By James Davey and Eva Mathews
(Reuters) -Britain's competition regulator has secured commitments from fashion retailers ASOS (LON:ASOS), Boohoo (LON:BOOH) and George at Asda to use only accurate and clear green claims, as it cracks down on so-called "greenwashing" in the sector.
The three firms have agreed to change the way they display, describe and promote their green credentials, the Competition and Markets Authority (CMA) said on Wednesday.
Regulators are increasing scrutiny of companies which may be exaggerating their green credentials in an attempt to woo climate-conscious consumers as well as billions of dollars from environmentally focused investor funds.
The move by the CMA comes 20 months after it launched an investigation to scrutinise the green claims of the three fashion retailers, having identified concerns of possible greenwashing during an initial review of the sector.
ASOS, Boohoo and George at Asda make over 4.4 billion pounds ($5.6 billion) annually from UK fashion sales, the CMA 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," CMA CEO Sarah Cardell said.
"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."
The regulator has issued an open letter to the sector advising all fashion retailers to review their claims and practices.
The CMA said ASOS, Boohoo and George at Asda have each signed undertakings that commit them to an agreed set of rules around the use of green claims.
These include all green claims being "accurate and not misleading" while statements made about materials in green ranges must be specific and clear, such as ‘organic’ or ‘recycled’, rather than ambiguous like ‘eco’, ‘responsible’, or ‘sustainable’.
The fashion retailers must not use ‘natural’ imagery, such as green leaves, logos, or icons in a way that suggests a product is more environmentally friendly than it actually is.
Also, any claims made to consumers about environmental targets must be supported by a clear and verifiable strategy.
ASOS said it welcomed the CMA's commitment to ensuring equal standards are applied across the industry.
Boohoo and Asda also said they were pleased to have mutually agreed the voluntary undertakings with the CMA.
Shares in ASOS were down 2.1%, while shares in Boohoo were up 0.7%.
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