From Fine to Framework: What Shein’s €1 Million Penalty Says About the Need for Responsible Marketing

The Case Against Shein

The AGCM’s investigation concluded nearly a year after opening a probe into Shein’s environmental claims. Two stood out. Marketing for its “evoluSHEIN by Design” line implied that products were made entirely from sustainable materials and were fully recyclable. Neither of these statements were considered accurate, given the fiber blends used and the fact that most textiles of this kind cannot be recycled with existing technology and infrastructure. The regulator also noted that this line represents only a small share of Shein’s total product range.

AGCM took issue with Shein’s climate pledges, as well. The company has public goals to cut greenhouse-gas emissions by 25% by 2030 and to reach net zero by 2050, but Shein’s own reported emissions have risen since 2023. These inconsistencies, the authority said, were especially concerning given Shein’s “increased duty of care” as a high-pollution, high-volume producer.

The Italian decision follows a July ruling by France’s Directorate for Competition, Consumer Affairs and Fraud Prevention, which fined Shein €40 million for deceptive marketing. That investigation also found unsupported environmental claims alongside misleading price-reduction promotions.

Shein’s “superfast” fashion model is built on high-volume, low-cost production, with as many as 10,000 new items added to its app each day. Many garments are made from polyester and other synthetics that are difficult to recycle and often end up in landfills or incineration within a short time. Critics say the oversupply of such materials fuels a throwaway culture, contributes to plastic pollution, and undermines circular economy goals.

A Growing Global Crackdown

• In Germany, asset manager DWS was fined €25 million after prosecutors found it misrepresented the sustainability credentials of its funds, giving investors a misleading impression of the funds’ true environmental impact.
• In Australia, Active Super received a A$10.5 million penalty for marketing its superannuation funds as “ethical” while still holding investments in excluded sectors such as tobacco, coal mining, and gambling.
• In Canada, Keurig paid C$3 million after advertising its single-use coffee pods as “easy to recycle” despite most facilities being unable to process them—a misrepresentation that left thousands of tons of plastic headed for landfill instead.
• In France, H&M and Decathlon were fined for vague and unverified sustainability claims on clothing labels, while TotalEnergies faces the country’s first greenwashing trial against an oil and gas company: a case over its “carbon neutral by 2050” messaging, continued fossil fuel expansion, and portrayal of natural gas as the “least polluting” fuel.
• In the United Kingdom, the Competition and Markets Authority gained new powers in April 2025 to directly fine companies up to 10% of global turnover for misleading environmental claims without going to court. The CMA has already issued early warnings to food and retail brands using generic terms like “eco” or “carbon neutral” without evidence.

These are among the most visible examples in a broader enforcement wave. Regulators in the U.S., EU, UK, and Australia have not only increased the size and frequency of fines but, in some cases, made it easier to impose them. The UK’s new CMA powers, expanded FTC actions in the U.S., and coordinated EU investigations all signal a willingness to move faster and act across borders.

While enforcement levels in some regions have plateaued since the spike of 2021–2022, the overall risk of regulatory penalties, litigation, and reputational damage remains high—especially for companies in high-impact sectors. Authorities are issuing some of their largest-ever penalties, and litigation tied to misleading sustainability claims is rising worldwide. The direction of travel is clear: the era of unverified sustainability storytelling is ending.

Why Misleading Claims Matter

Greenwashing (when companies overstate or misrepresent their environmental performance) is more than a marketing misstep. It erodes consumer trust, distorts markets, and delays the systemic changes needed to address climate and environmental challenges. When customers can’t distinguish between genuine progress and overstated claims, responsible businesses lose competitive ground, and consumers struggle to make informed choices that align with their personal values.

One common form of greenwashing is promoting a small, “more sustainable” product line while the majority of a company’s offerings are produced using the same high-impact methods: practices that consume significant resources, generate high levels of waste or emissions, or otherwise cause substantial environmental harm. This tactic shifts public attention away from the full scope of a company’s operations, creating a perception of transformation without the operational changes to support it.

In the case of Shein, regulators found that such selective promotion gave a misleading impression of the company’s overall environmental performance. Similar patterns emerge across sectors: a bank advertising “green” investment funds that quietly hold carbon-intensive assets, an energy company touting a handful of offshore wind projects while committing billions to new oil and gas fields, a packaged goods brand launching a “plant-based” snack line while its main portfolio depends on deforestation-linked commodities, or a coffee company promoting a single recyclable cup design while most of its products use single-use plastics that rarely get recovered.

For industries with high environmental impact, the stakes are especially high. Without clear, verifiable evidence (e.g., third-party audits, independently verified emissions data, full lifecycle assessments, or certifications with transparent criteria), marketing claims can blur the line between meaningful action and image management. They also contribute to consumer fatigue: when audiences feel misled too often, they may stop believing any claims—including those backed by credible data.

Ethical communication in this context goes beyond legal compliance. It recognizes marketing’s role in shaping public perception and consumer behavior. Honest, specific, and evidence-based claims enable businesses to build lasting trust, support policy goals, and help steer both markets and cultural norms toward solutions that match the scale of the environmental crisis.

The B Corp Standard on Responsible Marketing

B Lab’s standards address greenwashing directly. Under Purpose & Stakeholder Governance Standard 4 (PSG4), Certified B Corporations must commit to principles for responsible marketing and public relations. These principles are designed to ensure that what a company says publicly aligns with what it does operationally, reducing the risk of misleading claims and reinforcing trust with customers, investors, and other stakeholders.

