ASOS, Asda & Boohoo | Firms probed over 'greenwashing' claims - HR could be impacted

Firms probed over 'greenwashing' claims - HR could be impacted

Several major firms are under investigation amid claims they may have exaggerated their environmental credentials.

The Competition and Markets Authority (CMA) will be scrutinising eco-friendly and sustainability claims made by ASOS, Boohoo and George at Asda about their fashion products, including clothing, footwear, and accessories. The move comes as part of its ongoing investigation into potential greenwashing and follows concerns around the way the firms’ products are being marketed to customers as eco-friendly.

In January 2022, the CMA launched an initial review after identifying concerns around potentially misleading green claims. These included a number of companies creating the impression that their products were ‘sustainable’ or better for the environment – for example by making broad claims about the use of recycled materials in new clothing – with little to no information about the basis for those claims or exactly which products they related to.

Sarah Cardell, interim Chief Executive of the CMA, said: “People who want to ‘buy green’ should be able to do so confident that they aren’t being misled. Eco-friendly and sustainable products can play a role in tackling climate change, but only if they are genuine.

“We’ll be scrutinising green claims from ASOS, Boohoo and George at Asda to see if they stack up. Should we find these companies are using misleading eco claims, we won’t hesitate to take enforcement action – through the courts if necessary.”

The CMA has written to the firms outlining its concerns and will use its information gathering powers to obtain evidence to progress its investigation.

Asos said it was “committed to playing its part in making fashion more sustainable, including providing clear and accurate information about its products”, while Boohoo said it was “committed to providing its customers with accurate information on the products they buy”.

A spokesperson for Asda said: “We know how important it is that our customers can trust the claims we make about our products, which is why we ensure the statements we make can be supported by industry accreditations. We are ready and willing to answer any questions the CMA have about our George for Good range and welcome further work by the CMA to ensure the sustainability claims made by the fashion industry as a whole are robust and clear.”

Sustainability and its impact on HR

The very nature of the CMA’s investigation is to consider whether consumers might have been wrongly influenced by any one company’s eco-friendly claims.

However, misleading claims about a firm’s commitment to the planet can also have a significant impact on the HR function – particularly given how many workers prioritise roles at firms with strong green pledges. Environmental and Social Governance (ESG) and Corporate Social Responsibility (CSR) are matters that an increasing number of employees and jobseekers are putting emphasis on when it comes to their career choices.

In fact, a 2022 report from PLAY titled Corporate climate crisis: why businesses need to support employees in making sustainable behavioural changes gathered the thoughts of more than 1,000 UK respondents on this very subject. The study found that 68% of all staff feel that it is important that the company they work for acts sustainably.

This demand for good, sustainable practices appears to be particularly important for the younger demographics, with the same study finding that one in four workers won’t work for an unsustainable business.

PLAY’s research also showed that sustainable behaviour could actually help employers with talent attraction and retention, with more than half of employees (54%) saying that they would be more likely to work for a company that provides resources and tools for them to become more sustainable.

Additionally, amidst ‘The Great Resignation’ – the current period of mass staff turnover, where around one in four UK employees have either left their job or are considering doing so, according to a 2021 Randstad UK study – employers are increasingly under pressure to engage and retain their best people.

Sustainability practices and ethical pledges are increasingly becoming a deciding factor for employees debating whether to stay with their current company or seek a new opportunity. As such, if employees were to discover that their employer is not as eco-friendly as they initially assumed (particularly if this was a deciding factor in accepting the job offer), this could have a detrimental impact on areas such as trust, engagement, productivity and morale.

Firms treating ESG as a box-ticking exercise

Adding to the concerns of workers who are interested in their employer’s eco commitments, recent research has found that half of firms regard ESG as a “box-ticking exercise”, indicating significant levels of employee disengagement with and disinterest in this important activity.

EcoOnline, a leading technology platform for safer workplaces, conducted a survey of 124 businesses in June 2022. They found a significant minority of businesses are not actively reporting on ESG measures and performance, with 42% of survey participants disclosing that their organisation currently has no reporting system in place.

As demand for clear and transparent disclosure on long-term ESG strategies grows, ESG reporting is an increasingly important tool for organisations to respond to evolving climate, social, cultural and compliance concern.

An increasing pressure for transparency

The study highlights a majority of employees felt organisational pressure to report ESG data had increased in the last three years, with environmental activity flagged as the highest priority (67%).

However, despite these expectations for greater transparency, two-thirds of employees responding to the survey (66.7%) claimed their organisation does not produce a publicly available annual ESG or sustainability report. This suggests a concerning lack of clarity surrounding the execution and effectiveness of ESG strategies amongst those businesses surveyed.

With the majority of respondents believing pressure to report on environmental (80%), social (76%) and governance (73%) will increase over the next year, those who don’t make the investment now are putting themselves at financial and regulatory risk.

Fundamentally, it pays to be more responsible and transparent. Those organisations with robust ESG strategies have already demonstrated increased investment returns, lowered risks, and improved crisis resilience.

Organisations that are future-focussed and proactive recognise how crucial it is to integrate ESG considerations into their business strategy and vision.

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Reflecting the value of a strong ESG strategy to the business bottom line, the research shows that 69% of employees believed that where strong ESG measurement and reporting was in place, it had a positive impact on their organisation’s performance.

Commenting on the research findings, Helene Melby Brodersen, Head of ESG Strategy at EcoOnline, said: “It is clear from the results of the study that ESG transparency has and will continue to be a key focus for organisations across all sectors in 2022 and beyond.

“ESG reporting is a vital communication tool that plays an important role in convincing sceptical customers, as well as stakeholders and investors, that an organisation is taking meaningful and proactive action on issues which affect us all.

“Ultimately, ESG reporting is not just a box-ticking exercise, but is intended to inspire an organisation-wide commitment to generating sustainable long-term goals.”

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