Goodwin Antitrust & Regulatory Shorts: Fashion Faux Pas; Misleading Green And Social Responsibility Claims

1. Rise in Fashion Industry Enforcement as Green Claims Directive Stalls

In recent years, legislative initiatives have increasingly reflected the green agenda and sustainability objectives of the European Commission (the Commission). Authorities have been paying closer attention to unfair commercial practices, including the dissemination of inaccurate corporate responsibility disclosures and false or exaggerated environmental claims. The fashion industry has emerged as a key focus area, with national agencies across Europe intensifying efforts to investigate greenwashing, deceptive labeling, and misleading ethical assertions, especially concerning labour practices.

In the past month or so, two pivotal developments unfolded: The first one took place on 25 May 2025, when the Commission formally joined forces with several national competition authorities in urging the online fashion giant SHEIN to comply with EU consumer protection laws. The request followed a coordinated investigation that uncovered suspected fake discounts, manipulation of reviews and ratings, deceptive product labels, and misleading sustainability claims. This joint enforcement action complements a separate, ongoing Commission investigation under the Digital Services Act (DSA). The DSA imposes heightened due diligence obligations aimed at ensuring transparency and consumer trust in digital markets on very large online platforms (VLOPs), and SHEIN was designated a VLOP in April 2024.

The second development occurred just last week, when the Commission announced - and later clarified - its intention to withdraw support for the Green Claims Directive (GCD) unless the Council's proposed amendment to include 30 million micro-enterprises within its scope was removed. Micro-enterprises are defined as companies with fewer than 10 employees and less than €2 million in revenue. Originally unveiled in March 2023, the GCD aimed to protect consumers from misleading environmental marketing by requiring companies to have their green claims independently verified. The final text of the Directive had been expected imminently. The Commission's reversal is formally grounded in concerns that the Directive, as amended, would impose a disproportionate administrative burden on small businesses. At the same time, there is growing concern that the GCD's stringent requirements could inadvertently discourage companies from communicating their environmental efforts—a phenomenon known as 'greenhushing'—or worse, deter them from pursuing sustainability initiatives altogether.

The uncertainty surrounding the future of the GCD should not be interpreted, without more, as a rollback of the EU's broader sustainability agenda. Rather than signaling a retreat from environmental regulation, the Commission's recent move reflects a recalibration of scope and priorities. It is now up to the co-legislators to consider the Commission's position and renegotiate the Directive's scope. Importantly, the rest of the EU's green regulatory framework—including measures targeting greenwashing—remains intact and continues to advance. We recall that just last year, the Commission adopted two key green directives that embed sustainability into the EU's regulatory fabric. The first is designed to empower consumers during the green transition, strengthening safeguards against unfair commercial practices and ensuring access to reliable, verifiable product information. The second introduces more robust requirements around corporate sustainability reporting, reinforcing transparency and accountability.

Member states have until next year to transpose both directives into national law, after which enforcement — particularly around deceptive green claims — is expected to intensify.

2. Reform Milestones

As consumer scrutiny of ethical and environmental claims intensifies, the EU has rolled out a series of landmark policies targeting greenwashing, unethical labour practices, and digital consumer risks — particularly in high-impact sectors like fashion. Here is how the regulatory landscape has evolved in recent years:

3. Overview of Investigations Targeting Greenwashing and Unfair Practices Across Europe and the UK

EU Investigates SHEIN and Temu Over Online Practices and Consumer Risks
The Commission's recent enforcement action against SHEIN underscores the importance and gravity the EU attaches to greenwashing, false ethical claims, and other unfair practices. In this particular case, the Commission is investigating a variety of other SHEIN practices, which range from the presence of illegal goods and content on its platform to the opacity of its recommender system that influences the range of products recommended to users first, through a parallel, complementary DSA inquiry. The Commission has also asked the retailer to provide information on the measures adopted to mitigate risks relating to consumer protection, public health, users' well-being, and the processing of data.

Another Chinese e-commerce giant, Temu, received a similar request for information, at the same time as SHEIN, after receipt of a consumer complaint alleging that the exponential increase in Temu's user base is the result of aggressive marketing that may violate EU consumer protection laws, notably articles 7, 34, 35, 38, and 40 of the DSA. The company is under investigation for failure to ensure traceability of those trading on the platform; lack of transparency; and insufficient measures to protect minors and mitigate the risks stemming from the service's allegedly addictive design and illegal product listings.

