FASHION LAW

Senior Editorial Consultant

Whose Fashion? Whose Footprint? Piercing the Veil of Corporate Social Irresponsibility in Fashion’s Supply Chain

By Saumya Verma

Senior Editorial Consultant

Fashion Law IP Blog


The fashion industry which is worth $1.3 trillion and employs more than 300 million people, is at the crossroads of a healthy economy and a damaged environment. Swift production cycles in fast fashion are creating huge externalities that society has to pay for i.e. pollution, resource depletion, and climate change. This analysis examines the legal frameworks for reallocating externalities to corporate entities, utilizing concepts such as corporate veil piercing, supply chain causation, economic internalization, and transnational forum shopping. By piercing the veil of limited liability, courts and regulators can hold fashion companies accountable and make them take responsibility for harms that are currently outside of their control.

I. Nexus Between the Corporate Structure Doctrine and the Allocation of Externalities in Fashion Conglomerates

The principle of limited liability in ‘corporate structure doctrine’ safeguards the interests of shareholders from being personally held liable for corporate debts and damages. This lets fashion conglomerates pass on the costs of environmental harm to others. This insulation encourages companies to make as much money as possible, even if it means negatively impacts environment. Because shareholders get the profit without having to deal with all the pollution or waste. In the fashion law, ‘piercing the corporate veil’ acts as a crucial and exceptional legal mechanism to disregard a company’s separate legal personality (limited liability) and hold its directors, shareholders or parent companies directly liable for environmental harm caused during manufacturing of apparels. This doctrine is used by courts when a corporation is used as a ‘alter ego’ or tool for fraud or injustice. Examples of this in the U.S. are Lowendahl v. Baltimore and Zaist v. Olson. In the fashion industry, global giants like LVMH and Inditex often operates through layers i.e. subsidiaries and complex supply chains to distance themselves from being held liable for any kind of harm for instance, water pollution (textile dyeing alone accounts for 20% of world’s industrial wastewater). By holding the parent companies liable, the law can encourage more responsible decision making and push businesses to adopt sustainable fashion practices. It is particularly significant in environmental law, where public policy favours prevention, remediation and cleanup. In Coty US LLC v. 680 S. 17th Street LLC, a New Jersey court pierced the veil of an undercapitalized LLC and held its only member responsible for environmental harm. This case made it clear that corporate firms cannot avoid their accountability when it comes to contaminated assets. When it comes to fashion, this precedent suggests that courts may pierce veils in conglomerates where subsidiaries cause harm, like microfiber pollution. For example, washing synthetic clothes releases 5,00,000 tons of microfiber into the oceans every year, which is the same as 50 billion plastic bottles. In addition, environmental laws make it easier to pierce the veil. The EU’s Environmental Liability Directive, 2007 and the Comprehensive Environmental Response, Compensation, and Liability Act, 1980 (U.S. CERCLA) both states that companies shall be held liable for the actions of their subsidiaries, and this may also include the actions of their parent companies. In fashion, where 60% of materials are plastic-based synthetics that make up 9% of annual ocean microfiber pollution, these kinds of rules could make conglomerates pay for their own mistakes. At present, US state ‘corporate laws’ often ends up incentivizing the irresponsible behaviour rather than discouraging it. Limited liability allows companies to enjoy higher market returns while shifting the environmental and social costs of their actions onto others, making meaningful accountability for ESG harms difficult. In response, some countries like France and Netherlands have passed laws that impose duty of care on large companies to prevent environmental harm caused by textile supply chain. This type of law has been harmonised by EU in the form of The EU’s Environmental Liability Directive, 2007, as mentioned earlier. Such a model will help transforming passive investors into environmental stewards, encouraging them to demand better practices. Yet these liability gaps are not limited to internal corporate structures alone. These gaps reflect deeper systemic issues that extend beyond the company itself. They get worse when supply chains are broken up, which makes it even harder to figure out who is responsible for harm that happens far away.

