ACCC actively targeting greenwashing

The Australian Competition and Consumer Commission chair Delia Rickard said the watchdog is clamping down on brands that actively contribute to greenwashing.

In a speech to the Sydney Morning Herald Sustainability Summit, Rickard said businesses need to be ready to substantiate any environmental or sustainability claims when marketing their goods and services

Greenwashing has been a major problem ever since consumers have been pushing brands to be more climate conscious. Earlier this year, ASIC said it was also targeting greenwashing from organisations.

Rickard said the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on changing consumer preferences.

She said, “Broad terms like ‘environmentally friendly’, ‘green’, or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing.

“It is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, or other forms of evidence. Where we have concerns, we will be asking businesses to substantiate their claims.”

The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims, Rickard warned.

Rickard said making sustainability work for business and consumers requires a multi-pronged approach.

“Through the consumer law, the ACCC plays a part in this by ensuring that businesses tell the truth, but there will also be roles for standards bodies, certification schemes, industry and governments via policy reform.

“The ACCC is actively monitoring green claims in the market and will be considering what steps can be taken to improve their integrity. This will include engaging with industry and producing guidance for businesses.”

In looking at claims the ACCC is concerned about what the ordinary consumer will understand the claim to mean. Rickard said improving the veracity of environmental claims protects consumers and ensures competitive conduct in the market.

She said, “Many businesses go to extraordinary lengths to make their processes, products and services more sustainable. This innovation and investment should be protected from unscrupulous behaviour of other businesses making green claims without incurring the same costs. This can have a chilling effect on investment in this space, as businesses are not able to realise the full benefits of making environmental improvements.”

Rickard acknowledged those businesses transitioning to more sustainable practices, recognising their right to promote the steps they are taking as part of that journey.

“A business’s sustainability transition doesn’t happen overnight – it’s a long process up and down the supply chain,” she said.

“While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers. Businesses in these positions need to be careful to not overstate the status of their transition through the claims they make.”

Rickard said businesses to step into the shoes of a consumer before making environmental claims about a product, adding the ACCC is working with other regulators to take a coordinated approach to addressing a range of issues relating to sustainability.