A report from Fordham University’s Gabelli School of Business suggests that interest among U.S. consumers in labels that highlight products’ “sustainable” attributes – and about such “sustainable” attributes more fundamentally – is mixed. Surveying a sample of 500 consumers in the United States about how fashion brands could provide information on Environmental, Social, and Governance (“ESG”) efforts, including via labels on their garments and accessories, Gabelli’s Responsible Business Coalition found that just 13.1 percent of consumers indicated that they were “very interested” in using ecolabels to help guide their fashion purchases, while approximately 50 percent of consumers surveyed indicating “some level of interest” in ecolabels, and almost 18 percent indicating that they had “no interest at all.” 

Setting the stage in the report it released this summer, the Responsible Business Coalition (“RBC”) states that companies – including those in the fashion space – are “being called upon to be both innovative and socially innovative to achieve a sustainable, responsible future,” with the United Nations Sustainable Development Goals, in particular, “calling on companies to adopt sustainable and socially responsible policies to solve systemic societal and environmental issues such as accelerated climate change, pollution, and inequality.” Such sustainability-centric pushes from regulators and intergovernmental organizations like the UN, paired with research that consistently shows that “a significant increase in the public’s concern for environmental and systemic social issues,” have prompted (at least some) brands to focus on “making their products more sustainable and socially conscious.” 

Against this background, the RBC sought insight into “the most effective means for brands to communicate [their ESG efforts] with consumers” – with an emphasis on the use of labeling. Among the top-line takeaways is that while approximately half of the consumers surveyed indicated “some level of interest” in ecolabels, “a large segment of customers” (almost 50 percent) does not consider the inclusion of ecolabels to be particularly valuable tool when it comes to helping them decide what garments and/or accessories to buy. The RBC notes that interest in fashion ecolabeling is significantly impacted by age, with older consumers being far less interested in ecolabels than are younger consumers, and the most interested consumers falling in the range of 25 to 44 years old. 

Consumers’ level of education also significantly impacts their interest in fashion ecolabels, the RBC determined. “Specifically, the greater the level of education post high school, the greater the interest: Consumers with only a high school degree have the lowest level of interest. By contrast, those with degrees post Bachelor’s (e.g., Master’s, Ph.D., JD, MD, etc.) had the highest level of interest.” Also, the survey results revealed that where consumers live – and their employment status – also impacts their interest in ecolabels. In short: The RBC’s findings indicate that ecolabeling is “most relevant for younger, college educated, employed, urban consumers.” 

Assuming brands were to start making use of labels that identify the ESG elements of their operations and output, nearly half (46 percent) of the consumers surveyed by the RBC indicated that “recyclability” was an issue of importance to them. This was followed by human rights, which was important to 39 percent of consumers, while chemical usage, animal welfare, and material usage were each selected by 33 percent of surveyed consumers. Information regarding a firm’s carbon footprint was important to 31 percent of consumers surveyed, and finally, one in five (20.7 percent) of consumers surveyed showed interest in information about companies’ diversity and inclusion efforts. 

Like its findings regarding consumers’ overall interest in brands adopting ESG-centric labels, one in five consumers (20.9 percent) indicated that “none of these information options would be important in their decision making.” 

When asked to rank the ESG attributes that they believe are the most important for fashion brands to address and inform consumers about, one-third survey participants listed “recyclability” and “human and labor rights” in their “Top 3.” “Material composition” was among the Top 3 for 24 percent of respondents, followed by “animal welfare” and “chemical usage” (23 percent of respondents put them in their Top 3), and carbon footprint (22 percent). Finally, less than 15 percent of consumers surveyed listed “water usage,” “diversity and inclusion,” and “employee education” in their Top 3 priorities for companies. 