II. The Problem of Remote Environmental Harm and Supply Chain Causation

The global supply chains of fashion industry make it even harder to decipher what caused environmental harm. The reason being that the corporate veils make things ambiguous. The fiber industry causes a great deal of negative impact on our ecosystem. For instance, global fiber production increased from 58 million tons in the year 2000 to 116 million in 2022 and it is estimated to reach around 147 million by 2030. Fast fashion which manufactures around above 100 billion clothes every year, uses polyester which has been reported to have adverse impact on human health and environment. Legally, it’s quite difficult to prove that something caused harm from a distance i.e. pollution in developing as well as least developed countries. The reason behind this involves a complex chain comprising of many people that makes direct liability less clear. The legal doctrine of causation asks for proving proximate cause of the harm. However, in cross-border supply chains, the industrial waste contributes to 2-8% global carbon emissions. Every second, a truckload of clothes is thrown away or burned. Every year, 85% of clothes are thrown away. Every year, Americans dump approximately 34 billion pounds of clothes in countries like Ghana, Chile, Kenya etc. This often clogs up the waste systems and poses health risks in the countries where second hand clothes are dumped. Legal responses include supply chain due diligence laws like New York’s Fashion Sustainability law (popularly known as the Fashion Act), which requires companies to report environmental effects and how they plan to fix them. But there are still gaps in causation. For instance, parent companies don’t have to pay for supplier violations unless veil piercing applies. Sustainable supply chain management offers only a limited response to systemic harm. While brands such as H&M have adopted sustainability measures following criticism over wastes and emissions, these efforts remain largely voluntary and remain unenforceable. Greenwashing further erodes liability by allowing companies to market environmental responsibility without any meaningful change. Regulatory actions including those by the US Federal Trade Commission against brands like H&M for misleading environmental claims, highlight how easily sustainability narratives can be manipulated. To bridge this gap between conduct and harm, courts could turn to enterprise liability, holding larger corporations responsible for foreseeable, system-wide harms arising from their business models, as is done in Law of Torts.

III. The Economic Internalization Doctrine and Environmental Responsibility

Based on the Market The economic internalization doctrine offers a supplementary framework to the complexities of causation in law, asserting that polluters must assume the total costs of their actions to synchronize market incentives with environmental responsibility. In fashion, inefficiency comes at a huge cost. Underuse and poor recycling practices drain the industry of over more than $361 billion a year. Economic tools that force a company to internalizes these losses like environmental taxes, cap-and-trade system and extended producer responsibility, may help ensure that the brands bear the true cost of the environmental pollution rather than just passing ill effects of production led pollution to the society. Regulatory efforts have begun to reflect this logic. The EU’s strategy for sustainable and circular textiles, for instance, requires brands to take responsibility for textile waste and promote recycling. In United States, the laws like Fashioning Accountability and Building Real Institutional Change Act, 2022 (FABRIC Act) and The Garment Worker Protection Act in California, Senate Bill 62, 2022, address ethical sourcing and emissions transparency, while several states now mandate disclosure of emissions, water use, and waste, pushing fashion industry towards greater accountability.

A theory of market-based sustainability stresses actions taken at the firm level, such as circular models (resale, rental), which could be worth $700 billion by 2030. But without internalisation, the fast fashion model, which accounts for 10% of the world’s carbon emissions, will continue. Some suggestions are to only use ‘sustainable’ labels on clothes that have 60% eco-fibers and to require life-cycle claims. This doctrine, along with veil piercing, can make fashion more sustainable in the long run. However, its use around the world is affected by differences in laws that allow people to choose the best place to file a lawsuit in transnational disputes.

