Late 2023 marked a significant milestone in Australia’s commitment to environmental responsibility, with the Australian Competition and Consumer Commission (ACCC) releasing comprehensive guidance for businesses on making accurate environmental claims. Building on this momentum, January 2024 witnessed The Treasury’s release of a climate-related financial disclosure legislation exposure draft for consultation. This legislation aims to enhance transparency surrounding companies’ material risks associated with climate change, empowering investors to make informed choices.
The primary focus of these regulatory measures is to combat ‘greenwashing,’ a deceptive practice wherein companies misrepresent the true environmental impact of their products and operations. This can take various forms, including Greenhushing, Greenclaiming, Greenlighting, Greenrinsing, Greenshifting, and Greencrowding.
- Greenhushing: This involves the failure to report negative environmental impacts of products and operations.
- Greenclaiming: Companies make misleading environmental claims on labels or in advertisements without proper supporting evidence.
- Greenlighting: Highlighting positive environmental aspects while downplaying or ignoring other harmful effects.
- Greenrinsing: Cycling through Environmental, Social, and Governance (ESG) targets without achieving them.
- Greenshifting: Shifting responsibility onto consumers to minimize environmental impacts, such as providing advice on product disposal.
- Greencrowding: Joining environmental action groups without actively fulfilling sustainability commitments.
To avoid falling into the ‘greenwashing’ trap, companies are advised to take proactive measures, including:
- Reviewing Marketing Strategies: Thoroughly examine and rework marketing strategies and environmental claims to ensure accuracy and transparency.
- Regular Monitoring and Updating: Stay abreast of regulatory changes and evolving environmental priorities, regularly updating strategies accordingly.
- Substantiating Claims: Keep environmental claims well-supported with up-to-date evidence and certifications.
- Employee Training: Inform and train employees about new regulations and policies, extending the awareness to state and territory jurisdictions.
In a collaborative effort to promote best practices, the National Retail Association’s ESG Committee is actively working on a comprehensive guide for environmental and sustainability claims. The committee is scheduled to meet via video on March 19 to discuss the guide further.
For those interested in joining the meeting or seeking additional information, contact Geoffrey Annison at g.annison@nationalretail.org.au
For further details, refer to the official ACCC guidance here and the Treasury’s exposure draft here.