There is an increasing demand from stakeholders, financiers, customers and government for transparent information about your company’s commitment to lessen its environmental impacts. If your company is making positive environmental change, you should be able to express this to these stakeholders and publicise the awesome work that you are doing.

BUT

The Australian Competition & Consumer Commission’s (ACCC) new Compliance and Enforcement Priorities for 2022-23 have listed one of their top priorities as relating to addressing false or misleading claims of environmental or ‘green’ credentials so you need to make sure that what you are putting out there accurately reflects the impact you are making.

What does the law say?

The Competition and Consumer Act 2010 (Cth) – Schedule 2 (“Australian Consumer Law”), Australian Securities and Investment Commission Act 2001 (Cth) and the Corporations Act 2001 (Cth) all have provisions relating to false, misleading or deceptive conduct.

Relevant to environmental claims is the requirement to not make misleading representations concerning future matters (e.g. s 4 Australian Consumer Law, s 12BB ASIC Act, s 769C Corporations Act). These provisions relate to where declarations are made where there is no reasonable ground for making the declaration, and are particularly applicable to circumstances in which a company may represent that a future emissions target may be met by a particular date where the basis for making that claim is not grounded in the truth.

The standard for engaging in misleading or deceptive conduct (e.g. s 18 Australian Consumer Law) doesn’t require any party to actually have been mislead or deceived but rather only requires that they were likely to have been mislead or deceived.

This is why you have to be extra careful in the way you phrase your environmental claims and the support you give for those statements.

Various penalties (criminal and civil), injunctions and/or damages may be sought where companies fail to adhere to these requirements.

How has this been enforced in the past?

ACCC has brought several claims against companies under the Australian Consumer Law for misleading and deceptive conduct. For example, whilst unsuccessful, they have pursued Kimberly-Clark and Woolworths regarding the representation as to future matters regarding their flushable wipes.[1]

One successful claim saw the ACCC pursue GM Holden regarding their publication of their ‘carbon emission neutral’ Saab vehicles which was found to be false and misleading.[2] A current case in this area is the ACCR’s action against Santos for its representations that natural gas is a clean fuel and claim that it had a credible net zero emissions plan which are being alleged are misleading.[3] With the ACCC’s enforcement priorities announcement, greater enforcement actions in relation to misleading environmental claims can be expected.

How can you best substantiate your claims?

Vague environmental messaging – Claims of a product or service being ‘environmentally friendly’ or ‘green’ need to be supported by evidence. Clarity and accessibility of information to support these claims that can be understood by your consumer or other stakeholders are paramount.

Future targets – What is the target? How do you expect to meet your target? When will you meet your target? What have you based this prediction on? How will you measure your progress? What assumptions or evidence have you relied upon in setting and measuring the target?

Carbon neutrality – Carbon neutrality – When deciding how to communicate claims about carbon neutrality and offsetting, it is important to make clear how the offsets are generated. Additionally, what part of the company’s operations/product life cycle is being captured by this claim and whether this claim has been audited by a third party and how has this been done? 

Certification Schemes – The best way to ensure your environmental claims are supported by up-to-date data and are verified, is through a third-party certification from an accredited scheme. The International Social and Environmental Accreditation and Labelling Alliance (ISEAL) provides a management framework for the more reliable schemes in place. The use of third-party audit process can be used to support claims a company makes, provided that companies are not using compliance to give a ‘halo effect’ over and above the assurance that these schemes provide.

An example of this is FSC Certification. If you sell or use forest products in your business, the FSC certification is a globally recognised scheme tracing forest products from forest to shelf and incorporating ILO conventions in the process. This certification not only shows compliance with the highest social and environmental standards in the industry but can be used as a Timber Legality Framework to produce a low-risk rating under the Illegal Logging Prohibition Act 2012. It can also help indicate compliance under the requirements of the Modern Slavery Act 2018 with the new requirements in FSC STD 40-004 v3.1.

The ACCC has provided some useful principles to consider in their publication about Green marketing and the Australian Consumer Law, these are as follows:

• Claims must be accurate
• Claims should be able to be substantiated
• Claims should be specific, not unqualified and/or general statements
• Claims should be in plain language
• Claims should only be made for a real benefit
• Claims must not overstate a benefit
• Pictures can also be representations
• Claims should make it clear whether claimed benefits refer to packaging or content
• Claims should consider the whole product life cycle
• Claims using endorsement or certification should be used with caution
• Claims should not overstate the level of scientific acceptance

How can we help?

Consumers who want to make purchasing decisions that align with their personal ethics and care for the environment need to be able to do so confidently.

Demonstrating the credibility of your claims and obtaining sustainability certification is simple. We can provide you with all the skills and tools necessary to obtain various environmental certifications and how you can use that certification to accurately support environmental claims.

For more information visit our website https://hikarisolutions.com.au/home-5/sustainability-standards/

[1] Australian Competition and Consumer Commission (ACCC) v Kimberly-Clark Australia Pty Ltd [2019]; Australian Competition and Consumer Commission (ACCC) v Woolworths Group Ltd (2020)

[2] ACCC v GM Holden Ltd [2008]

[3] ACCR v Santos (unreported)