Reducing Fashion MNEs' Potential Litigation Risk Arising From Environmental Sustainability Marketing Messages From A Signalling Theory Perspective

Abstract

For multinational enterprises (MNEs) in the fashion industry, sending out an attractive and truthful marketing message to consumers is the key to their success. Sustainable development is becoming more relevant as a marketing message for fashion MNEs, and consumers are becoming more aware of environmentally sustainable practices, prompting them to seek verification of marketing messages sent by MNEs in the fashion industry. In the H&M Group case, consumers discovered that H&M®’s products are not in line with its marketing materials, giving rise to litigation risk (Chelsea Commodore individually and on behalf of all others similarly situated, Plaintiff, v. H&M Hennes & Mauritz Lp, Defendant, in the United States District Court for the Southern District of New York).

This thesis reviews existing literature on signalling theory and signal verification to help fashion MNEs to reduce the litigation risk raising from marketing messages. The research gap arose as there is little research on verifying fashion MNEs’ environmentally sustainable signals by adopting ISO 14021 Type II Self-Declared Environmental Claims.

To identify whether fashion MNEs sent out verifiable signals regarding their sustainable practices to consumers, this thesis analyses the claims made by four selected fashion MNEs through their annual reports and their brands’ products. It analyses whether the claims made through brands’ products match with annual reports, and then verifies the claims made through brands’ products by using ISO 14021 Type II Self-Declared Environmental Claims.

Through the adoption of signalling theory and case studies, this thesis concludes that by voluntarily compliance with the most frequently satisfied requirements in ISO 14021 Type II Self-Declared Environmental Claims, fashion MNEs could reduce potential litigation risks raised from unmatched environmental sustainability marketing messages from different channels.