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ACCC’s new greenwashing guidance for businesses to avoid fines

The ACCC today published draft guidance to improve the integrity of environmental and sustainability claims made by businesses and protect consumers from ‘greenwashing’.

The draft guidance aims to address the concerning conduct identified by the ACCC’s recent greenwashing internet sweep, which found 57 per cent of businesses reviewed were making potentially misleading environmental claims.

“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,” ACCC Chair Gina Cass-Gottlieb said.

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

“Similarly, businesses that are taking genuine steps to adopt sustainable practices are put at a competitive disadvantage by businesses that engage in ‘greenwashing’ without incurring the same costs.”

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The draft guidance identifies eight practical principles which the ACCC encourages businesses to apply when making environmental claims. By following these principles, businesses are less likely to mislead consumers and contravene the Australian Consumer Law.

Overview of ACCC’s New 8 Principles by Gilbert + Tobin law firm

1. Make accurate and truthful claims

All environmental claims should be accurate, true and factually correct.  This includes:

  • do not overstate the level of scientific acceptance.
  • do not exaggerate environmental benefits or understate an environmental harm.
  • only make meaningful claims.
  • make sure comparisons are transparent and fair.
  • have reasonable grounds for making representations about the future.

2. Have evidence to back up your claims

It is good practice to ensure you can substantiate any environmental claim.  Evidence that is independent and scientific is the most credible. Make any evidence, research or data relied upon publicly available to help consumers easily understand, verify and trust your claims.  This evidence can be directly where the claim is made, or if there is a lot of information, accessible using, eg. links, brochures, sites, QR codes.

3. Don’t leave out or hide important information

Incomplete information can be misleading.  Consumers cannot make informed decisions if they are not given relevant information that gives the full picture, or if important information is placed where they are unlikely to notice or find it. When considering how information is presented:

  • Small print should not hide the truth.
  • Transparency is the key.
  • Consider the full lifecycle of your product or service.

4. Explain any conditions or qualifications on your claims

Some environmental claims may only be true under certain condition or realised if certain steps are carried out.  Theoretical environmental benefits that are not clearly explained or unlikely to be realised during ordinary consumer use are likely to mislead consumers.

5. Avoid broad and unqualified claims

Broad and unqualified claims can be interpreted widely and more easily mislead consumers than clear, specific claims that are substantiated. Providing only partial information (or information without sufficient qualifications) also risks misleading consumers.

Emissions related claims: The ACCC also noted businesses should exercise particular caution with representations about emissions associated with their products, services or businesses. It stated consumers are unlikely to readily understand what is meant by broad headline claims like ‘carbon natural’, ‘climate neutral’ or ‘net-zero’, and provided guidance on good practice for emission related claims.

Environmental claims in highly polluting industries: The ACCC noted that emissions intensive businesses (eg. those relying on/selling fossil fuels) should be particularly careful not to understand the overall environmental impact of their business when making environmental claims. The ACCC stated that broad or unqualified environmental claims made by business in these industries have a higher chance of misleading consumers.

6. Use clear and easy-to-understand language

When making environmental claims, use clear, easy to understand language that an ordinary, reasonable consumer can understand:

  • Avoid technical or scientific language
  • Use words to convey their common meaning

7. Visual elements should not give the wrong impression

Consumers may interpret visual elements (eg., colours, images, logos or symbols in marketing materials and product packaging) as a claim about the environmental benefits of a product, service or business. They can contribute to an overall misleading impression together with the words used (or omitted information).

  • Symbols: It can be misleading to use symbols or logos that convey widely accepted meanings (eg., the mobius loop, which typically represents that a product is made of recycled materials / recyclable). Make sure it meets criteria for using the symbol, and clearly and prominently explain the intended meaning next to the symbol.
  • Trust marks: If designing your own symbols, be careful to avoid symbols looking like trust marks that represent certification by a third-party when not the case (eg., a circled green tick with the words ‘biodegradable approved’ when the product is not certified biodegradable).
  • Third-party certifications: When using logos from an environmental certification scheme, consider the overall impression created and provide further information / explanation needed to ensure consumers are not misled as to the scheme’s nature, especially if they may be unfamiliar with it (eg., whether the scheme is independent or self-assessed).  Businesses should only use the logo in relation to:
    • the business’ particular product, service or aspect that has been certified; and
    • only while they remain certified and still meet the certification criteria.

8. Be direct and open about your sustainability transition

While the ACCC encourages businesses to share genuine steps they are taking to reduce their environmental impact with consumers, it cautions businesses against making claims that lead consumers to believe that the business is further along in their sustainability transition than is actually the case.

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