Green and social washing in focus: The rise in ESG disputes

It was recently announced that the Clean Clothes Campaign (CCC) and four consumers are filing a lawsuit against the US clothing brand Levi Strauss (Levi’s). The case revolves around allegedly misleading sustainability claims and violations of labor rights at a factory in Turkey where Levi’s produces. More than 400 employees lost their jobs there. They had struck for better working conditions and joined a union. Hundreds of workers are still waiting for their compensation.

Both online and in its brick-and-mortar stores, Levi’s made promises to consumers about responsible production and respect for workers’ rights. According to the CCC, this is misleading. These promises lead consumers to believe that they are buying from a brand that delivers on these promises.

In this context, ‘social washing’ is often spoken of. Social washing involves making misleading statements about human rights, supply chain working conditions, and diversity policies. Companies that engage in social washing present themselves as socially responsible, even though there is often a lot going on behind the scenes. For example, you campaign for fair wages and good working conditions. Many brands claim their clothing is made responsibly. In reality, your suppliers may have unsafe working conditions, poor employment conditions or even forced labor.

Many clothing brands use commercial audits to support their claims about working conditions. An audit checks whether a supplier or manufacturer complies with labor standards. The problem with these audits is that they are often not independent and are paid for by the client. In addition, the audits are announced in advance. The inspectors often do not speak to the workers and the inspection reports are not public, which leads to low transparency. In short, audits often cannot factually support claims that clothing is produced responsibly.

In recent years, the Dutch Register of Legal Professionals has noted a 215 percent increase in ESG-related disputes, with greenwashing being the most common category. This increase is due to increased public awareness, stricter regulations and class action opportunities under the WAMCA (Mass Claims Settlement Act).

Consumers and stakeholders no longer hesitate to initiate proceedings before the RCC or civil courts. Research from the University of Amsterdam shows that 78 percent of ESG proceedings between 2022 and 2024 related to greenwashing allegations. Only 14 percent concerned social washing and eight percent related to governance issues. This distribution is expected to shift as laws such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD) continue to be implemented. While the current focus of the jurisprudence is on greenwashing, it is expected that more disputes over social washing will also arise.

The Greenwashing Directive and the Green Claims Directive will also play a crucial role in future enforcement. The Greenwashing Directive is due to be implemented into national law in 2026. The Green Claims Directive is not yet in force and is currently being negotiated at European level. These guidelines impose strict requirements on the substantiation and verification of environmental claims. Companies will soon have to provide scientifically based evidence before they can make sustainability claims.

Greenwashing in fashion

Greenwashing is widespread in the fashion industry. A 2020 study by the European Commission found that a significant proportion of sustainability and environmental claims examined (53.3 percent) contained vague, misleading or unfounded information about the environmental properties of products. This is problematic because it can prevent consumers from making truly sustainable consumption decisions.

Many brands use sustainability claims such as “organic cotton,” “eco,” “conscious,” and “sustainably produced.” In the Netherlands, the Authority for Consumers and Markets (ACM) monitors misleading sustainability claims and thus greenwashing. The ACM can impose large fines or penalty payments on parties that make misleading sustainability claims.

In 2022, the ACM criticized retailers H&M and Decathlon, among others, for greenwashing. The companies sold products with claims such as “Conscious,” “Ecodesign,” and “Organic Cotton” without any factual basis. In 2025, the ACM pointed out Dutch department store De Bijenkorf for using unclear sustainability claims on its website. De Bijenkorf used general and vague claims such as “sustainable products” and “reduced environmental impact” on its website, as well as a “sustainable choices” filter, without sufficient evidence. This mainly concerned clothing and cosmetics. After the ACM pointed this out, De Bijenkorf immediately changed and removed these claims.

These examples show how even established brands can find themselves in legal trouble when claims are not backed up by concrete facts and measurable performance.

The ACM has already prosecuted many companies for greenwashing, but hardly any for social washing.

Guidelines for sustainability statements

Sustainability statements must be accurate, clear and complete. The ACM requires companies to back up their claims with facts and keep them updated. Specific claims require explanation and verifiable, independent evidence.

The ACM Sustainability Statement Guidelines provide five rules of thumb and practical examples to help companies formulate sustainability statements. Every sustainability claim must be checked against these five rules of thumb:

• Use accurate, clear, specific and complete sustainability statements.
• Support your sustainability statements with facts and keep them up to date.
• Make fair comparisons with other products or competitors.
• Describe future sustainability ambitions in concrete and measurable terms.
• Make sure visuals and labels are helpful and not confusing to consumers.

Legal framework: self-regulation and civil enforcement

Greenwashing can be addressed by consumers or competitors through self-regulatory bodies such as the Advertising Rules Committee (RCC) or the ACM, or through civil courts.

The RCC is a body that decides on complaints from consumers or interest groups based on the Dutch Advertising Code. There is a special regulation for sustainability statements, namely the Code of Sustainability Advertising. The ACM and the RCC work together on complaints about sustainability claims. Consumers must first submit complaints about greenwashing to the RCC before the ACM begins an investigation.

For example, the Irish fashion retailer Primark was reprimanded by the RCC in 2023 for its advertising claims. The clothing chain used posters with texts like: “Reduce CO2 emissions by 50 percent. So the planet can breathe freely.” The RCC considered this sustainability goal to be insufficiently substantiated to assume that the goal will be achieved. Primark also used text such as “organic, recycled, sustainable and affordable cotton”. According to the RCC, it was not made sufficiently clear that these were Primark’s ambitions and not results already achieved.

Prevention is better than cure

A company that is guilty of greenwashing or social washing risks administrative sanctions, civil damages claims and reputational damage.

The ACM can impose fines of up to 900,000 euros per violation and, in serious cases, ten percent of the relevant annual turnover. In civil law, class actions involve considerable risks. The damage can run into millions of euros if large groups of consumers are affected.

The reputational damage that occurs when a court confirms an accusation of greenwashing or social washing is significant. A study by Erasmus University Rotterdam shows that companies suffer an average loss of brand value of 32 percent over a period of two years after substantiated greenwashing allegations.

Despite these risks, it should not be forgotten that sustainability claims are permitted provided that applicable laws and regulations are adhered to. It was not the intention of the legislature for companies to limit or avoid statements about their sustainability ambitions (so-called greenhushing). If the production of a garment can have a more positive climate or labor impact, it is beneficial for consumers to be informed correctly, completely, clearly and specifically. Based on this information, consumers can make more sustainable choices.

Prevention is still better than cure. Formulate sustainability and ESG statements carefully. Gather sufficient evidence to support the veracity of the claims. Consult the Sustainability Claims Guidelines and the European Commission Guidelines. If in doubt, have marketing campaigns checked by specialists to ensure compliance with applicable laws and regulations.

Written by Margot Span from Spargo Legal. Margot Span specializes in intellectual property law and commercial contracts and regularly discusses current legal issues in the Case Law column. www.spargolegal.nl