AUTHORITY INVESTIGATION INTO SHEIN
On 25 September 2024, the Italian Competition and Market Authority (“AGCM” or the “Authority”) launched an investigation against the Chinese fast-fashion giant Shein over alleged misleading or omissive environmental messages contained in its Italian website (managed by the Irish company Infinite Styles Services CO. Limited, which is formally the party of the investigation).
More in detail, the Authority holds that Shein’s use of “generic, vague, imprecise” claims over the quality of the products and their environmental impact and recyclability aimed at creating the impression that the garments and manufacturing are sustainable might mislead consumers.
The Authority also notes that the sustainability messages and efforts that Shein passes are at odds with its nature as a “fast or super-fast fashion” brand, which drops on the market hundreds of new cheaply made items each week, and the greenhouse gas emissions reported in the ESG reports of 2022 and 2023 (which increased of 80% from 2022 to 2023).
GREENWASHING: CURRENT AND FUTURE REGULATION
In the context of a growing consumers’ awareness towards climate change and related issues, regulators are making serious efforts to tackle greenwashing. In fact, by the next couple of years, alleged unreliable and unsubstantiated environmental messages might be condemned under Directive (EU) 2024/825 as regards empowering consumers for the green transition through better protection against unfair practices and through better information entered into force on 28 February 2024, but which will be applicable starting from 27 September 2026.
Directive (EU) 2024/825, by amending Directive 2005/29/CE and Directive 2011/83/EU, inserts among misleading actions:
- any false, untruthful or deceiving information on the environmental characteristics of a product and its circularity aspects, such as durability, reparability or recyclability;
- making an environmental claim related to future environmental performance without clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan that includes measurable and time-bound targets and other relevant elements necessary to support its implementation, such as allocation of resources, and that is regularly verified by an independent third party expert, whose findings are made available to consumers;
- advertising benefits to consumers that are irrelevant and do not result from any feature of the product or business;
and among unfair commercial practices:
- displaying a sustainability label that is not based on a certification scheme or not established by public authorities;
- making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim;
- making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business;
- claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions.
In the framework of strategic initiatives and action policies adopted by the European Union on greenwashing and circular economy, Directive (EU) 2024/825 will be complemented by a Directive on Green Claims, which will provide more specific rules on environmental claims. The Directive on Green Claims is still a proposal, but we gave deeper preliminary insights on it here.
THE UK PRECEDENT IN THE FASHION SECTOR
The Italian Authority followed the steps of the British Competition Markets Authority (“CMA”), which earlier this year closed an investigation launched into three major fashion retailers (Asos, Boohoo and Asda) about their eco-friendly claims. The three businesses signed formal agreements to use only accurate, specific and clear green claims. The undertakings are listed here.