Wrestle with PESTLE: greenwashing and UK fashion brands

Reading time: seven minutes

This LCN Says is part of LawCareers.Net’s new ‘Wrestle with PESTLE (WWP)’ series, which looks at various business case studies using the PESTLE technique.

Unsure what PESTLE is? Read the previous WWP explaining the technique.  

PESTLE stands for:

• political;
• economic;
• sociological;
• technological;
• legal; and
• environmental.

This technique involves using these six external factors to analyse the impact on a business and/or industry.

Case study: Zara and greenwashing in the UK

In 2022, fashion retailer Zara came under fire from various sources due to some of its sustainability claims. Articles by Vogue business, the Independent and the Guardian all discussed the so-called misleading claims made by the brand over its environmental credentials. In short, Zara has been accused of ‘greenwashing’ – a term that describes the marketing spin used by companies to persuade the public that its products, aims and policies are environmentally friendly. From a ‘Zara Pre-Owned’ initiative to its ‘Join Life’ sustainably considered collection, let’s dive in!

Political impact

In the UK, the government has made a commitment to help deliver ‘net zero’ – a promise to reduce greenhouse gas emissions in the atmosphere by 2050. This has a multitude of impacts on companies and businesses that operate within the UK, from ensuring they meet the public expectations of net zero to reaching the political standard that’s been set for them. In its most recent report, Inditex (Zara’s parent company) stated: “Inditex is firmly committed to reaching net zero in 2040 through the reduction of carbon emissions across our supply chain and across all other areas of our business.”

Other political factors that affect Zara’s sustainability pledge include its trade agreement with Europe because, as a Spanish multinational brand, the company can trade freely within Europe. This means that it doesn’t face trade restrictions within this area, such as paying extra taxes on imports and exports. However, with more than 6.2 million customers in the UK per year, the political impact of the Brexit deal in the UK is significant and has led to British shoppers paying up to 50% more than its Spanish counterparts for Zara items. It could be argued that this higher cost for consumers, driven by international policy, is often associated with a reliable supply chain and therefore more sustainable practices.

Economic impact

Associate James Crabtree from Bevan Brittan LLP wrote in a recent Commercial Question for LawCareers.Net: “The production and consumption of goods is a cornerstone of the UK and global economy.” Yet, a recent turn towards sustainable consumption means that businesses have had to begin advertising and implementing greater sustainability policies to retain consumer interest and maintain profit.  

Policies such as Zara Pre-Owned (an initiative that allows you to repair, resell or donate used Zara garments) and Zara Join Life allow the company to continue producing items with the same supply chain model without losing valued customers. The cost of a scheme like this is minimal to the company (compared to supply chain changes), but it ensures that consumers aren’t lost due to the company being labelled ‘unsustainable’.

In particular, the Join Life initiative claims that by 2022 it’ll use “100% renewable electrical energy in our own operations” but it’s not until 2025 that even a “25% reduction of water impact in our supply chain” is reached. Note that Zara will make no significant changes to its supply chain until much further down the line, in 2030. With 50% of the items Zara sells now in the Join Life collection, it’s clear that the marketing value of the collection is significant. Sustainable initiatives such as this are key to brands as they ensure consumers return to the brand and keep the brand’s profits high.

As we reported a few months ago, Zara has also made an active decision to abandon its free returns policy. By reducing last-mile costs as gas prices continue to rise and emissions-cutting across its distribution line, paid returns can be advertised by Zara as part of its wider sustainability initiatives. Once again, this decision helps them to save on refund costs, while maintaining a sustainable image.

Sociological impact

Now more than ever, people want to be considered environmentally conscious and sustainable shoppers. With the rise of platforms like Depop and Vinted offering ‘sustainable’ second-hand wares for lower prices, retailers (including Zara) must respond. The Zara Pre-Owned initiative and encouraging customers to drop off their used clothing, footwear and accessories in-store demonstrates this.

But this is just one social trend that Zara has to keep up with because, as a fashion brand, it must also continue producing items that are ‘on-trend’. The constant need to produce new items that match up with the speed of this demand, puts pressure on the company’s sustainability claims. That said, Vogue Business notes that Zara’s resale platform “includes repair, which sets it apart from brands like Shein and Pretty Little Thing”.

It's also worth considering that ‘greenwashing’ is rapidly becoming a well-known term, with plenty of public interest. Fast fashion brands must ensure that across the board, they’re considering how consumers are adapting their habits to match increased expectations of sustainability – if they are at all.

Technological impact

In order to reach its ambitious goal of becoming net zero by 2040, Zara needs to adopt the latest technology. This includes investing in start-ups such as CIRC, a brand that’s created technology that allows textile products made of polyester and cotton blends to be recycled on an industrial scale. In the long term, technology like this, which allows Zara to create garments out of ‘recycled fibres’, will increase sales and reduce using high cost ‘new’ materials.

If you’ve recently been to a Zara store, you may have also noticed the new self-checkout system introduced in 2017. Plus, if you’re in London, you may have seen its new flagship store in Battersea Power Station, featuring a fitting room reservation service, ‘Pay & Go’ service (using a smartphone) and an online shopping collection point with an automated storage area. This could even be considered as mimicking online shopping in-store and the new purchasing habits of consumers. Again, these technological innovations show that Zara is considering how people want to shop in order to maintain a high-profit margin. 

Legal impact

The Competition and Markets Authority is the authoritative body on greenwashing in the retail industry, with the main legislation on greenwashing claims being the Consumer Protection from Unfair Trading Regulations 2008 (CPUT). The CPUT enforces a general injunction on all traders, including in fashion, from engaging in misleading actions and misleading omissions. So, legally speaking, Zara must live up to the claims it makes regarding the sustainability of its products, supply chain and environmental policies.

Equally, there’s a legal aspect to greenwashing and advertising across businesses. The Advertising Standards Agency enforces the Committee of Advertising Practice Code, which ensures that companies’ marketing communications comply with a consistent set of standards. In short, all of Zara’s advertisements of its sustainability claims must be legal, truthful and not misleading. The brand has been accused by researchers of providing misleading information regarding its sustainability and, although it hasn’t legally faced any charges yet, it could face legal action on this in the future.

Environmental impact

The environmental impact of Zara and its sustainability claims has been discussed throughout this article, with references to the various aspects of greenwashing allegations. However, it’s worth noting that the world of fast fashion is often associated with waste. By encouraging people to hop on new trends, changing what’s in store every few weeks and capitalising on affordability, waste is bound to occur. However, Zara must continue its efforts to engage with the increasing eco-conscience of its shoppers as not doing so could negatively impact profits, as well as continue to damage the planet.

If Zara’s net-zero plans are true, they could have a positive impact on the planet. For example, if the CIRC technology mentioned above did lead to a 25% reduction in water consumption throughout the supply chain, the result would be significant. Currently, the chemicals used in the production process for fibres and textiles (eg, dyes) account for around 43 million tonnes of non-renewable resources and textile production alone is the cause of 4% of all freshwater extraction globally. Reducing this, even slightly, with technology and a commitment to sustainability is a step towards net zero.

The verdict

Zara has a long way to go with its sustainability strategies as a business, and this plays into every aspect of its model. The influence of external factors is evidently key, as you can see how a company may assess various factors to make informed decisions on its policies. So, although this could be considered strictly an ‘environmental issue’, numerous factors and stakeholders are important when considering the wider impact of Zara and greenwashing claims.  

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Katherine Bryant (she/her) is a content and engagement coordinator at LawCareers.Net.