ACCC cracks down on green claims that won’t wash

Posted on 20 Jul 2023

By Greg Thom, journalist, Our Community

The environment lobby has welcomed moves by the Australian Competition and Consumer Commission (ACCC) to crack down on the controversial trend known as greenwashing.

The Australian Conservation Foundation (ACF), endorsed the ACCC’s proposal for businesses to avoid the use of broad unqualified claims of sustainability.

Greenwashing is a term is used to describe the practice of companies that make misleading environmental or sustainability claims.

The regulator has released draft guidance designed to protect consumers by improving the “quality and integrity” of claims that refer to green credentials.

ACCC chair Gina Cass-Gottlieb said the new guidance aimed to:

make businesses aware of their obligations under the Australian Consumer Law
clearly articulate what the ACCC considers to be good practice when businesses make environmental claims about their products and services
ensure that businesses taking genuine steps to adopt sustainable practices are not put at a competitive disadvantage by businesses that engage in ‘greenwashing’ without incurring the same costs.

“As consumers become more environmentally conscious, businesses need to be honest and transparent when making environmental or sustainability claims, so consumers are not being misled,” said Ms Cass-Gottlieb.

“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers are often paying higher prices based on these claims.”

The ACCC move follows an internet sweep conducted by the regulator in October–November last year aimed at identifying misleading green marketing claims. The sweep revealed that more than half of the 247 businesses put under the microscope had made concerning claims about their environmental credentials. 

The cosmetics, clothing and footwear, and food and drink sectors were found to have the highest proportion of concerning claims among the industries targeted in the operation

“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers are often paying higher prices based on these claims.”

ACCC chair Gina Cass-Gottlieb

The new guidance was welcomed by the Australian Conservation Foundation (ACF), which endorsed the ACCC’s proposal for businesses to avoid the use of broad unqualified claims of sustainability.

Audrey van Herwaarden, the ACF’s corporate environmental performance analyst, said greenwashing undermined the urgency of the need for climate action in what is shaping up as a crucial decade in the health of the planet.

She said misleading environmental and sustainability claims created a false impression of environmental responsibility, misleading consumers, investors and the public about the actions taken by companies to reduce emissions.

“This has a broader impact on society, as emissions are not being cut at the pace needed to ensure a safe climate for humans to survive,” she said.

Ms van Herwaarden said the EU parliament recently voted to ban the generic use of the confusing – and at times misleading and deceptive – term “carbon neutral” in advertising.

The multi-country trade bloc also has plans to ban environmental claims that are based solely on carbon offsetting schemes.

“ACF would like to see the Australian government similarly consider regulatory options to control the use of broad carbon-neutral marketing, including an outright ban,” said Ms van Herwaarden.

The draft ACCC guidance identifies eight practical principles that the regulator encourages businesses to apply when making environmental claims.

“Businesses must provide clear, accurate and trustworthy information to consumers about any environmental or sustainability claims and be able to provide evidence to back them up,” Ms Cass-Gottlieb said.

“If you make a claim about the environmental or sustainability benefits of your product or service – make sure it’s right, and if you are unsure or can’t substantiate these claims, then don’t make the claim.”

Consultation with business and consumers on the new draft guidelines closes on September 15.