Taken as a whole, the RBC states that these results indicate that eco-conscious fashion consumers may, in fact, want easy access to garments’ sustainability credentials, and that their “first priorities are knowing how to recycle their clothes, and that they can be comfortable that people were treated fairly in the creation of their garments.” As for how consumers want to access such information, the majority of survey participants (65 percent) pointed to ecolabels attached directly to the products that they are considering purchasing as ideal, followed by indication via “a website icon or a website filter for sustainable products.” This is distinct from QR codes, for instance, which were the “least desired ecolabeling option” with only one in five consumers indicating interest. 

The RBC’s findings come as a number of big-name brands have opted to cease their use of the Higg Materials Sustainability Index (“MSI”), a suite of tools aimed at helping companies to measure – and make information available to the public about – the environmental impact of their offerings, in the wake of allegations of greenwashing. The controversial Higg MSI is one of many certifications available for brands to calculate and tout the sustainability of their wares in light of rising consumer concern over climate change. A slippery slope, “Certification in general is sort of this false promise, and it is this license to greenwash,”  George Harding-Rolls, a campaign manager at not-for-profit Changing Markets Foundation, told Quartz, noting that “certification programs like the Higg Index” – and other labeling initiatives – often trivialize the amount of change that the fashion industry needs to take to become sustainable.” 

Prior to the most recent round of pushback, Allbirds landed on the receiving end of a false advertising lawsuit last year for allegedly failing to live up to the claims that it makes in its sustainability-centric marketing, including ones about the carbon footprint of its popular footwear, which it measures using a proprietary life cycle assessment tool and the Higg MSI. While plaintiff Patricia Dwyer took issue with the footprint-measuring tool, arguing that its calculations are based “on ‘the most conservative assumption for each calculation, skewing the calculations in its own favor,’ so [Allbirds] can make more significant environmental claims,” a New York federal court tossed out the case this spring.

In examining Allbirds’ environmental impact claims, Judge Cathy Seibel of the U.S. District Court for the Southern District of New York stated in April that Dwyer’s “criticism [is] of the tool’s methodology,” not with Allbirds’ statements about its products, thereby, letting the sneaker-maker off the hook.

Shoppers once selected products based simply on price or brand, but now attributes such as whether goods are “sustainable,” “climate-friendly,” “green,” and “eco-friendly” are readily becoming part of the consideration. The latest IAG New Zealand Ipsos poll found, for example, that while climate change is “not the top concern for the public currently, more than half [of survey respondents said that they] worry about it regularly, including about the impacts of climate change that we are already seeing at home and abroad.” At the same time, an IBM survey found that more than 2 in 3 global respondents say that “environmental issues are significantly (very or extremely) important to them personally,” and 84 percent consider “sustainability” to be important when choosing a brand.

Despite prevailing attitudes of consumers to prioritize sustainability and environmental good, research continues to show that few consumers who report positive attitudes toward eco-friendly products actually follow through with their wallets and pay more for “sustainable” goods, which may help to explain the enduring demand for fast fashion and other mass-market goods. 

Green, eco-friendly, climate-friendly products — confused?

With such sustainability concerns in mind, it is hardly surprising that a growing number of brands are flooding the market with very-specifically-marketed goods. For instance, use of the word “green” is applied broadly to almost everything related to benefiting the environment, from production and transportation to architecture and even fashion items. “Eco-friendly” – which is not quite so broad and defines products or practices that do not harm the Earth’s environment – is slapped on everything from beauty goods to dishwashing soaps. Meanwhile, “climate-friendly” is used to define products that reduce damage specifically to the climate. 

All these terms – most of which lack legal definitions and which are used interchangeably by brands – are used in labelling to make us feel good if we buy products claimed to minimize harm to the planet and the environment. Some brands are even moving beyond simply eco-friendly and now seek to claim their products are “climate-neutral.”

Who says it is up to standard?

While companies are increasingly using environmental claims to appeal to consumers, they also attract greater scrutiny. Concerned about allegations of greenwashing – i.e., claiming that a product is “sustainable” when it is not or that it is “greener” than it actually is, many brands are turning to organizations, such as Climate NeutralFoundation Myclimate, and members of the Global Ecolabelling Network, to legitimize their claims, and thereby, avoid large scale public relations scandals. 

