The Commerce Commission has issued a warning to Kmart NZ Holdings Limited (Kmart) for potentially breaching the Fair Trading Act and making unsubstantiated claims in its "100% sustainably sourced cotton" advertising.
Commerce Commission Competition, Fair Trading, and Credit General Manager, Vanessa Horne says greenwashing is a real concern as well-intentioned consumers are led to believe products are more environmentally friendly than they actually are.
"Consumers have a right to clear and accurate information, and greenwashing makes it virtually impossible for a consumer to identify if a product is genuinely sustainable," Ms Horne says.
"Kmart's absolute claim of "100% sustainably sourced cotton" implies a high level of certainty that we believe Kmart did not have," Ms Horne says.
During the Commission's investigation Kmart admitted its "Better Cotton" was actually mixed with conventional cotton in the supply chain.
Kmart could therefore not say with certainty whether 100% of the cotton in its clothing was supplied by Better Cotton farmers or was sustainably sourced.
"Businesses know that consumers are increasingly considering the environment when buying goods or services and may be influenced to purchase from one company over another because of their environmental claims," Ms Horne says.
"Unsubstantiated claims are unfair for businesses who put in the time and resource to make sure their environmental claims are legitimate.
"We are very supportive of businesses getting involved in sustainability initiatives, but as with any advertising, claims made must be accurate and be able to be backed up to avoid breaching the Fair Trading Act.
"Our message to businesses is simple: if you can't back it up, don't say it.
"If you think a business is being misleading about its environmental claims please let the Commission know on our website," Ms Horne says.
After the Commission raised the issue, Kmart removed the "100% sustainably sourced cotton" claim from its New Zealand website. Kmart has also advised it continues to provide regular compliance training for its staff members in consumer and competition law.
Background
The 100% sustainable cotton claims were made from 4 August 2023 and removed on 4 October 2024.
The Commission believes this conduct was likely in breach of the Fair Trading Act and has issued a warning letter to Kmart. Only the court can determine if a breach has occurred. Legal action remains available to the Commission in future if the conduct is repeated.
The Commission has published guidance to help businesses meet their obligations when making environmental claims.
The Commerce Commission has joined 19 other consumer protection agencies from around the world, through the International Consumer Protection and Enforcement Network (ICPEN), in an open letter to the fashion and textile industry. The open letter encourages the fashion retail sector to review their commercial practices and ensure that their environmental claims comply with consumer law.