IV. The Dynamics of Forum Shopping in Transnational Fashion Governance

Amid these ongoing economic and structural changes, forum shopping i.e. the strategic choice of where to file the lawsuit has also become a key factor in global fashion governance. Strategically, plaintiffs search for such jurisdictions which offer stronger environmental protection or more favorable liability rules. It shapes how fashion companies will be challenged for their actions causing environmental harm across borders. Foreign plaintiffs forum shop for better outcomes, so U.S. courts get more transnational lawsuits because they offer higher damages. In fashion, this dynamic shows up in lawsuits against big companies for abusing their supply chains. The U.S. Alien Tort Statute lets people sue for damages that happen outside the U.S., but there are limits on who can do so. Defendants fight back with forum non conveniens motions, which move cases to other countries. But shopping brings up trade issues because lawsuits in the U.S. cost foreign companies money. EU rules, such as the Corporate Sustainability Due Diligence Directive, 2024 make governance more consistent, which makes people less likely to shop. In this situation, we require rules that are the same for everyone, like in intellectual property litigation frameworks. In fashion, this could make people more responsible for harm that happens far away, which would strengthen the legal strategies needed to break through barriers and make externalities part of the system.  

Clearly, piercing the corporate veil, along with changes to causation, internalization mechanisms, and regulated forum shopping, creates a clear way to deal with fashion’s externalities. In order to check 26% of the world’s carbon emission by 2050, the global law needs to undergo overhaul and incorporate sustainable fashion manufacturing models.

The Denim Carbon Crisis: Why Jeans Are in Regulators’ Radar?

By Saumya Verma

Senior Editorial Consultant

Fashion Law IP Blog

Each pair of denim jeans mass-produced emanates 33.4 kg of CO2 into the environment, exploits 3781 litres of water, and occupies 12 square meters of land for their production. Consumer behaviour is a critical factor of Denim’s environmental impact. As consumers are becoming more cognizant about the ecological consequences of fashion, regulators globally are focusing on one of the most prevalent items in contemporary fashion i.e. denim jeans.

The Environmental Toll

Use of chemicals in making traditional denim puts the manufacturing company at the higher risk of getting sued. Formaldehyde, heavy metals like Chromium and Mercury, and synthetic indigo dyes are all hazardous substances that are subject to strict safety guidelines, worker protection protocols, and environmental impact assessments.  The sandblasting method is now illegal in many places because it can cause silicosis. These effects on the environment create a chain of legal responsibilities under law of torts, environmental laws, and climate laws. 

 Legislative Momentum

The European Union has put in place the most complete set of laws to protect the environment from textile pollution. Other areas are quickly following suit. The ‘Waste Framework Directive 2008/98/EC’, which was changed in 2018, says that textile waste must be collected separately starting on January 1, 2025. This makes it a legal requirement for member states and sets up enforcement mechanisms with big fines for not following the rules. The ‘REACH Regulation (EC) No 1907/2006’ is the most important law that controls chemicals that affect the making of denim.  Article 33 says that manufacturers must disclose Substances of Very High Concern (SVHC) with a weight concentration of more than 0.1%. If they don’t, they are strictly liable. If you don’t follow the rules, you could face fines of up to €1 million for each violation, and serious violations could lead to jail time.

The ‘Anti-Waste Law for a Circular Economy (AGEC) of 2020’ in France was the first law to create Extended Producer Responsibility (EPR) schemes. These schemes make manufacturers liable for the effects of the products used during manufacturing. These laws make take-back programs, recycling goals, and eco-design requirements legally binding. If a company doesn’t comply with them, they could face fines and even be kicked out of the market. California’s Proposition 65, also known as ‘the Safe Drinking Water and Toxic Enforcement Act’, makes it unlawful for chemicals to be exposed without any clear and reasonable cautions. The law permits people to file lawsuit against violations, with fines of up to $2,500 per day, which means that denim imports that don’t follow the rules could lose a lot of money. ‘The Corporate Sustainability Reporting Directive (CSRD) 2022/2464’, which was enforced in 2024, requires big corporations to make full disclosures about sustainability, including in-depth assessments of product’s environmental impact. False or misleading disclosures have been considered as violations of securities laws, which can lead to executives being held personally liable and even facing penal charges.

