H&M Case Shows How Greenwashing Breaks Brand Promise

A recent exposé on fast-fashion retailer H&M alleges that the company’s environmental promise is undermined by greenwashing.

H&M was using a scorecard system to inform customers about the environmental soundness of each product, but a report by Quartz claims that more than half of the scorecards portrayed products as being better for the environment than they actually were. The report also found some instances in which H&M’s scorecards allegedly gave information about the sustainability of a product that was completely opposite from the truth.

H&M has removed the scorecards in the wake of Quartz’s report. The scorecards were created based on the Higg Material Sustainability Index (MSI) by the Sustainable Apparel Coalition (SAC). The trade group has paused the use of the consumer-facing transparency scorecards in response to a complaint by the Norwegian Consumer Authority and is reassessing their methodology. (It has not paused the full use of the Higg MSI.)

A watchdog group found that the scorecards use only averages of the environmental impact of types of textile, rather than giving the full environmental impact of the manufacture and sale of a particular finished piece of clothing, Just Style reported.

H&M’s transgressions may go beyond that, though, with some of the product information shown on Quartz mixing up data — touting products that used 30 percent more water as using 30 percent less water, contradicting the SAC version of the scorecard.

For many of the experts on the RetailWire BrainTrust in an online discussion last week, the issue at H&M appeared to be part of a longstanding, alarming trend.

“Retailers have been greenwashing for years,” wrote Paula Rosenblum, co-founder of RSR Research. “At least a decade, maybe more. They often mask cost-savings initiatives with ‘green ones.’ The answer is simple. Get real.”

And the BrainTrust did not see retailers who fudge the numbers on environmental matters getting off easy.

“While the financial calculation of merely greenwashing away environmental issues may seem acceptable, this is a real threat to the long term success of companies like H&M who target a younger consumer,” wrote Mark Ryski, CEO of HeadCount Corporation. “I believe that H&M has already sustained brand damage as a result of their past greenwashing activities.”

“There is nothing worse for a brand than breaking the brand promise,” wrote Lucille DeHart, principal at MKT Marketing Services/Columbus Consulting. “Claiming to be ‘green’ is not enough today, consumers are savvy and will demand transparency.”

The fast-fashion industry has begun to make changes to its model in response to a perceived emerging customer focus on environmental and sustainability concerns. BrainTrust members had some advice on how best to make that happen, and avoid charges of greenwashing and the damage that comes with it.

“As retailers race to adhere to ESG practices, they will encounter not only issues with measurement accuracy, but with profit compromise,” wrote Ms. DeHart. “The best first step for every manufacturer/retailer is to establish a more sophisticated end to end supply chain. Having a strong planning, merchandising and allocation system will better ensure that the right amount of products get made and go to the right places to the right consumers. Produce less waste upfront.”

“Firms should treat sustainability reporting the same as they do their financial reporting,” wrote David Spear, senior partner, industry consulting, retail, CPG and hospitality at TeradataTDC
. “These data ought to be of high integrity and be able to pass an audit by any third-party accounting firm. Lately there are more firms that are starting to integrate their ESG reporting into their annual financial reports. I expect to see much more of this in the near term. H&M would be well advised to get their house in order or face consumer backlash at the register and on social media.”

“The industry cannot rely on trade associations as the arbiters of sustainability or eco-impact scoring,” wrote Nikki Baird, vice president of strategy at Aptos. “Huge conflict of interest, in my opinion. If brands want to avoid more of this kind of investigation in the future, they need to engage directly with organizations exclusively focused on reducing environmental impact and increasing the sustainability and reuse of products.”

Developments elsewhere in the fast-fashion world have called into question the extent to which customers truly care about the environmental posture of the retailers they patronize. Most notable is the emergence of Chinese fast fashion app Shein as the most searched for apparel app, and most downloaded app, in the U.S. The $800 billion company has been thriving despite drawing the ire of environmentalists and even competitors like ThredUP.

But Shein’s popularity with customers was a moot point for BrainTrust member Ken Morris, managing partner at Cambridge Retail Advisors.

“Shoppers have every right to lie to themselves; fast-fashion retailers shouldn’t have the right to lie to everyone else,” wrote Mr. Morris. “When corporations lie, they will eventually lose respect, loyalty and business.”

And one BrainTrust member pointed out that, when it comes to demonstrating environmental commitment, the proof is in the pudding — not the press release.

“Saying you’re ‘green’ is a little like saying you’re a ‘cool’ brand,” wrote Lee Peterson, EVP of thought leadership, marketing at WD Partners. “Don’t say it, just do it. We’ll be the judges of those two attributes, thank you.”