The Dutch Authorities Rigorously Pursue Greenwashing
In 2023, the Netherlands Authority for Consumers and Markets (ACM) updated its guidelines on sustainability claims, introducing stricter requirements around clarity, accuracy, and specificity. This followed a wave of enforcement activity that began in 2022, when the ACM launched investigations into corporate green claims across the fashion sector. It concluded that Decathlon and H&M had made vague or misleading sustainability statements. Both companies committed to revising their labeling and online messaging practices and agreed to donate to sustainability causes as partial remediation for their lack of transparency.

The ACM also took part in a broader European enforcement initiative examining SHEIN's environmental and ethical claims. Separately, in 2023, the Dutch Advertising Code Committee investigated a greenwashing complaint against Primark, further highlighting regulators' growing focus on sustainability messaging in the fashion industry.

From Armani to SHEIN: Italy Scrutinizes Green and Ethical Fashion Claims
In July 2024, the Italian Competition Authority (AGCM) initiated proceedings and carried out inspections at the premises of Giorgio Armani and Christian Dior for alleged breaches of the Italian Consumer Code in their advertising of clothing and accessories. The Dior probe was closed just last month without finding an infringement after the company gave a set of legally binding commitments designed to address any possible false statements in ethics and social responsibility statements.

In September 2024, AGCM also launched an investigation against Infinite Styles for possible generic, vague, confusing, and/or misleading environmental claims made in relation to SHEIN's Italian website. The authority focused on the misleading use of unclear claims such as "'circularity'" and "'green' fibres," lack of information on additional recyclability of the garment, and contradictions between the company's sustainability reports in previous years and its commitment to decarbonise.

The CMA Tightens Scrutiny on Green Claims in the Fashion Industry
Already in 2021, the Competition and Markets Authority (CMA) published the Green Claims Code to assist businesses to understand and comply with existing obligations under consumer protection law when making environmental claims. The authority subsequently scrutinized the fashion sector (2022) and opened formal investigations into alleged breaches of consumer protection law focusing on misleading green claims made by ASOS, Boohoo, and George at ASDA. In 2024, all three companies gave legally binding commitments to alter the display, description, and promotion of their eco credentials, ensuring accuracy. The CMA published additional compliance guidance in September 2024, specifically for businesses in the fashion retail sector, and sent letters to a further 17 fashion brands, advising them to review their practices.

4. Key Takeaways

• Intense, Coordinated Scrutiny Across the EU and the UK: Amid political GCD headwinds and heightened regulatory scrutiny, businesses must continue to rigorously evaluate their advertisements, websites, labeling, and all other customer-facing communications. The sharp rise in investigations and enforcement actions targeting greenwashing and misleading claims on ethics and social responsibility — combined with the Commission's move to collaborate with domestic authorities — highlights the EU's firm commitment to its green agenda and its zero tolerance for misinformation. This development also signals a new era of interagency cooperation and regulatory alignment, paving the way for more effective cross-border enforcement. Companies will no longer be able to sidestep accountability by exploiting differences in national regulatory regimes. In this evolving landscape, proactive compliance, transparent communication, and robust internal controls are not just strategic priorities — they are essential for earning and preserving consumer trust.
• The DSA as a Powerful Enforcement Lever: The DSA enables DG CNECT to investigate and sanction VLOPS for not only illegal content but also misleading advertisements hosted on their interfaces. We recall that under the DSA, VLOPs need to publish — in a consolidated and systematic manner — a repository of all their advertisers for a year after a given advertisement was last presented on the platforms' interfaces, including targeting parameters used and reach of end users per member states. At the same time, VLOPs need to prepare periodically comprehensive risk assessment and content moderation reports, assess systemic risks stemming from their operations, including for the end users' well-being and fundamental rights, and take adequate mitigating measures. The DSA is, therefore, expected to serve as a powerful complementary tool to that of traditional consumer protection laws in the fight against greenwashing and other unfair practices. Breaches of the DSA can lead to fines of up to 6% of the investigated platform's global turnover in addition to remedies ordered to address the breaches.
• Upcoming Transpositions of EU Law at Member State Level Will Further Raise the Bar: The EU's recent directives on consumer protection for the green transition and corporate sustainability due diligence are in the process of being transposed at the member state level. In the coming years, regulatory demands and scrutiny will further intensify. Member States are expected to introduce robust enforcement mechanisms, including significant financial penalties and the possibility for follow-on damages claims, thereby increasing the financial and reputational consequences for noncompliance.
• Global Companies Must Commit to Genuine Compliance: Businesses operating or selling products across multiple jurisdictions must carefully align their sustainability communications with evolving domestic and EU laws and ensure that their compliance with applicable laws and regulations is not just nominal. Overstating environmental efforts or minimizing climate impacts can still lead to costly investigations, heavy fines, and reputational damage. Moreover, the risk of private enforcement actions means that companies could face not only administrative sanctions but also civil litigation from consumers and competitors.

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