 Standards and Compliance

International standards have acquired quasi-legal status through their incorporation into regulatory frameworks and commercial contracts. EU rules have used ‘OEKO-TEX STANDARD 100’ testing protocols as a reference, so for many market segments, following them is a legal requirement instead of just a choice. These protocols though are not legally binding but influential. ‘The Global Organic Textile Standard (GOTS)’ sets up rules that can be enforced through certification agreements that make suppliers and buyers legally responsible for following them. If you don’t follow GOTS rules, you are breaking the contract. This means you could be liable for damages and could be kicked out of the market. From Cradle-to-Cradle Certified programs make full lifecycle assessments that meet the due diligence requirements of new supply chain liability laws. Under ‘safe harbour’ provisions in different environmental laws, companies that use certified products get legal protections. Adding these standards to public procurement requirements makes the law even more complicated.  More and more government contracts require certified sustainable textiles. This means that following the rules is now a legal requirement for getting into public markets that are worth billions of dollars a year.

 Innovation under Pressure 

Regulatory compliance has changed technological innovation from something that gives a company an edge to something that is required by law. The EU’s Eco-design for Sustainable Products Regulation sets mandatory performance standards for textiles, such as standards for durability, reparability, and recyclability. These standards can be enforced through market surveillance and fines. Intellectual property law is doing more and more to protect sustainable technologies. This makes it harder for companies that don’t come up with new ideas to compete.  Patent protection for methods of reducing water use, alternative dyeing processes, and fibre recycling technologies creates legal monopolies that can keep competitors who don’t follow the rules from getting important sustainability solutions.

The switch from sandblasting to laser technology shows how regulatory pressure has turned optional improvements into legal requirements. In many places, workmen’s compensation laws have rendered employing traditional sandblasting processes illegal. As a result, technological alternatives need to be approved under law. Under chemical laws, new biotechnology products have to go through complicated approval processes. Bio-based indigo dyes need a lot of safety testing and regulatory approval before they can be sold. This makes it difficult for new manufacturing companies to enter into the market, which favours the existing successful companies.

 Market Disruption 

Regulatory compliance costs create substantial financial obligations that are legally enforceable through various mechanisms. Environmental taxes, carbon pricing, and pollution charges make people directly responsible for the harm they do to the environment, and there are fines for not paying or following the rules. Extended Producer Responsibility fees create ongoing financial obligations that are legally binding and can be collected through normal debt collection methods.  If a company doesn’t pay the fees it owes, it could lose its assets, its business licence, and even be charged with a crime.

Securities law says that public companies have to tell investors about any big environmental risks and the costs of following the rules. This means that regulatory impact is a legal requirement in financial reporting. Not fully disclosing environmental liabilities is a form of securities fraud that can lead to civil and criminal penalties for executives. When following the rules makes it harder for new businesses to enter the market, it can lead to competition law issues. This is because companies with enough resources to follow the rules may have more power in the market.  Antitrust authorities must weigh environmental goals against competitive issues, which makes it hard to review mergers and look at how the market behaves.

 Implementation Barriers 

The most difficult legal problems for global denim companies are those that come from having to deal with different laws in different places. Different rules in different places can make it difficult to meet all obligations at the same time. Companies have to deal with complicated questions about which laws to follow and possible regulatory arbitrage opportunities that could break the rules of fair competition. When enforcement is uneven, companies that follow strict rules are at risk of breaking the law because they have to compete with companies that follow weaker rules.  This unfair regulation could break international trade agreements and give people a reason to sue under WTO rules. Laws about supply chain liability are making companies more responsible for making sure their suppliers follow the rules. This means that companies have to keep an eye on and enforce environmental standards across their global production networks. Under modern slavery laws, due diligence requirements also include following environmental rules. This means that businesses can be held liable for almost anything. Class action lawsuits are a new kind of legal peril that may occur when denim manufacturing harms the environment and leads to tort claims.  Presently, the textile companies can also be held liable under climate law and could be held responsible for contributing to global warming through their emissions. For instance, the ‘UN Fashion Industry Charter for Climate Action’ is a key industry-led initiative setting net-zero emissions targets by 2050. EPR schemes of France is another example of climate law to deal with the adverse effects of fast fashion.

