**6. Conclusions**

The above paragraphs outline the emergence and development of codes of ethics, their purpose, and some insights into their content. It has been said that codes of ethics are a form of self-regulation that contain general principles to guide behavior and that those codes are multifunctional, as they not only serve to represent (and enhance) a company's culture and values, but also may cause a company to adopt a specific organizational and/or governance structure. Some fundamental themes relate to workers' rights (including equality and discrimination issues), labor safety standards, bribery and anti-corruption, and counterfeiting and unfair business practices, with limited direct attention given to environmental protection.<sup>52</sup>

Attention to working conditions is not surprising. As previously stated, large retailers have outsourced production to countries with low wages, poor to no union representation, and lenient (or non-existent) environmental protection, where textile workers are accustomed to poverty and child-forced and prison labor is reported (ex multis, House of Commons 2019, p. 12 ff). Today, these and similar issues are well known and stigmatized by public opinion around the world. In an era where Internet and social networks allow information to spread quickly, a greater number of consumers have taken interest in the challenges of ethical and the sustainable fashion cause.<sup>53</sup> Consequently, when shopping for apparel, consumers have di fferent concerns; the general labor conditions under which their clothing is made is one of them. Yet, when one is interested in purchasing an ethical garment, it is di fficult to navigate among the many choices on the market (Vogel 2010).

Irrespective of whether CSR programs succeed in tackling problems such as poor working conditions and low wages in the clothing sector,<sup>54</sup> they may nonetheless create a general sense of reliance and may even influence consumer choice. Codes of ethics may a ffect how a certain brand image is portrayed to the public: as these codes are easily accessible on the brand's website; consumers might perceive them as a tool to gain better knowledge of company's values and consequently rely upon them.

<sup>52</sup> It is important to reiterate that, as stated above, we found that some brands had published a separate report on its commitment to environmental sustainability and/or improvement (see note 32). However, as this is not the object of the current contribution, this matter was not investigated further.

<sup>53</sup> On the events, see the introductory paragraph and note 7; on the issues, see note 32.

<sup>54</sup> For a critique on the effectiveness of CSR programs, see House of Commons (2019, p. 12 ff).

Indeed, such codes can be used as marketing tools to attract more ethical fashion consumers precisely because they speak to issues the public finds important, such as workers' rights. They could be used as a commercial statement even if they do not take the form of "classic advertising".<sup>55</sup> It is therefore necessary to distinguish between those companies that genuinely want to be "ethical" and those that merely aim to appear as such—without e ffectively being such—in the eyes of consumers. For instance, it is not news that some companies are stigmatized for practicing "greenwashing"<sup>56</sup> (i.e., the act of misleading consumers with regards to practices that impact the environment).<sup>57</sup> Analogous practices could be used in other fields, such as child labor and, more generally, working conditions.<sup>58</sup>

These reflections lead us to question what might happen if, for example, a consumer discovered (perhaps from a journalistic investigation) that the apparel purchased (from a brand claiming, expressly in its code of ethics, to be ethical and sustainable) was not produced in the specific way declared?<sup>59</sup> For instance, we could imagine what might happen if a brand violated its pledge not to use child or forced labor in the production of its clothes—a commitment made by every code of ethics surveyed.

If it is conceivable that consumers might reach out to some NGO and carry out or contribute to a protest campaign, as the strategy of "naming and shaming" has often been e ffective. Such action might even result in a boycott of famous brands: damage to image and reputation might be significant. Indeed, in the case of a lesser-known company, such a violation could be more di fficult to discover, or might attract less public attention. However, for an ethical consumer, buying ethically produced apparel means buying a product that possesses certain "qualities", which form the precise basis for purchasing that (ethical) brand over another (un-, or less-ethical) brand. What legal remedy might a customer have upon discovery that a company's code of ethics, which were instrumental in the purchase decision, was nothing more than lip service to the issues that consumers value?

<sup>55</sup> There is clearly no question as to their commercial purpose when CSR statements are not public or otherwise accessible to consumers, or in the event they are in no way connected to the promotion of products. See Beckers (2017).

<sup>56</sup> On greenwashing in general, see Bowen (2014).