For example, the climatop label, as developed by Myclimate, certifies products that generate significantly less greenhouse gas than comparable products. The carbon footprints of the certified products are based on international standards (ISO 14040) and verified by an independent expert. Environmental Choice New Zealand is the official environmental label body that awards certificates and lists environmentally friendly products for green homes or businesses. Products must meet similar standards (ISO 14020 and ISO 14024). Good Environmental Choice Australia is a similar organization.

Third-party certifications may help brands to navigate this space, but as indicated by the widespread pushback against the Higg Index (including a Norwegian Consumer Agency’s move to take issue with H&M’s use of the standard to rate environmental and social sustainability throughout the supply chain, arguing that the index was insufficient to support its environmental claims), such certifications are not without issue.

A willingness to pay more for “sustainable” products

For years, researchers have examined climate-oriented consumption to see if it actually wins consumer support. Reports, such as Nielsen Insights, suggest the majority (73 percent) of people would change their consumption habits to reduce their impact on the environment, and almost half (46 percent) would switch to environmentally friendly products. But these results should be interpreted cautiously. As U.S. psychologist Icek Ajzen wrote, “Actions … are controlled by intentions, but not all intentions are carried out.” 

Despite environmentally-friendly sentiments from large swathes of consumers (and putting inflationary pressures aside), such concern about the environment does not readily translate into the purchase of “green” products. 

Commercial research reveals that 46 percent of consumers are more inclined to buy a product if it is “sustainable” or “eco-friendly,” but nearly 60 percent are unwilling to pay more money for that “sustainable” or “eco-friendly” product. Meanwhile, academic research has consistently identified this gap between purchase intentions and behaviors. Regardless of environmental concern and the positive attitude of customers towards sustainability and green products, it is estimated the market share of green products will reach only 25 percent of store sales by 2021. 

Ultimately, the research that evaluates consumers’ willingness to pay more for green products has been mixed. For example, one study found Spanish consumers were willing to pay 22–37 percent more for green products, but Japanese consumers were only willing to pay 8–22 percent more for green products. 

From procuring raw materials to shipping the final product, almost all steps of the manufacturing and production process of eco-friendly products cost more than traditional products. There are several reasons for this. Sustainable materials cost more to grow and manufacture, reputable third-party certifications add further costs, and using organic materials is more expensive than alternatives, such as mass-produced chemicals. Simple economies of scale also impact price. While the demand for such products remains low, the price remains high. More demand would mean more production and lower unit price costs. As economists say, as price lowers, our willingness and ability to buy an item increase. 

The nudge to change behavior

In a free market economy, it is very difficult to force people to pay more for products. But brands can “nudge” consumers towards more eco-friendly products. Nudge theory is used to understand how people think, make decisions and behave. It can be used to help people improve their thinking and decisions. 

Studies show eco-friendly logos and labels can be used to nudge consumers toward sustainable fashionfood consumption and eco-friendly offerings. So, while not all consumers will pay more for green “climate-friendly” products despite the best of intentions, we can slowly nudge them to make better choices for the planet.

Gary Mortimer is a Professor of Marketing and Consumer Behavior at Queensland University of Technology. (This article was initially published by The Conversation.)

Nike is among the highest-rated names on the latest version of a ranking of companies by the “completeness of [their] withdrawal” from the Russian market, while names like Alibaba, Diesel, Tom Ford, and Armani allegedly score poorly. After first compiling and publishing a ranking of companies’ responses to the Russian invasion of Ukraine (and the subsequent levying of sanctions by governments) in February, the Yale Chief Executive Leadership Institute (“CELI”) has released an updated ranking this month of what it claims is the current state of companies’ operations, with over 1,000 companies “voluntarily curtail[ing] operations in Russia to some degree beyond the bare minimum legally required by international sanctions,” but some companies – including fashion/luxury names “continu[ing] to operate in Russia undeterred.” 

