ACCC lays down the law on green claims

Rakshnna Pattabiraman

20th Sep 2022

Businesses must be able to substantiate environmental or sustainability claims when marketing or risk enforcement action, the Australian Competition and Consumer Commission has warned.

Deputy chair Delia Rickard told this morning’s Sydney Morning Herald Sustainability Summit that the regulator will actively target ‘greenwashing’ this year as there is a “growing concern” that businesses are making false or misleading claims to capitalise on changing consumer preferences.

Rickard said broad terms like ‘environmentally friendly’, ‘sustainable’ or ‘green’ may mislead customers as they rarely provide any clarity on what that exactly means in any product or service that a consumer is purchasing.

“In looking at claims we are concerned about what the ordinary consumer will understand the claim to mean.

“It is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, or other forms of evidence,” said Rickard.

She said the regulator is already monitoring “green claims” in the market and will be considering steps to improve their integrity.

“Through the consumer law, the ACCC plays a part in this by ensuring that businesses tell the truth, but there will also be roles for standards bodies, certification schemes, industry and governments via policy reform,” said Rickard.

“Many businesses go to extraordinary lengths to make their processes, products and services more sustainable. This innovation and investment should be protected from the unscrupulous behaviour of other businesses making green claims without incurring the same costs. This can have a chilling effect on investment in this space, as businesses are not able to realise the full benefits of making environmental improvements,” Rickard said.

She said businesses that are transitioning to more sustainable practices, have the right to promote the steps they are taking as part of that journey.

“A business’s sustainability transition doesn’t happen overnight – it’s a long process up and down the supply chain,” she said.

“While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers. Businesses in these positions need to be careful to not overstate the status of their transition through the claims they make.”