Australian consumers sceptical of ESG claims: Consumer Policy Research Centre

A new report from the Consumer Policy Research Centre (CPRC) reveals that Australians are sceptical about the truthfulness of company sustainability claims.

The think-tank’s research states that while businesses are using sustainability as a marketing tool, customers are doubting the authenticity of organisations’ commitments to achieve their ESG targets and improved environmental outcomes.

Despite ACCC guidelines expressing the need for clear and qualified statements, the report reveals that the majority of green claims are vague and general in nature.

According to the report, “Terms could be as vague as ‘natural’, ‘ethical’, ‘organic’, or ‘sustainable’—or without specific phrases, but featuring images of nature or earthy materials to suggest being environmentally friendly.”

Of the 122 green claims investigated, only 39 had supporting evidence or verification.

“The onus is not on consumers to attempt to verify claims or spend hours researching the various claims they encounter. It’s up to industry and government to make green claims worthy of consumer attention.”

Green claims also lack consistency, classification and common frameworks, according to the authors.

“Businesses that misuse green claims risk reducing consumer trust in sustainable claims more broadly. Further, greenwashing can harm businesses doing the right thing, by reducing market competition and stifling innovation if businesses that are genuinely making efforts to improve their processes are unable to benefit from these and effectively compete,” the report states.

A recent McKinsey report on the sustainability of the global fashion industry tells a similar tale, where consumers struggle to distinguish between a sustainable and green washed product.

According to the authors, “As the industry continues to grapple with its damaging environmental and social impact, consumers, regulators, and other stakeholders may increasingly scrutinize how brands communicate about their sustainability credentials.

“If brands are to avoid greenwashing, they must show that they are making meaningful and credible change while abiding by emerging regulatory requirements.”

Results from a 2021 survey reveals that 88 percent of Gen Z Americans do not trust brands’ ESG claims and are likely to cancel, or not purchase from a brand that they perceive to be performative.