Gucci, Bottega Veneta, Saint Laurent, and Balenciaga’s owner Kering appears to be looking to get ahead of rising attention to – and enduring uncertainty about – sustainability-centric marketing by issuing guidelines to enable the brands under its ownership umbrella (and presumably, the parent company, itself) to avoid greenwashing-related legal issues and public relations backlash. Amid wide-ranging “accusations of greenwashing” (i.e., the practice of making false or unsubstantiated claims in order to make a company and/or its products appear more “sustainable” or environmentally friendly than they actually are) and corresponding “criticism on social media,” which have “the potential to damage corporate and brand reputations,” Kering has “outline[d] the current regulatory setting for communications about sustainability-related products” to help its brands to make appropriate claims.
In its newly-released “How to avoid greenwashing guide,” which comes as part of its fifth suite of “Standards,” Kering advises its brands to “avoid broad, generic” sustainability-centric statements, such as “green,” “eco-friendly,” and “environmentally-friendly,” and to refrain from claiming that they – or their products – are “carbon neutral,” and instead, focus on “emission reduction efforts and contribution to offset programs separately.” Beyond that, the French luxury goods conglomerate alerts its brands that in order for a sustainability-centric claim to be above-board, the statement must be “true and relevant, clear and unambiguous, fair and without exaggeration, substantiated and verifiable, not over-using visual natural or nature-like elements, and putting forward certifications properly.”
Reflecting on the need for guidelines, Kering states in its in-house release that greenwashing is “a serious obstacle to achieving a truly sustainable transition in the fashion industry and in the wider world as it prevents consumers from making informed purchasing decisions. Furthermore, it is also a form of unfair competition that can harm companies that communicate their sustainability efforts in a proportionate, measurable, and fair way.”
Rising Stakes
The move by Kering to shore-up environmental messaging makes sense for at least a couple of reasons. Primarily, Kering has been at the forefront of sustainability efforts in the fashion space, putting forth sustainability targets in 2012, for example, and vowing to reduce the carbon emissions, as well as waste and water use throughout its supply chains by 25 percent by 2016. As recently as 2019, Kering announced that its “entire Group will become carbon neutral within its own operations and across the entire supply chain,” stating that “as a next step in its long-term commitment to sustainability, Kering will offset the Group’s annual Greenhouse Gas emissions from 2018 on top of all efforts to first avoid and then reduce them.”
All the while, the group’s management has not shied from taking on the topic, with chairman and CEO François-Henri Pinault, for instance, telling the New York Times in 2017, “We’ve put in the time creating a framework for sustainable business practices, as well as ways in which anyone can measure progress,” pointing to Kering’s environmental profit and loss methodology, a model that “measures and monetizes the environmental impact of business activities across the entire supply chain.”
Such willingness by Kering and its brands to publicize their efforts in the realm of sustainability/ESG realm (as opposed to keeping them under warps) could, at least in theory, give regulators more material to take issue with, making cross-brand awareness about and adherence to the rules and regulations that much more critical.
At the same time, Kering’s move to adopt sustainable marketing-focused rules seems apt, as companies are simultaneously facing increased demand for environmental consciousness and heightened levels of scrutiny from consumers, investors, and regulators, alike. While companies’ climate and environment-related claims have long been met with relatively lax stances from regulation and enforcement perspectives, that is changing. The U.S. Securities and Exchange Commission, for example, has proposed a rule mandating that publicly-listed companies disclose emissions that are “material” or that are relevant to companies’ emissions targets, among other things, thereby, potentially upping the ante for companies to make good on their pledges. Elsewhere in the regulatory space, the Federal Trade Commission (FTC”) is revisiting its “Green Guides,” which are aimed at helping marketers to avoid making misleading environmental claims, in a move that is expected to provide more emphasis on things like carbon neutrality and carbon offsets.
Outside of the U.S., regulators and advertising watch dogs are similarly on high alert. Just last month, the Netherlands Authority for Consumers and Markets accused H&M of engaging in greenwashing by making “unclear and insufficiently substantiated sustainability claims,” including its use of terms like “ecodesign” and “conscious,” prompting the Swedish fast fashion giant to agree to “adjust” or refrain from making unsubstantiated sustainability claims on – or in connection with – its offerings in order to “minimize the risk of misleading practices involving sustainability claims.” Before that, in a decision on August, the Advertising Ethics Jury of French advertising regulator ARPP held that an ad promoting “recycled” materials sneakers from adidas ran afoul of advertising rules, which require, among other things, that advertising messages are accurate and not misleading to consumers.
In addition to increasing attention from regulators and their growing appetite for enforcement when it comes to sustainability-centric marketing and climate-related claims, private plaintiffs are beginning to take on companies over their environmental, social, and governance (“ESG”) and climate claims. “Private-party suits against companies making climate-related, sustainability, and other ESG claims appear to be increasing,” Winston & Strawn’s Jonathan Brightbill and Jennifer Roualet assert, noting that plaintiffs are pursuing companies on claims relating to misrepresenting and breach of warranty, unfair business practices, and securities fraud. And still yet, companies face risks in extra-legal scenarios, namely, in the event that greenwashing claims find traction among consumers on social media.
Against this background, companies’ marketing and legal teams are dedicating greater attention to how brands can tout environmental credentials, while remaining within the bounds of the law.
Going Forward
“Despite the increasing scrutiny of environmental representations, many questions remain unresolved,” according to Vedder Price PC’s Brett Heinrich, Jason Sobelman, and Henrietta Worthington. With this in mind, companies are increasingly looking to adopt guidelines of their own to identify relevant issues, and avoid legal and PR missteps, and guidance from various sources is worth noting.
The Competition and Markets Authority (“CMA”) in the United Kingdom, for one, has provided some useful insight by way of a “greenwashing” guide of its own, centering on six key principles that businesses must adhere to in connection with their marketing/advertising operations. Specifically, the CMA mandates that in regards to sustainability/ESG: “(1) Claims must be truthful and accurate; (2) Claims must be clear and unambiguous; (3) Claims must not omit or hide important relevant information; (4) Comparisons must be fair and meaningful; (5) Claims must consider the full life cycle of the product or service; and (6) Claims must be substantiated.” (In order to observe these objectives, the CMA recommends that companies adhere to a 13-step checklist, which can be found here.)
In the U.S., even before the various agencies’ new rules/revisions come into force, it is worth noting that falsified and/or misleading claims, including about net-zero strategies, for example, fall within the purview of regulators, such as the FTC. Section 5 of the FTC Act gives the agency authority to regulate unfair and deceptive trade practices, including misleading advertising claims that are material to a consumer’s purchasing decision. Additionally, the FTC requires advertisers to possess “a reasonable basis” for any objective assertions prior to the dissemination of such claims in advertising, which should typically consist of “competent and reliable” scientific evidence in the context of environmental claims.
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