Article
ACC Advice to Business on ‘Greenwashing’
Announcement – Australian Competition and Consumer Commission, July 2023
Environmental and sustainability claims – Draft guidance for business
This draft guidance explains the obligations under the Australian Consumer Law which businesses must comply with when making environmental and sustainability claims.
It sets out what the ACCC considers to be good practice when making such claims, to help businesses provide clear, accurate and trustworthy information to consumers about the environmental performance of their business.
The goals of this guidance are to:
- encourage accuracy by businesses who choose to make environmental and sustainability claims
- demonstrate how businesses can make true, clear, evidence-based claims that consumers can understand and trust
- decrease instances of ‘greenwashing’, which is the practice of making false or misleading environmental or sustainability claims
- assist consumers to make more informed choices if they want to make purchasing decisions based on environmental or sustainability claims
- help businesses understand and comply with their obligations under the ACL when making environmental and sustainability claims
- explain the general approach the ACCC will take in investigating whether environmental and sustainability claims contravene the ACL and potential enforcement outcomes.
Read the full guidance here: https://apo.org.au/sites/default/files/resource-files/2023-07/apo-nid323537.pdf
Eight principles for trustworthy environmental and sustainability claims
Many consumers care about their environmental impact. They use environmental and sustainability claims (environmental claims) as a key factor to decide where they want to spend their money. Environmental claims are only useful for consumers when they are true, accurate, in easy-to-understand language and appropriately qualified. False or misleading claims also unfairly disadvantage businesses who are making genuine claims.
Businesses have obligations under the Australian Consumer Law (ACL) (being Schedule 2 of the Competition and Consumer Act 2010 (Cth)) not to make false or misleading representations or engage in misleading or deceptive conduct. These obligations should be considered whenever you are making environmental claims.
If you choose to make environmental claims, you can use these eight principles to help you comply with your obligations under the ACL, and to ensure that any claims you make create trust in your business and allow consumers to make informed decisions.
Principle 1: Make accurate and truthful claims
All your claims should be true and accurate.
Even claims that are factually correct can sometimes still mislead consumers. You should consider the overall impression created, including through use of visual elements.
Only make claims that represent a genuine environmental impact and do not exaggerate the benefits or level of scientific acceptance of a claim.
Principle 2: Have evidence to back up your claims
It is good practice to ensure you have clear evidence to back up all your claims.
Evidence that is independent and scientific is the most credible.
Making the research, evidence, or data that you are relying on easily accessible to consumers helps consumers to understand and trust your claims.
If you are making a representation about a future matter (e.g. something that you promise, forecast or predict will happen in the future), you must have, and be able to show that you have, reasonable grounds for making that representation. Otherwise the representation will be taken to be misleading under the ACL.
Principle 3: Don’t leave out or hide important information
Consumers cannot make informed decisions if they are not provided with relevant information that gives the full picture, or if important information is placed where they are unlikely to notice or find it. Consider all the relevant information about your environmental impact and be transparent about it.
Principle 4: Explain any conditions or qualifications on your claims
Theoretical environmental benefits, which are not clearly explained, are likely to mislead consumers. Ask yourself if there are any conditions that need to be met or steps that need to be taken for your claim to be true. If claims are only true in certain circumstances, you should explain this to consumers clearly and prominently.
Principle 5: Avoid broad and unqualified claims
Broad claims can be interpreted widely and more easily mislead consumers than clear, specific claims that are substantiated.
Ensure that you clearly qualify your claims, with prominent disclaimers, if there are any limitations to them.
Principle 6: Use clear and easy-to-understand language
Most consumers do not have specialist scientific or industry knowledge. It is good practice to use clear and easy-to-understand language and to avoid technical terms.
Principle 7: Visual elements should not give the wrong impression
Visual elements (for example green-coloured packaging, or logos representing a recycling process) on packaging and/or in advertising material can significantly influence a consumer’s impression of the environmental impact of a product or service. Avoid visual elements that would give the wrong impression about the environmental benefits of your product or service. You need to consider the overall impression that is created, taking into account not just the words used (or information that is left out), but also visual elements, colours and logos.
Principle 8: Be direct and open about your sustainability transition
You should be cautious about making aspirational claims about your future environmental objectives unless you have developed clear and actionable plans detailing how you will achieve those objectives. If you can transition to more sustainable business operations and want to tell consumers about it, be direct and open. Transitioning to a more sustainable business model takes time and is often not linear. For example, if you can’t reduce your greenhouse gas emissions in the short term, but are instead offsetting your impact on the environment, make this clear to consumers.