Lululemon is under investigation on suspicion of "washing green" or faces huge fines
Recently, a spokesperson for the Canadian Competition Authority said that it is investigating Lululemon because the company may mislead consumers about its environmental impact and is suspected of washing green. Previously, the international environmental organization Stand.earth submitted a complaint report against Lululemon to the Canadian Competition Authority, which triggered the investigation.
Lululemon originated in Canada. It was founded in 1998 and went public in 2007. The company originally started selling yoga costumes and is known as the "LV of Yoga Industry". Although the investigation took place in Canada, Lululemon may face the risk of triggering multiple regulations.
Green washing marketing
In 2020, Lululemon launched the "Be Planet" campaign, stating that "we are committed to making products that are better in every way-better for people and the planet" and committed to a series of environmental goals, including by 2030, achieving a 60% reduction in absolute greenhouse gas (GHG) emissions from owned and operating facilities (Scope 1 and Scope 2); achieving a 60% reduction in greenhouse gas emission intensity in global supply chains (Scope 3); and becoming a net-zero emission company by 2050.
However, from Stand.earth's perspective,"Lululemon launched a marketing campaign that made public statements and displayed images on its website and elsewhere, implying that the company's actions and products help improve the environment and restore the health of the planet." "Stand.earth believes that this information is false and misleading, and Lululemon's marketing is green washing.
On January 27, 2022, on the eve of the opening ceremony of the 2022 Winter Olympics, Stand.earth called on Lululemon to fulfill its climate responsibilities. As the official equipment supplier to Team Canada, it must stop burning coal to power its factories and switch to renewable energy.
On September 15, 2022, Lululemon released its sustainability report, and Stand.earth pointed out that it was seriously off track on climate change issues.
Last fall, Lululemon released the company's 2022 impact report, and Stand.earth continued its investigation.
On February 12 this year, Stand.earth filed a 39-page complaint report with the Canadian Competition Authority, accusing Lululemon of misleading customers about environmental impact. The report pointed out that Lululemon claimed to "become a Planet" in 2020, but according to Lululemon's 2022 impact report, the company's greenhouse gas emissions have doubled. Specifically, Lululemon's scope 3 greenhouse gas emissions, that is, indirect emissions from company activities, have increased from 829,500 tons of carbon dioxide equivalent in 2020 to 1.691 million tons of carbon dioxide equivalent in 2022, doubling emissions. And Lululemon relies heavily on fossil fuels to produce products, which are difficult to recycle and cannot be biodegradable.
In response to Stand.earth's allegations, a spokesperson for Lululemon issued a statement saying: We have achieved the goal of 100% use of renewable energy electricity and an absolute reduction of 60% in greenhouse gas emissions from our own and operating facilities. We are very proud of this.
It was this statement that caused Lululemon to be questioned about greenwashing. Because even if the company achieves its annual goal of 100% renewable electricity, it will only reduce carbon emissions in Scope 1 and Scope 2, accounting for only 0.3% of the company's total emissions; however, 99.7% of Lululemon's emissions occur in Scope 3, which is the part of the supply chain that the brand does not directly control or own.
Stand.earth's request prompted the Canadian Competition Authority to order Lululemon to stop "Be Planet" activities, apologize to all Canadian consumers, and pay a fine of up to 3% of its total global revenue to the Canadian Government's Environmental Damage Fund. According to data released by Lululemon in March this year, the company's net revenue in fiscal 2023 is US$9.6 billion, and the amount of fines may reach US$288 million or more.
In May, Competition Authority spokeswoman Marianne Blondin confirmed that the agency "has launched an investigation into suspected deceptive marketing practices under the Competition Act." She said that there was no conclusion of misconduct, but because the law required the bureau to maintain confidentiality, it was unable to provide more details related to the matter.
This is not the first time Lululemon has been investigated by regulators. In 2007, the company was found guilty of violating the Textile Labelling Act by regulators, and has since stopped mentioning the health benefits of the seaweed clothing line.
Fast fashion has become a disaster area for carbon emissions
The reason why Lululemon has attracted the continued attention of environmental organizations and regulatory authorities is that the fashion industry has become the second largest polluting industry after oil.
Clothing production has doubled in the past 15 years, but the useful life of clothing purchased by consumers has dropped by 40%. Fast fashion is to blame. Data from the Alan MacArthur Foundation shows that the fast fashion industry accounts for about 10% of global carbon dioxide emissions, but it has not made effective progress in reducing emissions.
A United Nations report released in March 2023 found that although more and more fast fashion companies say they are making progress on climate initiatives, 99 fast fashion companies around the world have signed the United Nations Framework Convention on Climate Change, the Fashion Industry Climate Action Charter ", promising to achieve net-zero emissions by 2050. However, only 45% of companies actually comply with the climate goals needed to keep global warming below 1.5 ° C. One of the major difficulties is the verification of carbon emissions.