A the top of the September 14 ranking are companies that CELI characterizes as “totally halting Russian engagements or completely exiting Russia.” These companies largely consist of “financials,” “materials,” information technology,” and “industrials” firms (the latter of which includes management consultancies, law firms, etc.), but also extends to the likes of Nike (which is “exit[ing] Russia,” per CELI), Etsy (“deactivate[d] all listings from Russian sellers”), Ikea (“fold[ed] up Russian presence”), French cosmetics brand L’Occitane (“exit Russian operations”), off-price retail group TJX Cos. (which “divest[ed] its Familia subsidiary”) and French automaker Renault (“sold Renault Russia; transfer[ed] Moscow factory to city government and partner for local brand production”), among others. 

According to the CELI’s data, a total of 315 companies are included in this category, which carries with it an “A” rating. 

At the other end of the spectrum are companies that CELI labels as “continuing business-as-usual in Russia,” i.e., companies that are “defying demands for exit or reduction of activities.” Included in the 241 companies that are labeled as such: Chinese sportswear company Anta Sports and Chinese e-commerce giants Alibaba and JD.com. A handful of Italian fashion names are assigned an “F” rating, including Benetton, which has allegedly “continue[d] operations in Russia;” Calzedonia, which has “continued sales in Russia;” Diesel, which is “still operating in Russia [but has] not disclosed” that, per CELI; and Giorgio Armani, which is “still operating in Russia.” 

A snapshot of CELI's ranking

French fashion company Lacoste is also “still operating in Russia,” per CELI, as are U.S.-headquartered Quiksilver, which allegedly has “online sales still running,” and Tom Ford, which CELI claims is “still operating in Russia; not disclosed publicly.” (It is noting that Tom Ford’s operations are almost certainly limited to those of its Italian eyewear licensee, Marcolin; the company has not yet responded to a request for comment.)

Armani said in a statement that it “does not operate directly in Russia and the shops operating in the country with the brands of the group are managed by independent franchisees,” which is the norm for most brands when it comes to their presence in the Russian market. The company asserted that it maintains “strict compliance [with] the sanctions regime issued by the EU.” Diesel similarly revealed that it does not maintain brick-and-mortar stores in Russia and that it has ceased its e-commerce sales there. The Italian brand “stressed that … it was respecting the sanctions while noting that they do not apply to products selling for less than €300,” according to The Economist’s Italy correspondent John Hooper. 

Meanwhile, the likes of cryptocurrency exchange platform Coinbase (which “block[s] certain illicit Russian accounts but not all”); Fortnite-creator Epic Games (which has “stop[ped] in-game commerce for Russia;” Gap (whose “online sales [are] running; stopped shipments to franchisees in Russia”); Skechers (which has “suspended shipments to Russia but online sales continue”); and Mayhoola-owned Valentino (which has “suspend[ed] online sales; no information about on-site sales”) have been assigned a “C” grade “for scaling back some significant business operations but continuing some others.” (170 companies have been given a “C” rating by CELI.)

The highest number of companies (499) are situated within the “B” tier, which refers to companies that are “temporarily curtailing most or nearly all operations while keeping return options open.” This is the category where most fashion/luxury brands – such as Chanel, Gucci and Balenciaga-owner Kering, Louis Vuitton and Dior parent LVMH, Hermès, Prada, Moncler, Rolex, Ferragamo, Canada Goose, ACNE, Ganni, and Ralph Lauren, among others – are listed. Fast fashion companies H&M (which is “winding down business entirely”), Boohoo Group, and ASOS are included within this camp, as do retailers like Farfetch and Yoox, and mass-market names like adidas, Crocs, Ugg-owner Deckers, Levi Strauss, Puma, Northface and Supreme owner VF Corp., and Victoria’s Secret, the latter of which has “stopped exports to Russia, paused sales in Russia by franchisers, [and] suspended online sales.” 

