Ready to separate the green from the greenwashed?
Guiding businesses towards truthful environmental claims.
In an era where sustainability has become a cornerstone of consumer choices, businesses are increasingly making environmental claims to meet the growing demand for eco-friendly products and services. However, this surge has brought with it a rising concern known as “greenwashing.” This deceptive practice involves making false, misleading, or baseless claims about a company’s environmental and sustainability efforts, and it’s an issue that the Australian Competition and Consumer Commission (ACCC) is taking very seriously.
Understanding Greenwashing
Greenwashing poses a significant risk to consumers, as it can lead them to make purchasing decisions based on inaccurate information. The ACCC defines greenwashing as environmental and sustainability claims that are “false, misleading, or have no reasonable basis.”¹ Such deceptive practices may violate the Australian Consumer Law (ACL), including prohibitions against misleading conduct, false representations about goods or services, and misleading conduct regarding the nature of goods or services.
Consumer Awareness and Concerns
As consumer awareness and demand for sustainable products and services have risen, so too has the prevalence of greenwashing. Recognising the growing threat of greenwashing, the ACCC has been focusing on environmental and sustainability claims. To assess the extent of misleading claims, the ACCC conducted an internet sweep in late 2022, reviewing 247 businesses/brands across various industry sectors. Their findings were released in March 2023 and showed 57% of businesses identified as making concerning environmental claims.²
ACCC’s Guidance: Making Environmental Claims
In response to the concerning findings, the ACCC recently released a comprehensive guide titled “Making Environmental Claims: A Guide for Businesses.” This guide aims to help businesses navigate the complex landscape of environmental claims while upholding their obligations under the Australian Consumer Law (ACL). It introduces eight key principles that businesses should adhere to when making environmental claims.
Principles for Trustworthy Environmental Claims
- Accuracy and Truthfulness: Claims should be accurate and not create misleading impressions.
- Evidential Support: Clear and independent evidence should support claims, especially those about future matters.
- Transparency: Consumers should be provided with all relevant information, and businesses should be transparent about their environmental impact.
- Qualifications on Claims: Conditions or qualifications on claims, especially theoretical environmental benefits, must be clearly explained.
- Specificity in Claims: Broad and unqualified claims can be misleading; businesses are advised to qualify their claims.
- Clear Language: Businesses should use clear and understandable language, avoiding technical terms.
- Visual Impacts: Visual elements, such as packaging or logos, should not create false impressions.
- Sustainability Transition: Businesses should be direct and open about their future environmental objectives, acknowledging the non-linear nature of sustainability transitions.
By adhering to these principles, companies can build consumer trust, contribute to a more sustainable marketplace, and combat the pervasive issue of greenwashing.
Future Developments
Looking ahead, the ACCC plans to release additional guidance for businesses and consumers in early 2024. This guidance will cover emission and offset claims, the use of trust marks, and tools to help consumers confidently assess and rely on environmental claims.
References
- https://www.accc.gov.au/consumers/advertising-and-promotions/environmental-and-sustainability-claims
- https://www.accc.gov.au/about-us/publications/greenwashing-by-businesses-in-australia-findings-of-acccs-internet-sweep
- https://www.accc.gov.au/about-us/publications/making-environmental-claims-a-guide-for-business
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