Boohoo escapes legal action over green claims, but could face a cost

The Competition and Markets Authority (CMA) has concluded its probe into green claims made by a range of retailers, including Manchester-based online fast fashion brand, boohoo.

It said the undertakings it has secured commit ASOS, boohoo and George at Asda – which together make more than £4.4bn annually from UK fashion sales alone – to change the way they display, describe, and promote their green credentials, meaning millions of customers can expect to see clear and accurate green claims.

The move comes after the CMA launched an investigation into ASOS, Boohoo and George at Asda to scrutinise their fashion ‘green’ claims in July 2022, having identified concerns of possible greenwashing during its initial review of the fashion sector.

Sarah Cardell, CMA chief executive, said: “Following our action, the millions of people who shop with these well known businesses can now have confidence in the green claims they see.

“This also marks a turning point for the industry. The commitments set a benchmark for how fashion retailers should be marketing their products, and we expect the sector as a whole – from high street to designer brands – to take note and review their own practices.”

Bosses at boohoo welcomed the CMA’s response, saying: “We are pleased to announce that the CMA has now completed its investigation and has not found boohoo to have breached any consumer protection law. The investigation has, therefore, not resulted in any legal action being brought against boohoo.

“Throughout this 20-month process, the group has worked closely with the CMA to provide it with necessary information and disclosure, and has voluntarily agreed to enter into undertakings with the CMA.”

The boohoo statement added: “The group has not intentionally misled customers and is committed to best practice and providing customers with accurate information on the products they buy while delivering progress on its sustainability strategy. The group has found the investigation to be insightful and hopes the undertakings will provide further guidance to the industry.”

John Lyttle, CEO of boohoo group, said: “I’m pleased that we have been able to reach an agreement with the CMA following its investigation into environmental claims.

“Along with the other retailers who have been a part of this process, we have chosen to sign a set of undertakings that will provide some helpful clarity on how the CMAs green claims code operates in practice.

“We remain committed to working with others to find collective solutions to the shared challenges of sustainability within the fashion industry.”

However, Russ Mould, investment director at Manchester investment platform, AJ Bell, believes boohoo has not got off ‘scot free’.

He said: “It’s been a tough time for online fast fashion over the last couple of years and boohoo’s reputation has been buffeted by ethical issues around its supply chain and ASOS by poor inventory management and weak cash flow, so investors will be taking any small win they can.

“And they got that win with news a CMA probe into greenwashing conducted by both companies (and Asda’s George range of clothing) has not found they breached consumer protection law.”

He added: “Look beyond the headline and it’s clear the CMA has not let them off scot free. Some of the measures agreed with the competition authority could result in extra costs, which could be hard to absorb for companies operating at razor-thin margins, and they will have to back up any nods to sustainability in labelling and marketing.

“This could harm their ability to appeal to an increasingly eco-conscious young adult demographic which makes up their core market.

“These companies enjoyed their time in the sun during the pandemic, but they still face huge challenges to remain relevant and profitable in a post-Covid world.”