A snapshot of CELI's ranking

A Balancing Act

The balance between leaving the Russian market entirely and continuing to operate there/opting to provide goods/services that fall within the threshold allowed by sanctions (Italian fashion companies are permitted to export goods whose wholesale price is under 300 euros to Russia) has proven to be a tricky one from companies. Making a clean break for Russia has obvious benefits from a logistical perspective, along with benefits from a public relations perspective, especially given the increasingly ESG-specific stance that younger pools of Western buyers have taken in recent years; it also enables companies to more easily ensure that they are complying with various sanctions – which have, in many cases, been modified over time – thereby, reducing their potential exposure to criminal and civil penalties. 

In the short term, the rush of companies to remove themselves from the Russian market – at least for the time being – “will cost companies,” including fashion brands, “surprisingly little,” Hooper asserts. (For some context, French luxury goods titan LVMH, for instance, has typically generated less than 2 percent of annual revenue from Russia, while Cartier-owner Richemont has derived roughly 3 percent of its annual sales from the country in the past. It is worth noting that such impacts are not limited to sales that occur in Russia, as no shortage of deep-pocketed Russian consumers already do their luxury shopping outside of the country in markets like London and Dubai, along with Milan and Paris.)

Not without drawbacks, attempts by companies to walk away from their operations in Russia have likely proven complicated and costly. Beyond that, such moves could put them at risk of facing legal consequences, including lawsuits waged by consumers and companies, alike. As of April, at least two class action lawsuits had been filed against Western companies in the wake of their moves to halt operations in Russia. Moscow-based firm Chernyshov, Lukoyanov & Partners filed suit on behalf of pools of Russian consumers against Apple and Netflix, accusing the two companies of running afoul of consumer rights laws. (Apple has “suspend[ed] all official site sales; turn[ed] off select apps and services,” per CELI, getting it a “B” rating, while it found that Netflix – which has an “A” rating – has “suspend[ed] service in Russia.”)

In connection with the lawsuits, as first reported by Reuters, the plaintiffs are seeking 60 million rubles ($998,750) in moral damages from Netflix users and 90 million rubles ($1.5 million) from Apple for reducing its devices’ functionality and value. Those figures are likely to increase as more individuals join the pool of plaintiffs, per Reuters. 

At the same time, Moscow-based company Talmer reportedly filed suit against Dell (which CELI says has “suspend[ed] all shipments to Russia”) for allegedly cutting off technical support for VMWare cloud computing services. 

It has been a difficult few years for those in business. Lockdowns shut down whole industrial sectors worldwide, turning profitable businesses into loss-making ones, while a lot of smaller businesses went under entirely. Many companies have been hoping for a return to some type of normality after the enduring impacts of the COVID-19 crisis. However, there are strong signals that a resumption of how things were is not on the cards any time soon, as the world appears to have entered into an age of accelerating grand crises.

Even before the pandemic hit in early 2020, the climate crisis was increasingly disrupting the world (and the companies operating it in) through extreme weather events. Then, just as some countries had declared their war against COVID to be won, the invasion of Ukraine has not only reshuffled global geopolitics, but also led to a dramatic increase in energy and food prices, having big knock-on effects on a whole host of other sectors. And still yet, as of this summer, brands, including those in the robust luxury space, were cutting down their expectations for the all-important Chinese market in light of the latest wave of COVID lockdowns. (“Forecasted growth for luxury and premium consumer brands was cut by 15 percentage points, and down nearly 25 percentage points for luxury brands alone,” CNBC reported in June, citing the results of an Oliver Wyman survey.)

One day there may be a time after COVID, after the Ukraine war, and even after the climate crisis, but there is unlikely to be a point of general stability any time soon. Humanity is pushing environmental limits to breaking point, risking further crises – whether in terms of disease, conflict, or natural disasters. Businesses, therefore, need to shift how they operate. The most drastic example of such action to date comes by way of Patagonia’s recent restructuring, which saw founder Yvon Chouinard and his family donate their $3 billion ownership stake in the privately-held outerwear-maker in order to “preserve the company’s independence and ensure that all of its profits are used to combat climate change and protect undeveloped land around the globe.”