 Strategic Imperatives

To stay on the right side of the law, we need to formulate a risk management plan that could include monitoring regulations, protecting rights under contracts, and getting insured. Other areas of focus are setting up legal frameworks for supply chain compliance that covers audit rights, termination clauses, and indemnification agreements pertaining to a company. Making the corporate governance structures consistent with the environmental laws such as board oversight of climate risks, executive pay linked to sustainability metrics, and shareholder involvement in environmental issues is equally important. Legal duties of care may require directors to think about how their business decisions might affect the environment.

Insurance for environmental liability is now a must-have, with special policies that cover fines, cleanup costs, and the risks of climate litigation. Companies need to keep an eye on treaty talks, agreements on regulatory cooperation, and the creation of international standards so they could propose for future legal obligations and impact on competition.

 Judicial Precedents and Enforcement

The Urgenda case in the Netherlands and other climate cases around the world show that courts are willing to hold both governments and businesses accountable for their environmental duties. In the class action suit of Milieudefensie et al. v. Royal Dutch Shell plc., a Dutch court found oil giant Shell responsible for CO2 reduction ordering Shell to cut greenhouse emissions by net 45% at end 2030, relative to 2019. Patterns in these precedents reveal that courts are aligned towards using more criminal penalties for violating environmental and climate laws. 

Citizen lawsuits and environmental groups may use civil enforcement to put more legal pressure on businesses outside of formal regulatory processes. In some places, private enforcement mechanisms let people who aren’t part of the government start legal proceedings for environmental violations. International arbitration is often used to settle environmental disputes in investment contexts. Tribunals have to find a balance among protecting investors and giving regulators the power to deal with environmental issues. Such precedents set significant standards for regulatory authority and compensation requirements. The changes in the denim industry are part of bigger changes in environmental law that include mandatory standards, criminal enforcement, and full liability frameworks. To be effective, we need more than just following the law. We also need to tactically integrate our legal obligations into our main business operations, risk management systems, and corporate governance structures. 

Greenwashing and Law: A Critical Assessment of the Fashion Industry’s Environmental Claims

By Saumya Verma

Senior Editorial Consultant

Fashion Law IP Blog

Greenwashing: Why Words and Actions don’t Always Align?

Fashion industry significantly contributes to worldwide environmental problems, because unsold clothing is discarded every second into landfills. The industry’s production includes around 92 million tonnes of finished products and 79 billion liters of water used annually. The fast fashion boom is particularly harmful, with planned fashion garbage by 2030 it will reach 148 million tonnes. The European Commission has determined that 53% of green claims are vague, deceptive, or unsupported, while 40% of the comments seem to lack actual facts, raising doubts about the validity of these categories. The survey shows that an alarming 68% of the corporate executives in the United States admit their involvement in greenwashing methods, causing significant problems on the credibility of environmental, social and administrative (ESG) claims of companies.

Greenwashing refers to the deceptive promotion of an organization’s environmental initiatives, sometimes including more expenditure on marketing such efforts than on implementing genuine ecologically sustainable policies. Several certifications, classifications and voluntary efforts in the fashion industry, such as the Higg Index and GOTS Certification, denotes sustainable procedures in the fashion and textile sector. However, companies use ambiguous vocabulary, buzzwords, and strategies to disseminate misleading marketing messages, fostering misunderstandings about environmentally linked language and creating a disparity between consumer expectations and the facts provided by firms.  In the fashion industry, greenwashing narratives encompass assertions of enhanced sustainability while only marginally improving certain collections, downcycling materials rather than prioritising fiber-to-fiber recycling, or endorsing take-back programs that promote guilt-free consumption. Consumers are ready to accept the risk of greenwashing when they have confidence in the product.

