Companies should have evidence to back up claims they make about their environmental sustainability, according to draft guidelines developed by the competition watchdog in a bid to stamp out greenwashing.
The Australian Competition and Consumer Commission (ACCC) published the draft guidance on Friday after its recent greenwashing internet sweep identified concerning practices ranging from overstating climate action to companies developing their own certification schemes.
That survey found 57% of the businesses reviewed were making potentially misleading environmental claims.
The draft guidelines propose eight principles that companies should follow if they choose to make environmental and sustainability claims to ensure they comply with Australian consumer law and so consumers can make informed decisions.
The principles include making accurate and truthful claims that don’t, for example, exaggerate the environmental benefit of actions taken by companies, and having clear, independent and scientific evidence to demonstrate to consumers that those claims can be trusted.
Another principle warns companies they should not omit or hide important information that would enable consumers to get a full picture of their practices.
For example, “highlighting the positive aspects of your product, service, or business while omitting information about the negative aspects”, which could give consumers the false impression a product or service had a lower environmental impact than it actually did.
The report points to a hypothetical case study of a plastic cosmetics pump bottle labelled “plastic free” but with small text on the back noting this only applied to the external bottle and not to the cap, pump or internal tube that sits inside the bottle.
“We did observe in the businesses that we swept late last year that there were situations which we thought were likely to be exaggerating benefits or understating harm or omitting relevant information,” the ACCC chair, Gina Cass-Gottlieb, said.
Erin Turner, the chief executive of the Consumer Policy Research Centre, said the guidelines were necessary and an important first step to improve green claims made by Australian companies.
“What we want is for companies to give customers information that helps them compare options and make meaningful choices. That’s not happening now,” she said.
The centre conducted research last year that examined claims consumers saw in the Australian market every day and found many of them were “vague and unhelpful”.
Turner said this included the use of words such as “sustainable” or “eco” without promising a business was actually doing anything specific.
“The one that stood out to me was ‘our freezers are greener’,” she said.
Turner said in addition to guidelines, legislation was needed to require businesses to put more information into the market.
“We need claims that help people put options side by side and answer basic questions like, ‘how long will the product last’, ‘can I repair it’ and ‘is this better than another company’,” she said.
The Environmental Defenders Office (EDO) has been involved in 10 complaints to the ACCC and the Australian Securities and Investments Commission about greenwashing in the past year.
EDO managing lawyer Kirsty Ruddock said the firm would continue to highlight to the ACCC the need for companies to show a clear scientific basis for their net zero claims, in particular.
“For net zero claims to be credible, they must reduce absolute emissions and limit the use of offsets to situations where there are residual or unavoidable emissions,” she said.
“Too many net zero claims rely on offsets instead of reducing emissions.”
Consultation on the draft guidelines will run until 15 September. After the guidelines are finalised the ACCC will develop sector and issue-specific guidance.
Cass-Gottlieb said she expected one of the issue-specific areas would be emissions reduction and offsets.
The watchdog is seeking feedback from companies about what was practical and what information they needed so that businesses that were legitimately investing in sustainable practices could confidently make their claims.
Cass-Gottlieb said they also wanted feedback from consumers about what information would be helpful to assess claims about green credentials and how they would like to see that information and access it.
“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers are often paying higher prices based on these claims,” she said.
“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.”