Short of engaging in an unprecedented shift in ownership, there are things that companies and their leaders can do to respond to current crises, become better prepared for future crises, and address their own role in generating these crises in the first place. Here are three types of business models companies should start adopting now …

1. Respond to Crises

What is needed are reactive business models that can respond to crises at hand. Such adaptability will naturally have a survival element, in which organizations do whatever is necessary to mitigate negative effects on themselves. This means aligning companies’ management practices with the “new normal” after the crisis, instead of holding on to the old normal from before. Where appropriate, such models should also have a crisis-mitigation element, addressing the wider negative effects of the crisis at hand where they can.

It appears fossil fuel behemoths such as Shell and BP might be starting to do just that. Having long been under attack for knowingly contributing to the climate crisis and counteracting shifts to more sustainable energy systems, they appear to now be adapting to crisis forces. These forces include, most notably, the global trend towards phasing out fossil-fuel vehicles. As such, these companies have begun to transform key aspects of their business. A first move, for example, seems to be repurposing their petrol station operations into an electric vehicle charging infrastructure. As they ride the waves of the climate crisis, we can expect to see them make many disruptive greening changes like this.

2. Be Ready for Future Difficulty

Businesses also need to move from stability-based business models to accepting that the business reality is now one characterized by volatility, uncertainty, complexity and ambiguity. Value propositions encompass the benefits a business offers, for example to its customers, employees, and the community. Building business models for this new world means establishing value propositions for companies that are fit for the long run, that can morph into all kinds of crisis scenarios. It also means being agile and quick to adjust. 

One form this could take, for instance, is for a business to offer products and services that address timeless and fundamental needs like health, food, or security, rather than short-lived superficial wants like those related to fast fashion or the latest technological fads. A good example of such a business model is that of Chinese electronic goods corporation Haier, which has  explicitly tuned in to an ever-changing world, aiming to deliver “products that respond to the constantly changing needs of the modern home.” For instance, Haier responded to Asia’s air pollution crisis by developing an integrated air conditioner and air purifier.

Alongside this, Haier employs its unique “RenDanHeYi” (or 人单合一), which freely translates to “one single person in unity,” way of working, making it a collective of smaller, semi-autonomous companies that gives both individual freedom and collective responsibility to self-organized micro-entrepreneurs. This makes Haier a fluid, agile and resilient organization. By operating as a network of micro-enterprises, each of which works closely with customers to respond to their changing needs and situations, the business can evolve more easily as each new crisis plays out. Because of these features in their business model, Haier has done exceptionally well during and after the COVID crisis.

3. Help Prevent Crises of Tomorrow

Finally, businesses can better set themselves up for the future by adopting models that specifically mitigate or even prevent future crises. While COVID, the Ukraine crisis, and climate change are still ongoing problems, many business models have been geared towards keeping other things from becoming the next grand crisis. Some companies, for example, are adopting business models that promote reconciliation and peace, with view to preventing disruptive future armed conflict. Examples range from former Colombian guerrilla group members building adventure travel businesses that show the previously hidden side of the conflict, to coffee cooperatives in Rwanda designed for Hutus and Tutsis to reconcile through collaboration.

Managing businesses in an age of accelerating crises is challenging. However, transforming business models and managerial practices can go a long way in both making current and future crises manageable, and possibly even mitigating future crises.

Oliver Laasch is a Senior Lecturer in Entrepreneurship and Innovation at the University of Manchester. (This article was initially published by The Conversation.)

