Retailer Kmart has been warned by the Commerce Commission following an investigation into potentially misleading environmental claims about its cotton products.

The probe was launched after Kmart advertised in August 2023 that certain items were made from “100 per cent sustainable cotton.” However, during the investigation, the retailer acknowledged that its “Better Cotton” was blended with conventional cotton within the supply chain.

As a result, Kmart could not confirm with certainty that all the cotton used in its clothing came exclusively from Better Cotton farmers or was sustainably sourced.

“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,” said Vanessa Horne, Commerce Commission competition, fair trading, and credit GM.

She added, “Kmart’s absolute claim of ‘100 per cent sustainably sourced cotton’ implies a high level of certainty that we believe Kmart did not have.”

Although no fines were imposed, the warning signals heightened regulatory scrutiny on “greenwashing”, the practice of making unsubstantiated or exaggerated environmental claims to attract eco-conscious buyers.

In response, Kmart has removed the “100 per cent sustainably sourced” claim from its advertising and committed to enhancing its internal compliance processes.

The Commerce Commission emphasised that businesses must be transparent and cautious when making sustainability claims, especially in sectors such as fashion and retail, where environmental concerns are increasingly significant.