Major Approaches under Law against Greenwashing

a. United States of America

Section 5 of the Federal Trade Commission (FTC) Act stipulates that “unfair or deceptive acts or practices in or affecting commerce” are deemed unlawful. Deceptive practices encompass material representations, omissions, or actions that are likely to mislead a reasonably acting consumer in the given circumstances. Unfair practices result into substantial harm to consumers which cannot be reasonably alleviated and may not be balanced by any amount of compensation.  In the year 2022, the Federal Trade Commission started a claim against ‘Kohl’s’ and ‘Walmart’ for their misleading environmental claims. These companies asserted that ‘Bamboo Textiles’ were manufactured through eco-friendly methods. However, it was found that those textiles included rayon which was derived from bamboo through a process involving toxic chemicals, a hazardous pollutant. FTC issued a letter to Kohl’s pointing out that specific actions or practices related to the advertising of textile fibre products violated the ‘Textile Act’ and hence was deemed unfair or deceptive under Section 5(a)(1) of the FTC Act, 15 U.S.C. section 45(a)(1). The D.C. District Court mandated that both companies should discontinue the deceptive claims and refrain from overriding the Textile Laws and must adhere to the FTC’s requirement to submit mandatory reports for the next ten years. Thus, the Walmart and Kohl’s were mandated to pay substantial penalties for disseminating misleading claims and were determined to have violated the Textile Act and associated regulations.

b. European Union and United Kingdom

The EU jurisdiction has also initiated legal action against some major fashion retailers like Giorgio Armani, Christian Dior etc. concerning their false eco-claims.

Italy

The Italian Competition Authority examined ‘Giorgio Armani’ and ‘Christian Dior’ for their potential violations of the Italian Consumer law in their marketing of apparels and accessories. The ICA is also investigating Shein’s Italian website for purportedly misleading eco-claims. The Italian Advertising Self-Regulation Institute (IAP) guarantees that commercial communications must observe principles of honesty, truthfulness, and fairness, in order to protect consumer interests.

Germany

Germany has primarily depended on private enforcement to address greenwashing, while NGOs and consumer protection organisations have actively engaged in combating this issue for years. Actions have been taken against multiple companies, particularly in the fashion sector, including Adidas and Shein. Numerous cases have been resolved outside of court as a result of the compliance of the involved fashion companies.

Netherlands

The Netherlands has encountered considerable examination within the fashion sector, as the Authority for Consumers and Markets (ACM) revised its guidelines regarding sustainability claims in 2023. After investigating ten clothing companies, the ACM determined that Decathlon and H&M breached its guidelines by issuing vague and/or misleading sustainability claims. A successful greenwashing complaint was filed with the Dutch Advertising Code Committee against Primark.

France

France has emerged as a leader in both fashion and greenwashing regulations. ‘The Climate and Resilience Law’ was enacted in 2021 to enhance existing French legislation and strengthen environmental protections. The law addresses themes that impact citizens’ daily lives, such as consumption patterns and consumer behaviour. French law mandates that advertisements must be visible or accessible at the point of purchase, reliable, and easily comprehensible to safeguard consumers. The 2021 Resilience Law enhances the French Consumer Code (FCC), addressing misleading commercial practices and establishing potential penalties for environmental claims. It revised Article L. 121 of the FCC to incorporate the environmental impact of a product and to establish criteria for claims regarding the extent of the advertiser’s commitments. The law expands penalties for deceptive consumer practices under the FCC, allowing for fines to rise to eighty percent of the costs associated with misleading marketing practices related to environmental claims. In February 2020, France enacted ‘the Anti-Waste and Circular Economy Law’, aimed at eradicating waste and pollution throughout the entire life cycle of products. As of January 2023, ‘French Decree 2022-748 AGEC’ mandates verified environmental labelling for large clothing brands operating in France, with implementation for smaller companies scheduled to occur gradually in 2024 and 2025.

