Alarming, “high-level” greenwashing concerns encourage further action from the ACCC and others 

On 2 March 2023, the ACCC released a report, ‘Greenwashing by businesses in Australia’, detailing the findings of its ‘greenwashing’ internet sweep (Report).¹ The sweep was conducted in October 2022 as part of the regulator’s 2022/23 annual priorities to address ongoing consumer and fair-trading issues.

The industries that the sweep focused on were:

1. Energy
2. Motor vehicles
3. Electronics and home appliances
4. Textiles, garments and shoes
5. Household and cleaning products
6. Food and beverages
7. Cosmetics and personal care
8. Takeaway packaging

For a more detailed discussion of the internet sweep and suggested solutions on how to avoid greenwashing claims, refer to our previous article here.

In this article, we provide an overview of the Report’s findings, the ACCC’s plans for the near future in light of those findings, as well as an update on the position of the Australian Securities and Investment Commission (ASIC) on the issue.

What does the Report tell us?

The Report indicates that, of the 247 businesses across different sectors that were swept, 57% of the businesses made sustainability claims that raised greenwashing concerns.²

Problematic claims fell within the following eight key categories:

1. Vague and unqualified claims – Businesses that used vague terms such as ‘green’, ‘kind to the planet’, ‘eco-friendly’ and ‘sustainable’. These terms were considered confusing or misleading without proper explanations linking their usage to the respective businesses.
2. A lack of substantiating information – Businesses that were unable to sufficiently substantiate their green claims after the regulator made requests for further evidence. Some businesses reportedly provided supposedly informative click-through links that were broken, others presented outdated and irrelevant information in attempts to justify their alleged sustainability practices.
3. Use of absolute claims – Businesses that made absolute claims, such as labelling products or services ‘100% recyclable’, ‘Made from 100% recycled content’, ‘Zero emissions’. These terms were found to “give a very strong impression to consumers”. The Report indicated that many absolute claims were found to be false or misleading, given businesses were unable to provide clear and “robust evidence” that the claims were true. For example, the ACCC noted that businesses using even the smallest amounts of plastic in a product which they claimed to be “100% plastic free” would likely be false or misleading.³
4. Use of comparisons – Businesses that made comparison claims that were not backed by legitimate sources. According to the ACCC, such comparison claims prevented consumers from “accurately [assessing] the merits of one product over another” sold by other businesses. Examples of some misleading claims found include “fewer raw materials”, “generates less waste when compared to conventional alternatives” and “lower environmental impact”.⁴
5. Exaggerating benefits or omitting relevant information – Businesses attempting to affect consumers’ purchasing decision by exaggerating the benefits of their products or omitting negative attributes. For example, one business marketed its investments in renewable energy projects but was found to be sourcing most of its products from fossil-fuel based industries.
6. The use of aspirational claims, with little information on how these goals will be achieved – Businesses that made aspirational claims about their environmental goals, including reducing amounts of packaging and achieving Net Zero targets. The ACCC raised issues with the lack of practical plans within businesses to implement any changes to reach those objectives. In many instances, goals were either overly general or any progress claimed against aspirational targets were outdated and/or unclear.
7. Use of third-party certifications – Businesses that claimed to have an affiliation with certification schemes, some of which may not be as robust as a consumer may be assuming or which had limited application to the business’ products. The ACCC also expressed concerns on the misleading or confusing use of certifications. For example, the word ‘certified’ was used to describe a whole business when, in fact, only certain products or specific components of products were certified. Some businesses had also created their own certification schemes, which according to the ACCC, defeated the overall purpose of having a certification system as it was no longer able to help consumers distinguish between different products.
8. Use of images which appear to be trustmarks – Businesses using logos or symbols, such as nature-based imagery or the colour green, which could mislead consumers into falsely believing the business or its particular products are backed by certifications of third parties. These images were used by businesses even though the businesses did not in fact have the relevant third party certifications.

Noting these high-level, greenwashing concerns, what is the ACCC planning for the near future?

The ACCC has advised that it plans to conduct further assessment of all issues identified in the sweep, after which it intends to undertake further enforcement, compliance and education activities to address the concerns.⁵

Once specific businesses have been identified, the ACCC has reported that it will commence more targeted analysis to determine applicable compliance or enforcement approaches most suited to those businesses. Some possible courses of action could include administrative resolutions, issuing infringement notices or legal proceedings.

In the meantime, ACCC Deputy Chair Catriona Lowe has advised that there are “several active investigations underway” and the ACCC will “engage directly with businesses and industry associations to improve compliance with the Australian Consumer Law”.⁶

Beware of other regulators

Businesses should be aware that the ACCC is not the only regulator currently trying to take down greenwashing claims.

ASIC has demonstrated full commitment to its effort in ensuring “sustainability-related claims made by financial institutions are accurate” as part of its 2023 Enforcement Priorities, which HWL Ebsworth Partner, Polat Siva and Special Counsel, Brenton Pollard previously discussed here.

Since October 2022, ASIC has issued over $140,000 in infringement notices and has recently launched its first legal proceedings against alleged greenwashing conduct in the Federal Court. ASIC claims that Mercer Superannuation (Australia) Limited misled consumers about the sustainability practices of certain investment options it offers. In this court action, ASIC has sought declarations, pecuniary penalties, as well as injunctions preventing further use of misleading green statements.

Given both ASIC’s and the ACCC’s ongoing plans to crack down on greenwashing conduct, business owners should be proactive in reviewing their promotional materials on a regular basis and making necessary improvements. ACCC Deputy Chair Delia Rickard has provided tips for businesses on how to avoid making greenwashing claims, which we have previously summarised here.

Remember: Greenwashing could lead to super penalties

Businesses must bear in mind that the increased penalties for breaches of the ACL, enacted under the Treasury Laws Amendment (More Competition, Better Prices) Act (Cth) 2022 are here to stay. As noted in our previous article, representations that amount to greenwashing may constitute a breach of the ACL, in particular section 18 (which prohibits engaging in misleading or deceptive conduct in trade or commerce) and section 29 (which prohibits a person from making false or misleading representations about goods or services). Under the increased penalties breaches of section 29 of the ACL can lead to a potential $50 million fine or more.

For more information about the new penalty regime, please refer to our previous article here, where we analyse the new laws in detail.

How can we help?

We have a dedicated commercial and consumer law team that can assist you with review of marketing materials and provide related advice. Please contact us if you would like more information about the services we provide.

This article was written by Teresa Torcasio, Partner and Katie Lau, Solicitor.

¹Australian Consumer and Competition Commission, Greenwashing by businesses in Australia – Findings of the ACCC’s internet sweep of environmental claims (March 2023), <https://www.accc.gov.au/media-release/accc-%E2%80%98greenwashing%E2%80%99-internet-sweep-unearths-widespread-concerning-claims>
²Ibid, page 1
​³Ibid, page 5
⁴Ibid, page 6
⁵Ibid, page 9
⁶Australian Consumer and Competition Commission, ‘ACCC ‘greenwashing’ internet sweep unearths widespread concerning claims‘ (Web Page, February 2023), <https://www.accc.gov.au/media-release/accc-%E2%80%98greenwashing%E2%80%99-internet-sweep-unearths-widespread-concerning-claims>