Fashion doesn’t pump out 10 percent of the world’s carbon emissions. Nor does it produce 20 percent of the world’s wastewater. Yet despite being discredited multiple times, a horde of “zombie” data continues to lurch and stagger across press releases, news articles, industry reports and social-media updates, where it’s frequently accepted as sacrosanct fact.
Symptomatic of fashion’s “serious misinformation problem,” such false, unverifiable and incredible statements don’t just leave brands open to greenwashing accusations, but they can also pose a financial risk to capital markets investors, a London-based financial think tank warns.
“The growing market for green products presents an attractive opportunity for the industry, promising substantial gains for those claiming sustainability credentials,” wrote Catherine Tubb, senior investment analyst at Planet Tracker, in a research note on Tuesday. “The risk to investors arises when a brand or company bases their environmental assumptions, and perhaps even projections or analysis, on these zombie data. If exposed, this could negatively impact image and market share with their customers as well as investors.”
Take the cloud of fake news that shadows the cotton industry. A recent study by the Transformers Foundation found that the biggest tropes about the fiber, including the claim that it takes 20,000 liters of water to grow enough cotton to make a T-shirt, are inaccurate, highly misleading or oversimplified. Misinformation can spread when critical context is stripped or data is selectively edited, it noted. Another route involves the phenomenon known as “erratic copying,” a sort of game of telephone that introduces errors that accumulate and worsen over time. It’s when a false claim gains enough traction that it’s legitimized and enshrined as fact.
In the case of the water intensity of a T-shirt, Planet Tracker found a range of numbers from multiple sources, some of which conflated the garment with a kilogram of cotton and others to just 150 grams. A couple specified Australian cotton, though most did not take into account climate, irrigation and soil health complexities that can vary wildly from one geography to another.
“As the data is repeated through the internet, these important differences are often lost,” Tubb said. “Ultimately, irresponsible data practices result in several statistics being presented as the true figure.”
The European Commission distinguishes between misinformation and disinformation, though both present a financial risk to investors, she said. Misinformation is “verifiably false information that is spread without the intention to mislead, and often shared because the user believes it to be true,” while disinformation is “verifiably false or misleading information created, presented and disseminated for economic gain or to intentionally deceive the public.”
When the European Commission examined 344 “seemingly dubious” sustainability product claims online last year, it found that 42 percent of them were “exaggerated, false or deceptive” and could potentially qualify as unfair commercial practices under European Union rules.
“The EC’s findings demonstrate the gravity of the greenwashing problem, of which fashion is said to be among the worst offenders,” Tubb said. “If zombie data are found to be the pillar on which these claims are based, companies could continue to undergo regulatory scrutiny.”
The United Kingdom is also cracking down on greenwashing. Earlier this month, the Competition and Markets Authority said it’s reviewing the mounting number of environmental marketing claims in the apparel and footwear retail sector, including assertions that individual items of clothing are sustainable, better for the environment or made from recycled or organic materials. The watchdog said it would consider taking further action if it found evidence of non-compliance.
Besides causing companies to run afoul of the law, zombie data can lead to poor financial decision-making and result in significant losses for shareholders, she said. To “finally put the zombies to rest,” Tubb advises zeroing in on full supply chain traceability and transparency to help generate the robust data needed to equip investors with “more reliable and up-to-date information, protecting them from hidden risks.” Investors must also continue to conduct their due diligence and not accept the sustainability claims of brands at “face value.”
“They need to pressure brands and companies to trace and disclose the entire supply chain and publish sound data on ESG metrics such as greenhouse-gas emissions and wastewater effluents,” Tubb said. “Indeed, not knowing the true number means not knowing the baseline on which the industry can improve. As a result, fashion will remain an impediment to, rather than proponent of, achievement of the Sustainable Development Goals and Paris Agreement objectives.”