<sup>57</sup> In the United States, the Federal Trade Commission's Green Guides are designed to help marketers avoid making environmental claims that mislead consumers. The guidance they provide includes: (1) general principles that apply to all environmental marketing claims; (2) how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and (3) how marketers can qualify their claims to avoid deceiving consumers. More information is available at https://www.ftc.gov/news-events/media-resources/truth-advertising/green-guides. In Europe the Directive on Unfair Commercial Practices—Directive 2005/29/EC (UCPD) provides two main principles related to environmental claims: (1) traders must present their green claims in a clear, specific, accurate, and unambiguous manner, to ensure that consumers are not mislead (Art. 6 and 7); and (2) traders must have the evidence to support their claims and be ready to provide it to competent enforcement authorities in an understandable way if the claim is challenged (Art. 12). These principles are also reflected in several national guidance documents on environmental claims, notably the Danish Guidance on the use of environmental and other claims in marketing, the UK Green Claims Guidance, and the French Practical Guide to Environmental Claims for traders and consumers. For more information on the E.U. position see (European Commission 2019, p. 95 ff).

<sup>58</sup> The Guidance on the application of the Unfair Commercial Practices Directives contains a useful definition of "ethical claims" by the Danish Consumer Ombudsman's Guidance on the use of environmental and ethical marketing claims: "'Ethical claims' means in particular the use of statements, etc., which convey the impression that the manufacturing of a product or planning of an activity of a trader is made according to generally recognized and accepted standards, for example concerning child labor and general working conditions, nature protection, health, animal welfare, corporate social responsibility (CSR) initiatives, and charity donations. Such claims are typically based on the trader's wish to accommodate general or specific developments and trends that can be inferred from consumers' behavior". The Guidance recognized that CSR has become a marketing tool used to meet the growing concern of consumers that traders comply with ethical standards and therefore, such initiatives are in most cases, "directly connected with the promotion, sale, or supply of a product" and can be qualified as a commercial practice within the meaning of the UCPD.

<sup>59</sup> See Chemerinsky and Fisk (2004), posing challenging questions such as: "May a company selling tuna fish tell consumers—in advertisements, letters to environmental groups, and elsewhere—that its tuna is caught in a dolphin-safe manner, when company o fficials know that the company's nets regularly capture and kill dolphins? May a cosmetics company tell consumers—through advertisements, letters to department stores, and otherwise—that it does not test its products on animals, even though it knows that it regularly uses animal testing in a way that many of its customers would find repugnant? May an agricultural company tell consumers that its products are organic when it knows that it uses pesticides and herbicides that would not fit anyone's definition of organic? May a manufacturer represent that its products were "made in the United States" or produced with union labor, when it knows those statements are untrue?"

Consumers have different concerns when they purchase clothing, and concerns about the conditions under which they are made should have the same protection than concerns about price or other characteristics (Chemerinsky and Fisk 2004).

If we wish to look specifically for a *fil rouge* across legal systems, and not focus on the various national *de jure conditio* and *de jure condendo* approaches,<sup>60</sup> we might find common threads (despite particular details that might vary greatly between them61) in the laws that protect consumers from misleading advertising: all developed countries have laws aimed at helping consumers make better informed decisions based on accurate information in order to guarantee efficient market transactions (Nehf 2010, p. 107).

Generally speaking, if a brand fails to comply with a specific, clear, and verifiable undertaking (and therefore not including too general, idealistic, or aspirational statements) set out in its code of ethics, and those same representations caused a consumer to make a commercial decision that—without such affirmations—s/he would not have otherwise made, then it might not be audacious to place this case within the framework of the laws against misleading advertising and/or unfair commercial practices (Benatti 2014, p. 203; Bussoli 2010, p. 167; Chiari 2017).

This view is not dissimilar to that put forth in 2003 in the United States in a case<sup>62</sup> against Nike. Although this case was not strictly related to a code of ethics, it nonetheless offers points for reflection. Specifically, in 1996, Nike responded to allegations of mistreatment and exploitation of workers at overseas facilities<sup>63</sup> by (amongst others) publishing press releases and writing letters to the editors of various newspapers around the country. However, in April 1998, Marc Kasky sued Nike in California for unfair and deceptive practices, claiming Nike had violated California's Unfair Competition Law and False Advertising Law<sup>64</sup> by making "false statements and/or material omissions of fact" about the working environments where its products are manufactured "in order to maintain and/or increase its sales." Although the lower courts ruled in favor of Nike (holding it had exercised "noncommercial speech" protected by the First Amendment), it is interesting to note that the California Supreme Court reversed the decision of the lower court (holding that "[b]ecause the messages in question were directed by a commercial speaker to a commercial audience, and because they made representations of fact about the speaker's own business operations for the purpose of promoting sales of its products, ... [the] messages are commercial speech"), but remanded for further proceedings on the grounds that the suit "is still at a preliminary stage." Following this decision, Nike appealed (petitioned for *certiorari*) to the US Supreme Court (USSC), which initially agreed to hear the appeal<sup>65</sup> but ultimately, in 2003, let stand the California Supreme Court's ruling by dismissing the writ of *certiorari* as improvidently granted. Despite Nike and Kasky eventually settling (costing Nike \$1.5 million) (Bigge 2004) the case before any solid precedent could be established, it is nonetheless significant to note that—in light of the uproar surrounding supply chain issues—the state of California has recently enacted the CA Transparency in Supply Chains Act that requires all retainer sellers and manufacturers doing business in California with global gross receipts of at least \$100,000,000 to disclose the extent of their efforts in the areas of verification, audits, certification, internal accountability, and training.<sup>66</sup> Thus, as far as North America

