ACCC internet sweep uncovers concerning environmental and sustainability claims

28 March 2023
Antoine Pace, Partner, Melbourne

The Australian Competition and Consumer Commission (ACCC) has completed its anticipated internet sweep following clear messaging last year that the regulator would crackdown on misleading environmental claims. More than half of the businesses that were subject to the ACCC’s internet sweep in October 2022 were considered to have made concerning misleading claims about their environmental or sustainability practices. While the sweep covered businesses operating in eight different sectors, a high proportion of ACCC’s concerns were regarding claims made by businesses in the cosmetic, clothing and food and drink sectors.

The internet sweep follows announcements from the ACCC regarding the prevalence of misleading green claims by businesses (as set out in our article available here) as well as Australian Securities and Investments Commission (ASIC) issuing infringement notices for greenwashing (see our further article available here). In this e-update, we detail the ACCC’s findings from the internet sweep and note developments on

enforcement actions taken by regulators against greenwashing.

ACCC findings from the sweep

On 2 March 2023, the ACCC published its report on its findings from the internet sweep entitled Greenwashing by businesses in Australia – Findings of the ACCC’s internet sweep of environmental claims. At a high level, the report identifies the following key issues in relation environmental claims by business which are likely to mislead or deceive consumers:

  1. Vague and unqualified claims: Businesses used broad claims like “green”, “kind to the planet”, “eco-friendly”, “responsible” or “sustainable” to describe its products without providing further information about these claims. Businesses also made unqualified claims (for example, describing a product as biodegradable, compostable or recyclable without explaining the technical meaning behind these claims and the steps required by the consumer to achieve this outcome).
  2. A lack of substantiating information: Businesses failed to provide evidence to support the environmental and sustainability claims being made.
  3. Use of absolute claims: Businesses made absolute claims like “100% plastic free” or “100% recyclable” without clear and robust evidence to support such a strong claim.
  4. Use of comparisons: Businesses made broad generalisations when comparing their products with similar products in the market, in a manner that failed to allow consumers to accurately assess the merits of one product over another (for example, stating a product generates less waste when compared to conventional alternatives without citing the source or identifying what environmental impacts were considered).
  5. Exaggerating benefits or omitting relevant information: Businesses over emphasised positive sustainability benefits or omitted negative attributes of their products (for example, promoting their investments in renewable energy projects while continuing to source most of their products from fossil-fuel based industries, or asserting claims about its sustainability practices which did not reflect the entire lifecycle of the product).
  6. Use of aspirational claims with limited information on how these goals will be achieved: Businesses made claims on goals to reduce packaging or waste to landfill or net zero goals without detailing practical steps on how these goals were to be achieved.
  7. Use of third-party certifications: Businesses used certification trade marks to indicate a product or service met a particular standard without clearly describing the nature of the certification scheme, or how it applied to its product or business.
  8. Use of images which appear to be trustmarks: Several businesses used logos or symbols that appeared to be trustmarks but were not associated with a certification scheme.

What’s next?

The ACCC now has several active investigations underway for misleading environmental claims and has highlighted its intention to undertake appropriate enforcement and compliance actions in its report. The ACCC crackdown on greenwashing has also been bolstered by various stakeholders, including Greenpeace Australia Pacific’s complaint to the ACCC to investigate whether environmental claims by Toyota regarding its vehicles performance and net zero targets are misleading and deceptive.

ASIC has also taken action on greenwashing claims, particularly in the financial sector. In February, ASIC launched its first court proceeding against alleged greenwashing conduct by Mercer Superannuation (Australia) Limited (Mercer) in the Federal Court (see our article here). Mercer marketed its “Sustainable Plus” investment options to members who were committed to sustainability because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal. However, a sustainable investment policy document on Mercer’s website qualified that these investment options were subject to additional exclusions which included companies involved in, among other things, carbon intensive fossil fuel. ASIC claims these statements mislead consumers about the sustainable nature and characteristics of certain superannuation investment options.

What you should do?

Businesses should critically review all sustainability and environmental claims made by their organisation, including in their marketing collateral as well as public reports or statements. This should include product packaging and information, website content, digital or print advertisements and social media posts by influencers. Businesses should also ensure any company-wide claims in its corporate social responsibility statements and reporting documents are accurate, specific and backed by sufficient evidence. When reviewing your marketing material and making decisions regarding promoting your business’ green credentials, guidance can be taken from the key issues outlined by the ACCC in their report as set out in this article, as well as helpful tips set out in our previous article available here.

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Authored by:

Antoine Pace, Partner
Eve Lillas, Associate

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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