Key requirements under PSG4 include:

• Making precise, verifiable, and substantiated claims based on reliable or scientific data. This means citing credible sources, using consistent methodologies, and ensuring claims can be replicated or independently validated
• Being transparent about both positive and negative environmental and social impacts, so stakeholders get a full picture rather than a selective view
• Avoiding claims that misrepresent a company’s overall impact by focusing on small product lines or isolated initiatives that do not reflect the business as a whole
• Communicating realistic roadmaps toward sustainability goals, with interim targets, supporting data, and regular progress updates.

The intent is twofold: to protect consumers from misleading information and to help businesses build marketing practices that strengthen (rather than undermine) long-term credibility. This is especially relevant to high-impact sectors, where the temptation to overstate progress can be strong, and the consequences of doing so—as Shein’s recent fines show—can be costly.

B Lab’s guidance also addresses how companies communicate. Responsible marketing involves respecting consumer rights, avoiding manipulative tactics, and considering the impact of communications on vulnerable audiences. For example, a B Corp in the apparel sector would need to be honest about the environmental limits of its materials, avoid overstating recyclability, and make clear when a product line represents only a small fraction of total production.

Some B Corps model this approach through radical transparency:

• Patagonia’s “Don’t Buy This Jacket” campaign urged customers to reconsider new purchases by detailing the environmental cost of making each garment, prioritizing impact over short-term sales
• Dutch eyewear brand Ace & Tate published a candid account of mistakes made on its path to certification, openly sharing where it fell short and how it planned to improve
• Tony’s Chocolonely combines activist messaging with detailed disclosures on its supply chain practices, embedding transparency into its brand identity.

These examples show that PSG4 helps organizations use marketing as a tool for accountability. Companies that follow these principles make it easier for customers to understand the real scope of their impact, the work that still lies ahead, and the steps the company is taking to close that gap.

In practice, responsible marketing means that claims like “100% recyclable” are accompanied by data on where and how products can actually be recycled; “net zero by 2050” is paired with a clear, time-bound plan to reach interim milestones; and “sustainably sourced” is backed by third-party audits or certifications.

As enforcement actions increase worldwide, standards like PSG4 offer businesses a proactive way to align communications with reality, avoid reputational harm, and build trust through honesty. For companies in high-impact industries, that alignment is no longer optional; it’s becoming a baseline expectation from regulators, consumers, and peers alike.

The Circularity Connection

Circularity is a paradigm shift from the “make–use–dispose” economy. In a circular model, materials and products are created to stay in use for as long as possible, at their highest value, through reuse, repair, refurbishment, remanufacturing, and—only as a last resort—recycling. Done well, circularity reduces pressure on finite natural resources, respects ecological thresholds, and supports resilient systems that can sustain both people and the planet.

That’s why overstated recyclability claims, like those cited in Shein’s case, are so damaging. AGCM found that the company’s marketing implied its products were recyclable when the fiber types, blends, and global recycling infrastructure made that either impractical or impossible at scale. Such claims obscure the deeper systemic shifts needed to address the twin crises of textile waste and plastic pollution.

Under B Lab’s Environment Stewardship & Circularity (ESC3) requirements, companies pursuing authentic circularity must go beyond isolated product claims. They’re expected to:

• Understand and track material inflows, including how much comes from renewable, third-party–verified sources, and how much is reused or recycled
• Reduce reliance on virgin, non-renewable materials year over year, shifting toward sustainable or recovered inputs
• Design for longevity by building durability, repairability, and reusability into products and packaging from the start
• Enable true recirculation by ensuring that products can be disassembled, refurbished, or fully recycled at end-of-life, and that recovery infrastructure actually exists where its products are sold
• Actively improve recovery systems: not just relying on existing infrastructure, but investing in ways to expand or strengthen it in key markets

From Compliance to Credibility

Shein’s penalties underscore a reality that spans industries and borders: the gap between what companies say and what they do is no longer invisible. Regulatory agencies are investing in better investigative tools, building cross-border alliances, and giving themselves more power to act quickly. Civil society groups are learning how to monitor claims and escalate concerns. Even investors, whose own reputations are now tied to the credibility of their portfolio companies, are starting to scrutinize ESG and sustainability communications more closely. In this environment, compliance is the floor, not the ceiling.

Closing that gap isn’t simply about avoiding fines or meeting minimum disclosure requirements. It’s about protecting brand equity in a marketplace where trust is fragile and hard to regain once lost. The businesses that will hold their ground (and grow) are those whose sustainability claims can withstand the closest scrutiny because they’re rooted in operational reality, backed by independently verifiable data, and communicated with precision. Anything less risks falling into the same reputational quicksand Shein now faces.

Treating Every Claim as a Commitment

For companies ready to align marketing with measurable progress, the path forward begins with embedding accountability into every step of the communications process. That means building internal systems for verifying claims before they go public; making sure data flows seamlessly between sustainability teams, operations, and marketing; and treating each claim as a binding commitment rather than a flexible talking point. It also means ensuring that goals aren’t just aspirational slogans, but are supported by credible roadmaps, interim milestones, and regular progress updates that can be defended in any forum—whether it’s a regulator’s inquiry, an investor meeting, or the court of public opinion.

Third-party audits, lifecycle assessments, and transparent impact reporting are no longer optional in high-impact sectors. These tools protect against legal and reputational risk, improve decision-making, highlight operational inefficiencies, and open up new opportunities for innovation. Frameworks like B Lab’s PSG4 and ESC3 offer a tested structure for embedding these practices across teams and functions, making it easier to ensure that what’s said externally matches what is happening internally.

Copyright B Lab U.S. & Canada
Photo by Tatiana Zanon