The competition watchdog will step up its probe of companies’ environmental claims after an initial sweep found more than half made misleading statements ranging from overstating climate action to developing their own certification schemes.
The survey of 247 businesses or brands across eight sectors by the Australian Competition and Consumer Commission last October found 57% had promoted “concerning claims about their environmental credentials”.
“Consumers are now, more than ever, making purchasing decisions on environmental grounds,” said ACCC deputy chair Catriona Lowe. “Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims.”
Businesses genuinely pursuing more sustainable goods and services often incur additional production or research costs. They face being unfairly disadvantaged if rivals can get away with making false or misleading claims, the ACCC said: “This undermines effective competition and can create a disincentive for businesses to invest in sustainability.”
Known broadly as “greenwashing”, the practice of making vague or unwarranted claims has been in the sights of regulators for years. Firms have been able to avoid significant penalties for such action, although court cases might soon change that.
The corporate regulator, the Australian Securities and Investments Commission, this week launched its first court proceedings alleging greenwashing.
ASIC alleges Mercer Superannuation (Australia) Ltd made statements on its website about seven “Sustainable Plus” investment options that were misleading. Some investments had companies that website statements stated as excluded, such as fossil fuel producers, Whitehaven Coal and Glencore PLC, ASIC will tell the federal court.
The ACCC said its sweep indicated a significant proportion of businesses may be making environmental claims that deserve closer scrutiny.
“Already, we have several active investigations underway across the packaging, consumer goods, food manufacturing and medical devices sectors for alleged misleading environmental claims,” Lowe said. “[T]hese may grow, as we continue to conduct more targeted assessments into businesses and claims identified through the sweep.”
Of the eight sectors surveyed, cosmetic, clothing and footwear, and food and drink industries had the highest proportion of concerning claims. Vehicles and the electronics and home appliance sectors fared relatively well.
Firms making vague and unqualified claims topped the list of most common issues, with many businesses describing their products as “green”, “kind to the planet”, “eco-friendly”, “responsible” or “sustainable”.
“These claims have little value for consumers as they can have a variety of different meanings and rarely provide enough information to allow consumers to make an informed purchasing decision,” the ACCC said.
In other cases, companies were making claims without providing any supporting evidence. Some firms claimed to provide proof but the web links provided were broken, the watchdog said.
Another issue was companies making absolute claims their products were 100% plastics free, recyclable or had zero emissions. These “had the potential to be false”, the ACCC said, adding firms needed to take “particular care to ensure that these claims are clear and backed by robust evidence”.
Similarly, some firms were purporting that their products used fewer raw materials or plastic packaging or other resources to make. However, consumers were not given details how much less material was needed, nor what the comparison involved.
In other instances, companies exaggerated sustainability benefits or omitted negative attributes that might be relevant to a consumer’s choice. For instance, a firm might promote investments in renewable energy projects but still source most of its products from fossil-fuel based industries, the ACCC said.
Another business might claim that offsetting its carbon emissions had a “positive” impact on the environment even though it had not taken steps to reduce its overall carbon emissions, the watchdog said.
Another common practice for firms surveyed was to claim affiliation with a variety of certification schemes, an approach that could potentially mislead consumers.
“Some businesses have also created their own certification schemes for their own products,” the ACCC said. “This raises concerns that [schemes] may be becoming meaningless, and no longer help consumers to distinguish between different products.”
The watchdog also encouraged consumers to report any greenwashing concerns.
