Following the release of ACCC’s draft guidance to improve the integrity of green claims made by businesses, ACCC deputy chair Catriona Lowe outlined the ACCC’s expectations for businesses making green claims at the General Counsel Summit.
Lowe outlined that many businesses are required to set ESG targets, with others choosing to do so. Where these efforts are marketed to seek to appeal to consumers increased environmental consciousness, the advice general counsel can provide to ensure the claims are true and do not mislead consumers is incredibly valuable.
Engaging with the ACCC
Low said the ACCC’s core objective was to promote competition, facilitate fair trading and protect consumers for the benefit of all Australians; that is, consumers, businesses and the wider community.
Lowe added that while the ACCC could not pursue all matters that come to its attention, it is an evidence-based agency and exercises discretion to direct resources to matters that provide the greatest overall benefit for consumers and competition.
Lowe said that the general counsel, as legal practitioners had valuable knowledge and on ground experience of significant value to the ACCC.
“You know how markets are working, where there may be misconduct that should be addressed and what’s coming up next over the horizon. I would encourage you all to actively be involved in the process of alerting the ACCC to matters of non-compliance or potential anti-competitive conduct.
“I cannot overstate how valuable this can be to help the ACCC prioritise our resources and identify issues of significant detriment in order to effectively promote competition and fair trading, and protect consumers,” said Lowe.
Reinforced focus on greenwashing
Earlier this year, the ACCC reinforced its focus on environmental claims and sustainability as an enforcement and compliance priority, broadening it to also include its work in competition and product safety.
“Today’s consumers are concerned about the environment and sustainability, and these concerns are increasingly being reflected in their purchasing decisions,” said Lowe.
Research conducted by the Consumer Policy Research Centre in 2022 suggested that 45 per cent of Australians always or often consider sustainability as part of their decision-making process when making a purchase.
This has led to a significant shift in how products are produced, marketed, and delivered to consumers as businesses respond to consumer demand.
Lowe said False or misleading environmental or sustainability claims causes significant harm for both consumers and businesses.
“The concept of greenwashing refers to conduct where businesses make misleading claims or representations to appear more environmentally conscious. This includes the use of false, overstated, vague, or unclear representations, as well as a business omitting key information that would impact a consumer’s decision-making process,” said Lowe.
Consumers are often willing to pay more for a product or service due to the environmental or sustainability benefit they are being promised.
False or misleading claims can undermine consumer trust in all green claims, particularly when they’re paying higher prices based on these claims.
“We need these claims to be genuine,” said Lowe.
A picture of the market
To get a better picture of the scale at which greenwashing is taking place in Australia, the ACCC conducted an internet sweep reviewing environmental and sustainability claims made by businesses in Australia late last year.
The ACCC reviewed 247 businesses across a range of targeted sectors and found that 57 per cent of businesses had made potentially misleading or deceptive environmental or sustainability claims.
“Whilst some might regard such terms as ‘mere puffery’, they do carry meaning for consumers.
“In competitive markets like the food and drink sector, the ACCC has seen environmental claims, particularly those relating to recyclability, being used by businesses to influence a consumers decision making process on what brand or product to choose,” said Lowe.
Lowe says the key message to businesses when making green claims is to not overreach, and that ultimately, consumer trust is on the line.
“We expect all businesses to familiarise themselves with this guidance and implement the eight principles into the environmental claims they are making. Ultimately, it comes down to businesses wanting confidence in making environmental claims and consumers wanting to be able to trust these environmental claims,” said Lowe.