According to the "Greenhouse Gas Accounting System" released in 2009, carbon emission accounting is divided into three scopes, of which Scope 1 and Scope 2 are related to direct or indirect activities of enterprises; Scope 3 covers upstream and downstream activities.
In Lululemon's 2022 Impact Report, it can be seen that it has only achieved carbon emission reductions in Scope 1 and Scope 2, while the proportion of Scope 3 emissions is still high and is on the rise.
The latest report of ASL(Action Speaks Louder) surveyed 27 secondary suppliers of Lululemon, located in China, Vietnam, Indonesia, Japan, South Korea and Sri Lanka, while the overall renewable energy level in these countries and regions is still at a relatively early stage. This is also an important reason why Lululemon has difficulty controlling Scope 3 emissions reductions. But Lululemon's sustainability propaganda masks soaring emissions, fossil fuel dependence and pollution in its supply chain.
This is also a common problem in most fashion industries. The supply chain of the fashion industry is complex. Most companies do not have independently built upstream and downstream factories, but instead form cooperation between upstream and downstream suppliers, which makes scope 3 supervision and accounting difficult.
Combating green washing has become the regulatory consensus of various countries
The word "green washing" comes from the English "washgreen", which refers to some companies using false green marketing activities to preserve and expand their market influence. Research by the Ecological Finance Research Center of Renmin University of China shows that companies generally use "deceptive communication" to promote the sustainability of factors such as product raw materials, processing processes or operating methods, causing consumers to be overly positive about their environmental performance. cognition. There are roughly three motives for companies to wash green: one is to cater to regulatory requirements or evade "condemnation" from relevant parties; the second is to cater to market demand; and the third is to reduce investment and financing costs.
In different industries, the performance of companies in green washing varies. In high-carbon industries, companies generally promote net-zero strategies and green commitments, but have no substantive actions. For example, oil giant Shell claims to be committed to global net-zero projects, but has not released emission reduction plans, and only 1% of its long-term investment is invested in low-carbon renewable energy; Eni, also an oil company, uses social channels to promote green commitments, but uses "lobbying and green washing" to extract more fossil fuels.
In some consumer-oriented industries, companies often claim to launch green products, but have been proven to be harmful to the environment. For example, Banana Boat Company claims that its sunscreen is "coral reef friendly", and it was later confirmed that the chemical composition of the product will cause coral bleaching and toxic to other marine life; Unilever promised innovative technology to completely recycle plastic sachet packaging, but carried out a large-scale incineration project in the suburbs of Jakarta, Indonesia, exacerbating air and marine pollution in the region.
In the financial industry, companies label financial products as "ESG" or "green" without any effective basis. For example, Goldman Sachs renamed its blue-chip funds as ESG funds in 2020, and described at least four funds in 2022 as "Clean energy" or ESG, and was later fined US$4 million for suspected greenwashing of some products.
In recent years, the international community has continuously strengthened supervision on green washing, and the European Union, the United Kingdom, the United States, China and other countries and regions have formulated corresponding policies and regulations. Europe's first formal penalty for green washing occurred in Italy. In 2020, the Italian Competition and Markets Authority fined Italian oil company Eni 5 million euros for falsely promoting in advertisements, claiming that its "green" diesel product Eni Diesel+ has a positive impact on the environment, saves fuel and reduces greenhouse gas emissions.
At the beginning of 2021, the European Commission launched an investigation for the first time into green washing activities in online marketing in different industries such as clothing, cosmetics, and household equipment. The results showed that 42% of product environmental claims were suspected of exaggerating or deceiving.
A report by RepRisk, an independent research institution in the United States, shows that as of 2023, global greenwashing incidents have increased by 70%, mainly from European financial institutions. Specifically, among the 148 global greenwashing cases reported by the banking and financial services industry, 106 involved European companies.
Although the complaint against Lululemon occurred in Canada, the company still faces the risk of violating a number of regulations, including the European Union's New Green Agreement, the Circular Economy Action Plan and the UK's Green Declaration Act Amendments.
Anika Kozlowski, assistant professor of fashion design, ethics and sustainability at the City University of Toronto, said that if the bureau determines that Lululemon has committed "green washing" behavior, it can resort to law.
Muchaneta Ten Napel, founder of fashion industry think tank Shape Innovate, said: "This case may set a precedent that the era of unbridled environmental propaganda is over. Companies need to combine marketing with actual practices or face legal and reputational risks."
Rachel Kitchin, a climate activist at Stand.earth, said the Competition Bureau's acceptance of Stand.earth's request for investigation "should serve as a real warning, not just to Lululemon, but to all companies that carry out greenwashing propaganda and behavior."
