Consumers are placing greater importance on the social and environmental credentials of their purchases. The ACCC has heard growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on these consumer preferences – termed ‘greenwashing.’
Consumers are often unable to determine the accuracy of a product’s sustainable credentials, reducing their confidence in the market. Many businesses go to extraordinary lengths to innovate and invest in sustainable processes and products but are facing unfair competition from those businesses making misleading claims.
The ACCC has set out “consumer and fair-trading issues in relation to environmental claims and sustainability” as one of its 2022-23 Compliance and Enforcement Priorities.
In 2023, the ACCC will target company websites that make unsubstantiated environmental, and sustainability claims. At least 200 company websites will be checked for misleading environmental claims (energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing, and footwear sectors).
The UK Advertising Standards Code has been updated to include the following advice on the use of carbon neutral and net zero claims that if followed, are less likely to mislead:
• Avoid using unqualified ‘carbon neutral’, ‘net zero’ or similar claims, without also explaining the basis of these claims
• Include accurate information about if, and by how much, you are actively reducing carbon emissions
• Provide objective evidence for the basis of claims of offsetting, including the offsetting scheme being used
• Where it is necessary to qualify information about a claim, that information should be relevant for consumers to easily take it into account in their decision
Learnings for the Australian retail industry
Under Australian Consumer Law, businesses could be called on to provide evidence for their environmental claims. The ACCC has warned that their investigations will be followed with compliance, education, and potential enforcement activities (depending on the extent of a breach), with the aim to enable consumers to make more informed purchasing decisions.
Although the ACCC has not published compliance guidance, the NRA urges all businesses to proactively conduct a review of online and advertising material, making sure that any environmental claims made are accurate and evidence based.
UK business advice may provide a helpful measure to assist businesses self-evaluate the validity of their environmental claims.