Research Brief 01

Australia's Clothing Labels Tell Consumers What They Are Buying—Not How It Was Made

Every garment sold in Australia comes with information intended to help consumers make purchasing decisions. Typically, clothing labels identify fibre composition, care instructions and, in many cases, the country of origin. These requirements improve consumer protection by helping shoppers understand what a garment is made from and how it should be maintained.

However, as sustainability becomes an increasingly important purchasing consideration, an important question remains unanswered:

What is the environmental impact of the garment?

Current clothing labels provide almost no information about this.

What Australian clothing labels currently require

Australian regulations require clothing suppliers to provide information that enables consumers to identify and care for textile products correctly. Mandatory care labelling includes either written care instructions or internationally recognised care symbols, ensuring consumers know how garments should be washed, dried and maintained.

These labels generally communicate:

• fibre composition

• washing and care instructions

• manufacturer or brand information

• country of origin (where applicable)

This information protects consumers, but it was never designed to measure environmental performance.

As a result, two garments labelled "100% cotton" may appear identical even though their environmental impacts differ substantially because of variations in irrigation, energy sources, manufacturing processes, transport distances and waste management practices.

Consumers are increasingly expected to make sustainable choices

Public awareness of fashion's environmental impacts has grown rapidly over the past decade. Many consumers actively seek products marketed as sustainable, responsible or environmentally friendly.

At the same time, businesses are making more environmental claims than ever before.

The challenge is that these claims are rarely presented using a consistent methodology.

One brand may define sustainability by using recycled fibres.

Another may focus on renewable electricity.

A third may highlight reduced water consumption.

Without standardised reporting, consumers cannot meaningfully compare products.

The Australian Competition and Consumer Commission (ACCC) has identified this as a growing concern. It notes that environmental claims must be truthful, evidence-based and not misleading. Vague expressions such as "green", "eco-friendly" or "sustainable" may mislead consumers when they are unsupported or lack sufficient context.

Information asymmetry creates a market problem

Economists describe this situation as information asymmetry—where sellers possess significantly more information than buyers.

Manufacturers generally understand how products are sourced and produced, while consumers must rely on marketing material and voluntary disclosures.

This imbalance makes it difficult for consumers to reward genuinely lower-impact products.

It also disadvantages companies that invest in sustainability but compete alongside businesses making broad environmental claims without equivalent evidence.

Lessons from existing labelling systems

Australia has successfully introduced simple environmental labels in other sectors.

Energy Rating Labels allow consumers to compare household appliances using a common methodology.

Similarly, the National Australian Built Environment Rating System (NABERS) translates complex building performance data into a straightforward star rating.

Both systems demonstrate that technical environmental assessments can be communicated through clear, standardised labels that support informed purchasing decisions.

The clothing sector currently lacks an equivalent national framework.

Towards a Clothing Eco Rating

Rather than replacing existing textile labels, Clothing Eco Rating proposes adding an environmental performance label that complements existing consumer information.

Such a framework could allow shoppers to compare garments using consistent environmental criteria rather than relying solely on marketing language.

Importantly, the objective is not to simplify sustainability into a single marketing claim. Instead, it is to translate complex environmental data into information that consumers can understand and use at the point of purchase.

As governments around the world continue exploring product environmental labelling, Australia has an opportunity to develop a transparent, evidence-based system that helps consumers make more informed decisions while encouraging greater accountability across the fashion industry.

References

Australian Competition and Consumer Commission. (2025). Environmental and sustainability claims.

Australian Competition and Consumer Commission. (2023). Care labelling for clothing and textiles mandatory standard.

Australian Competition and Consumer Commission. (2023). A guide to making environmental claims for business.