H&M is slated to revisit the language that it uses to advertise supposedly “sustainable” offerings, such as those from its Conscious Collection, following a probe by a Dutch market regulator. In the wake of an investigation by the Netherlands Authority for Consumers and Markets (“ACM”), which found that H&M has engaged in greenwashing, namely, by making “unclear and insufficiently substantiated sustainability claims,” including its use of terms like “ecodesign” and “conscious,” the Swedish fast fashion giant has agreed 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.”

“Consumers should be confident that [companies’] sustainability claims have a basis in fact, or there is a danger they are being misled,” ACM board member Cateautje Hijmans van den Bergh said in a statement on Tuesday in connection with the advertising body’s findings. In order to settle the matter, Stockholm-headquartered H&M – which maintains brick-and-mortar stores and e-commerce services in the Netherlands – has agreed to adjust or remove sustainability claims that are not substantiated and to avoid making such claims going forward. (An advertising claim generally requires substantiation if it makes an objective assertion about a product or service, either expressly or in an implied manner.)

The ACM says it will monitor H&M’s advertising claims for the next two years. Meanwhile, the ACM opted not the penalize H&M from a monetary perspective, as the company has vowed to donate 500,000 euros to “independent organizations working towards sustainable goals.” Not limited to H&M, the ACM similarly found that French sporting goods retailer Decathlon S.A. made “unclear” advertising claims related to the sustainability of its offerings, as well.

H&M Conscious collection ad

A spokesperson for H&M stated on Tuesday, “We have taken the decision to remove H&M’s Conscious Choice indicator from our online shop worldwide. This work is in progress and will be finalized by the end of October.”

While the ACM’s retail-focused probes and subsequent actions are expected to serve as a wakeup call for brands that are making sustainability-focused claims that they cannot back up (even if those claims are relatively vague in nature), there is likely still room for companies like H&M to continue to advertise their “sustainable” credentials. Reflecting on the ACM’s action, sustainability policy expert Kristen Fanarakis says that it could “put a damper on [H&M’s marketing of] ‘conscious’ collections,” but the wording of the CMA’s release “suggests that H&M could simply use recycled or organic fabrics” in these collections in order to substantiate its existing “conscious” claims and without altering its offerings or the practices that go into manufacturing and/or distributing them.

This may enable H&M to avoid running afoul of the Dutch Advertising Code – and thereby, avoiding sanctions that will likely follow in the event that the ACM uncovers additional unsubstantiated advertising by the company over the course of the next two years, in particular. However, it does not address larger sustainability issues around the decline in average “use” of clothing versus the increase in average apparel consumption (and subsequent discarding), according to Fanarakis. Beyond that, such a solution also does not touch on issues regarding product materials/quality, which represent an integral element in the bigger picture of circularity and sustainability.

And still yet, the impact will almost certainly be limited to products advertised and sold in the Dutch market; as of the time of publication, products on H&M’s U.S. e-commerce site still bore the “Conscious Choice” label.

The ACM’s probe comes amid rising regulatory and private action in the sustainability and ESG marketing realm, with Norway’s consumer watchdog, for example, taking on H&M for its allegedly misleading marketing of its “sustainable” Conscious collection back in 2019. “Based on the Norwegian website of H&M, we found that the information given regarding sustainability was not sufficient, especially given that the Conscious Collection is advertised as a collection with environmental benefits,” the Norwegian Consumer Authority stated at the time. 

More recently, H&M was accused of “taking advantage of consumers’ interest” in sustainability and products that “do not harm the environment” in a false advertising lawsuit filed in the U.S. According to the proposed class action complaint that she filed in a New York federal court in July, Plaintiff Chelsea Commodore claims that in an attempt to target the growing segment of eco-conscious consumers who are willing to pay more for “sustainably-made” garments and accessories, the Swedish fast fashion giant prominently incorporated “‘environmental scorecards’ for its products called ‘Sustainability Profiles’” into the labeling, packaging, and marketing materials for hundreds of its offerings – only to ultimately remove them after being called out for using “falsified information that did not comport with the underlying data.” That case is currently underway.