United Kingdom

The United Kingdom possesses a fragmented and non-mandatory framework for regulating consumer-oriented green claims, resulting in greenwashing activities occurring beyond the jurisdiction of England’s courts. Recently, the UK’s Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) have focused on addressing both intentional and unintentional greenwashing in business-to-consumer communications. In September 2021, the CMA released the Green Claims Code, comprising six guiding principles designed to assist businesses in comprehending and adhering to their responsibilities under consumer protection law regarding green claims. The principles encompass the necessity for claims to be substantiated, truthful, accurate, clear, and unambiguous.

In September 2024, the CMA released guidance titled ‘Complying with consumer law when making environmental claims in the fashion retail sector’, which applies to all businesses making environmental claims regarding clothing, footwear, fashion accessories, or related services. The Guidance delineates 11 rules for companies, emphasising the necessity for green claims to be clear and accurate, to avoid omitting critical information, to refrain from using ambiguous terminology, to prevent misleading imagery and icons, to provide clear and equitable comparisons, and to articulate any actions required by consumers for the claim to be realised.

c. India

India has yet to implement a specific law targeting greenwashing; however, existing consumer protection laws and regulations may provide some assistance. The Consumer Protection Act, 2019 empowers the Central Authority to establish guidelines aimed at preventing unfair trade practices and safeguarding consumer interests. In January 2024, the Central Authority released ‘the draft Guidelines for Prevention and Regulation of Greenwashing’, marking the inaugural instance of specific legislation addressing greenwashing in India. The Draft Guidelines characterise greenwashing as deceptive or misleading practices that involve concealing, omitting, or obscuring pertinent information through exaggeration, vague, false, or unsubstantiated environmental claims, as well as the use of misleading language, symbols, or visuals. A new definition of Environmental Claims (ECs) is introduced, characterising them as statements regarding a product or service that imply environmental friendliness. The claims seek to demonstrate that the product or service is environmentally responsible or eco-friendly.

The Draft Guidelines asserted that all ECs must be substantiated, clear, and unambiguous. The use of generic environmental terms such as ‘clean’, ‘green’, ‘eco-friendly’, ‘eco-consciousness’, ‘good for the planet’, ‘minimal impact’, ‘cruelty-free’, and ‘carbon-neutral’ is prohibited without sufficient explanation, substantiation, or disclosures. Technical environmental terms such as Environmental Impact Assessment, Greenhouse Gas Emissions, and Ecological Footprint should be accompanied by accessible language, with clear explanations of their meanings and implications. All ECs must ensure comprehensive disclosures, utilising research data that does not selectively highlight positive findings while concealing negative results. Individuals submitting ECs must specify whether the claims relate to the product, its manufacturing process, packaging, usage, disposal, or the service and its delivery process. Comparative ECs should utilise verifiable and relevant data provided to consumers, clearly delineating the specific aspects under comparison. Claims regarding specific environmental characteristics, including Carbon Offsets, Carbon Neutral, Compostable, Degradable, Free-of, Sustainability, Non-Toxic, 100% Natural, Ozone-Safe, Ozone-Friendly, Recyclable, Refillable, Renewable, and similar assertions, require substantiation through credible certification, reliable scientific evidence, or independent third-party verification.

The Advertising Standards Council of India (ASCI) released the Guidelines for Advertisements Making Environmental/Green Claims in January 2024, marking a significant change in India’s regulatory framework regarding greenwashing. The ASCI Guidelines clearly outline different types of claims and establish specific standards for each category. Advertisers must support absolute claims with robust empirical evidence, while comparative claims require proof of environmental superiority over earlier versions or competing products. Additionally, environmental claims must address the entire product life cycle. Misleading representations and manipulative visual elements are explicitly prohibited.

