The New Zealand arm of low-price department store Kmart – Kmart NZ Holdings Limited – has been issued a warning from the Commerce Commission for potentially breaching the Fair Trading Act and making unsubstantiated claims in its “100% sustainably sourced cotton” advertising.
Commerce Commission’s competition, fair trading, and credit GM Vanessa Horne said greenwashing is a real concern as well-intentioned consumers are led to believe products are more environmentally friendly than they actually are.
“Consumers have a right to clear and accurate information, and greenwashing makes it virtually impossible for a consumer to identify if a product is genuinely sustainable,” Horne said.
“Kmart’s absolute claim of “100% sustainably sourced cotton” implies a high level of certainty that we believe Kmart did not have,” Horne said.
During the Commission’s investigation, Kmart admitted its “Better Cotton” was actually mixed with conventional cotton in the supply chain. Kmart could therefore not say with certainty whether 100 per cent of the cotton in its clothing was supplied by Better Cotton farmers or was sustainably sourced, the Commission noted.
“Businesses know that consumers are increasingly considering the environment when buying goods or services and may be influenced to purchase from one company over another because of their environmental claims,” Horne said.
“Unsubstantiated claims are unfair for businesses who put in the time and resource to make sure their environmental claims are legitimate.
“We are very supportive of businesses getting involved in sustainability initiatives, but as with any advertising, claims made must be accurate and be able to be backed up to avoid breaching the Fair Trading Act.”
Horne said if companies can’t back it up, then they should not say it.
“If you think a business is being misleading about its environmental claims please let the Commission know on our website,” Horne said.
After the Commission raised the issue, Kmart removed the “100% sustainably sourced cotton” claim from its New Zealand website. Kmart has also advised it continues to provide regular compliance training for its staff members in consumer and competition law.
The 100% sustainable cotton claims were made from August 4, 2023 and removed on October 4, 2024.
The Commission believes this conduct was likely in breach of the Fair Trading Act and issued a warning letter to Kmart. Only the court can determine if a breach has occurred. Legal action remains available to the Commission in future if the conduct is repeated.
This latest challenge comes a week after the Australian Uyghur Tangritagh Women’s Association (AUTWA) filed an application in the Federal Court to compel Kmart to produce documents demonstrating what it knows about two suppliers listed on its 2024 and 2025 factory lists that are believed to have links to the Xinjiang Uyghur Autonomous Region.
Uyghurs are Turkic-speaking people of inner Asia living mostly in the Uygur Autonomous Region of Xinjiang in northwestern China, where systematic state-sponsored forced labour and other human rights abuses have occurred against them, according to many media and government body reports globally.
AUTWA is seeking the documents to determine whether Kmart has adequately implemented its ethical sourcing procedures regarding these suppliers, and whether Kmart’s public statements about this have been misleading or deceptive.
Regarding the AUTWA case, Kmart swiftly released a statement, with a spokesperson saying the retailer is committed to respecting human rights in its operations and supply chains.
“As a large Australian retailer, we recognise that through our size and scale we have an important role to play in combating modern slavery, which is a serious and complex problem facing global supply chains.
“We are disappointed that the AUTWA has taken this course of action. As part of Kmart’s transparent approach to our Ethical Sourcing Program, we invited the AUTWA to meet with us several times to help us understand their concerns.
“Kmart has been in correspondence with the applicant’s lawyers for over 12 months and has provided extensive details of our Ethical Sourcing Program.”
Ragtrader has reached out to Kmart for comment on the New Zealand case..