<sup>60</sup> On varying attitudes towards codes of conduct in a European context, see Howells et al. (2006).

<sup>61</sup> Every legal system has its own laws against misleading advertising. Generally speaking, there are different types of enforcement regimes, such for instance self-regulatory enforcement of advertising guidelines, civil enforcement through private actions for breach of advertising norms, and enforcement action brought by governmen<sup>t</sup> agencies to police marketplace for the good of general public. See Nehf (2010).

<sup>62</sup> Nike (2003), Inc., et al. v. Kasky, 539 U.S. 654. For an analysis of the case, see Benatti (2014, p. 203) (highlighting that this line of thought has not ye<sup>t</sup> taken hold).

<sup>63</sup> For a review of the 1990s events that involved Nike and the labor conditions of contractors in its factories, see Vogel (2005, p. 77 ff).

<sup>64</sup> In the United States, laws against false or misleading advertising are regulated on two levels: at the state-level and on the Federal level. The Federal Trade Commission (FTC) Act (enforceable by the FTC on behalf of consumers) and the Lanham Act are two fundamental federal laws.

<sup>65</sup> Nike (2003), Inc., et al. v. Kasky, 539 U.S. 654.

<sup>66</sup> For more information, see https://oag.ca.gov/SB657.

is concerned, it appears legislation is shifting in the direction of holding big business accountable to the public by requiring increased transparency when it comes to production and sourcing of products.

Similarly, on the other side of the ocean, the European Unfair Commercial Practices Directive67—enacted in 2005 "to contribute to the proper functioning of the internal market and achieve a high level of consumer protection by approximating the laws, regulations and administrative provisions of the Member States on unfair commercial practices harming consumers' economic interests" (Art. 1, Directive 2005/29)—suggests that lawmakers might also be moving in this direction.<sup>68</sup> In addition to its broad Art. 6(1), Art. 6(2)(b) expressly prescribes that "a commercial practice shall also be regarded as misleading if ... it causes or is likely to cause the average consumer to take a transactional decision that he would not have taken otherwise, and it involves: ... (b) non-compliance by the trader with commitments contained in codes of conduct by which the trader has undertaken to be bound, where: (i) the commitment is not aspirational but is firm and is capable of being verified, and (ii) the trader indicates in a commercial practice that he is bound by the code."<sup>69</sup>

Likewise, Australian Consumer Law<sup>70</sup> also aims to protect consumers and ensure fair trading by prohibiting, in its Section 18(1),<sup>71</sup> a person from engaging in conduct in trade or commerce that is misleading and deceptive or likely to mislead or deceive. This broad prohibition could be construed to create a general standard of conduct that would encompass aspects of CSR programs, such as codes of ethics (Southalan 2008; Spencer 2003).

Codes of ethics are often seen as a "win–win" solution (Howells et al. 2006, p. 196) and may perform a variety of functions, including being used as a marketing tool to meet the growing concern of consumers that clothing complies with ethical standards. In this regard, the laws against misleading advertising should provide protection in cases where codes of ethics have been used deceptively to affect or distort a consumer's choice, or significantly impair one's ability to make an informed decision. Albeit such path is narrow—indeed, to date, there does not appear to be any relevant evidence of courts (neither US, nor Australian) having found for a plainti ff relying on Kasky's line of reasoning, and the European UCPL requirements are quite strict72—it is still one worth pursuing.

**Author Contributions:** R.E.C., Professor of Comparative Private Law at the University of Milan (*Università degli Studi di Milano*) is the author of Sections 1, 2 and 6; K.P., Ph.D. candidate in Comparative Private Law at the University of Milan (*Università degli Studi di Milano*) is the author of Sections 3–5.

**Funding:** This research received no external funding.

**Conflicts of Interest:** The authors declare no conflict of interest.