Landmark Case Laws

1. Lee v. Canada Goose US, Inc

The consumer class action lawsuit against Canada Goose was voluntarily dismissed in 2022; however, the court permitted several of the plaintiff’s claims to proceed past a motion to dismiss, indicating its readiness to acknowledge and uphold greenwashing allegations. The court determined that suppliers of Canada Goose employed inhumane trapping techniques, resulting in strangulation and fractures in animals captured for Canada Goose garments. The court determined that the allegations sufficiently supported the inference that Canada Goose’s claims about ‘ethical’ fur sourcing were misleading to consumers, as the company sourced fur from trappers employing allegedly inhumane leghold traps and snares. On April 27, 2022, the case was voluntarily dismissed; however, the court ruled in favour of the plaintiff on several grounds, indicating its readiness to acknowledge a greenwashing claim, despite Canada Goose’s assertions that its animal welfare claims were nonactionable and subjective.

2. Commodore v. H&M and Lizama v. H&M

In 2022, two class action lawsuits were initiated against H&M, alleging that the company implemented a marketing strategy designed to mislead consumers regarding the environmental and sustainable attributes of its products. The Commodore complaint asserted that H&M had published environmental scorecards on its website, referred to as ‘Higgs Sustainability Profiles’, which included ‘falsified information that does not align with underlying data’. The complaint asserted that H&M’s ‘Conscious’ products utilised unsustainable materials and contained a greater proportion of synthetics compared to the primary collection. The complaints asserted that the plaintiffs depended on H&M’s deceptive representations and would not have acquired the products had they been aware of the misleading nature of those representations. As of January 11, 2023, litigation for both cases remain ongoing.

These class actions indicate an increased consumer propensity within the fashion industry to acquire environmentally friendly and sustainably produced goods, as well as to pursue legal remedies when perceiving brand deception. There is a deficiency in explicit guidance and standards regarding sustainability claims, which complicates the process of addressing misleading claims and holding defendants accountable. Furthermore, imposing the burden on plaintiffs to manage the complexities of a class action lawsuit renders consumer class actions an inequitable and unreliable mechanism for enforcing against greenwashing.

Conclusion

The fashion industry has seen a rise in greenwashing, driven by heightened sustainability awareness, intricate supply chains, and insufficient regulatory oversight. This has resulted in a notable rise in consumer class actions, reflecting an increased propensity among consumers to buy environmentally friendly products and pursue legal remedies when they perceive brand deception. These cases have proven unsuccessful, indicating that the law ought to adopt a more proactive stance in examining contemporary marketing claims and offering explicit guidance on sustainability assertions in the forthcoming revision of the Green Guides. Consumers may need to independently address greenwashing and pursue remedies for their grievances.

Other References:

  1. Ekstrand, Susie Stœrk, and Kristine Lilholt Nilsson. “Greenwashing?” European Food and Feed Law Review 6, no. 3 (2011): 167–73. http://www.jstor.org/stable/24325853.
  2. Breen, Kieran. “Cleaning Up Fast Fashion.” RSA Journal 166, no. 2 (5582) (2020): 34–37. https://www.jstor.org/stable/27008580.
  3. Rome, Adam. “Fashion Forward? Reflections on the Environmental History of Style.” Environmental History 23, no. 3 (2018): 545–66. https://www.jstor.org/stable/48554107.
  4. Schiller-Merkens, Simone. “Will Green Remain the New Black? Dynamics in the Self-Categorization of Ethical Fashion Designers.” Historical Social Research / Historische Sozialforschung 42, no. 1 (159) (2017): 211–37. http://www.jstor.org/stable/44176030.
  5. Lee v. Canada Goose US, Inc., 20 Civ. 9809 (VM) (S.D.N.Y. Jun. 29, 2021)
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