if there is a large gap in knowledgeable or scientific opinion.

To combat wrongful environmental claims authorities are investigating one of the most well-known sustainability rating systems of Sustainable Apparel Coalition (“SAC”), specifically Higg Index which measures environmental impacts in the garment production from certain materials, through a joint report from the Norwegian NCA and the Dutch ACM in August 2022. It was concluded that the claims made by the Norwegian traders were not adequately supported by the Higg MSI data. Consequently this could easily be deemed as misleading and against EU law, namely the EU Unfair Commercial Practices. Thus the Norwegian clothing brand Norrøna was prohibited from using this tool as way of making its environmental claims.

Upcoming EU Legislation on Environmental Claims and Anti-Green Washing Practices

The past couple of years, the European Commission has introduced two main legislative proposals to address the substantiation of green claims (“Green Claims Directive Proposal”) and prevent anti-green washing practices (“Anti-Green Washing Directive”).

Green Claims Directive Proposal

The Green Claims Directive Proposal introduces common criteria against misleading environmental claims. It would require companies to respect minimum requirements when substantiating and communicating environmental claims. The requirements would apply to explicit claims, and also seeks to prevent the proliferation of new public and private environmental labels.

In addition, the Green Claims Directive Proposal empowers independent third parties to prove the scientific evidence of companies' green claims. Companies will no longer be allowed to display label or logo from any sustainability schemes. Companies making environmental claims would have to back their claims with scientific evidence which takes into account environmental standards.

Moreover, the Green Claims Directive Proposal no longer allows labels which use aggregate scoring of the product's overall environmental impact. Environmental labels would be further regulated to avoid their proliferation. New public labeling schemes would not be allowed and new private schemes will need to be assessed before being approved.

The Green Claims Directive Proposal has not yet been formally approved at the time of writing, but it is very likely that it be passed into law early 2024.

Anti-Green Washing Directive

The Commission’s Anti-Green Washing Directive amends the Unfair Commercial Practices Directive 2005/29/EC (“UCPD”) and the Consumer Rights Directive 2011/83/EU to empower consumers for the green transition through enhanced protection against unfair practices, and better information.

In particular, Anti-Green Washing Directive amends the UCPD to include in the list of misleading and prohibited unfair commercial practices: “making generic, vague environmental claims,” and displaying a voluntary sustainability label not based on third party verification scheme or approved by public authorities.

The European Parliament and Council of the EU have reached an agreement on the content of the Anti-Green Washing Directive. The Directive should be published in the EU Official Journal in early 2024.

Future environmental challenges for the fashion industry

The fashion industry will face important risks and challenges in the near future. The strengthening of the requirements on environmental claims will impact the companies active in the fashion industry considerably, while already being subject to lawsuits in various European countries. Fashion companies will need to ensure that the labels and claims they display on their clothing apparels are backed by scientific evidence to ensure any risks of legal prosecution. In addition, while slightly more hypothetic, they may have to face stricter requirements in terms of recycling and reusability from the countries in which they sell their products, due to the increasing climate change litigation.

Sources:
- Urgenda Foundation v. State of the Netherlands Climatecasechart.com (Climate Change Litigation Database) filing date 2015
- Milieudefensie et al. v. Royal Dutch Shell plc. Climatecasechart.com (Climate Change Litigation Database) filing date 2019
- Exxon Mobil Corp. v. Office of the Attorney General Climatecasechart.com (Climate Change Litigation Database) filing date 2016
- Matthew Hilbberd, ‘Key challenges for the fashion industry in tackling climate change’, Studies in Communication Sciences 18.2 (2018), p.383 and pp. 393-394.
- Business Insider article ‘How Fast Fashion Hurts the Planet Through Pollution and Waste’ by Morgan McFall-Johnsen, 21 October 2019
- United Nations Climate Change 'Fashion Industry, UN Pursue Climate Action for Sustainable Development', 22 January 2018
- ACM publication Commitment decision for H&M regarding sustainability claims, 13 September 2022
- Business Human Rights Resource Centre article ‘Netherlands: H&M and Decathlon to remove sustainability labels from products following investigation by regulator into potentially misleading claims’ , 14 September 2022
- Gov.UK CMA 'ASOS, Boohoo and Asda: greenwashing investigation', 26 January 2023
- Greenpeace blog ‘Fashion greenwash: how companies are hiding the true environmental costs of fast fashion', 24 april 2023
- Earth.org '5 Fast-Fashion Brands Called Out for Greenwashing' by Martina Igini, 24 August 2022
- Proskauer on Advertising Law 'United States District Court Southern District of New York against Canada Goose Us, INC.', filed June 2021
- Asa.Org.uk The Cap Code Environmental Claims
- ACM & Norwegian Consumer Authority report ‘Guidance to the sustainable apparel coalition environmental claims in marketing towards consumers based on the Higg msi’, 5 October 2022
- EU Unfair commercial practices: https://eur-lex.europa.eu/EN/legal-content/summary/unfair-commercial-practices.html
- European Commission ‘Green Claims Directive Proposal’ 22 March 2023: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52023PC0166
- European Commission ‘Anti-Green Washing Directive’, 30 March 2022: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0143&qid=1649327162410
- European Commission ‘Unfair Commercial Practices Directive’, 11 May 2005: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02005L0029-20220528
- European Commission ‘Consumer Rights Directive’ 25 October 2011: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:02011L0083-20220528