Be GLAD it’s not you! ACCC launches Federal Court greenwashing proceedings against Clorox Australia Pty Ltd

13 May 2024
Antoine Pace, Partner, Melbourne

The Australian Competition and Consumer Commission (ACCC) recently announced that it has commenced Federal Court proceedings against the manufacturer of GLAD-branded kitchen and garbage bag products, Clorox Australia Pty Ltd (GLAD), for alleged false or misleading representations displayed on their products and packaging. This comes after the ACCC released guidance on environmental claims in December 2023 and stated that it is making environmental and sustainability claims an enforcement priority for 2024/2025.

The allegations

The ACCC alleges that during the period from June 2021 to around November 2022, the packaging of those kitchen tidy bags displayed the claim, ‘50% OCEAN PLASTIC RECYCLED BAGS’, and a secondary claim beneath stating, ‘Made Using 50% Ocean Plastic*’. When these representations are considered together with the depiction of a wave, the blue colour of the products, and the wording ‘GLAD to be GREEN’, the ACCC alleges that the packaging represented that the bags were at least partially made from plastic collected from the sea or ocean cleanup efforts.

The ACCC alleges that the relevant GLAD products were not comprised of 50% recycled plastic waste collected from the ocean, but that rather, these products were partially made of resin collected from communities that were located up to 50km from the nearest shoreline, with the remainder being non-plastic waste materials.

The ACCC alleges that the ocean plastic claims constituted misleading or deceptive conduct in contravention of section 18, and false or misleading representations in contravention of 29 and 33 of the Australian Consumer Law (ACL). The ACCC’s view is that GLAD had taken advantage of consumers’ environmental pollution concerns, and that it had denied consumers the opportunity to make an informed purchasing decision. In doing so, it is alleged that GLAD undermined competition by promoting its products as the better environmental choice, particularly by including a specific claim about ocean plastic.

Other developments

This matter is now before the Courts, and we will report further in due course. However more importantly, this action should be viewed within the broader context of current regulatory action in relation to so-called greenwashing claims.

For instance, in November 2023, MOO Premium Foods (MOO) gave a court-enforceable undertaking after representing that its yoghurt tubs were made from ‘100% ocean plastic’, when in fact they were made from what MOO described as ‘reclaimed ocean bound plastic’. ACCC Commissioner, Liza Carver, noted that this type of ‘ocean bound plastic’ was abandoned plastic waste that had been collected within 50km of the shoreline in Malaysia, and not directly from the ocean.

MOO provided the ACCC with a section 87B undertaking that it would update the packaging design to remove the ocean plastic representations, review all website and social media platforms to remove the claims, conduct an internal audit on the nature and location of the ocean bound plastic resin used in product packaging and establish and implement an ACL compliance program.

Elsewhere, the Australia Securities and Investments Commission (ASIC) has won the first greenwashing civil penalty action against investment advisor, Vanguard Investments Australia. The action was brought for misleading claims about environmental, social and governance (ESG) exclusion screens applied to the Vanguard Ethically Conscious Global Aggregate Bond Index Fund. The Court will consider an appropriate penalty in August this year – for more information, see our recent update here.

In terms of legislative action, the Federal Senate is currently conducting an inquiry into greenwashing and considering legislative options to protect consumers, as noted in our earlier publication. The due date for the report has been extended to June 2024, and public hearings began in April 2024. Participants in the hearing include the Environmental Defenders Office, the Australian Association of National Advertisers and Ad Standards. For more information on the inquiry, see here.

Key takeaways

In light of the rapidly evolving regulatory landscape, businesses are encouraged to look to ACCC and ASIC guidance before making environmental claims. Gadens has published a helpful summary of ACCC guidance delivered in a speech by Deputy Chair, Delia Rickard, here. Relevant ACCC and ASIC guides are below:

  • ACCC Making environmental claims: A guide for business.
  • ASIC information sheet: ‘How to avoid greenwashing when offering or promoting sustainability related products’.

If your business has not implemented an ACL compliance program, we recommend doing so as soon as possible. If you have an existing program, we recommend reviewing your program to ensure that it adequately addresses environmental and sustainability claims.

Although it might not necessarily be “Easy bein’ Green”[1], the legal, operational and reputational risks associated with greenwashing certainly outweigh the cost of a compliant business.

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Authored by:

Antoine Pace, Partner
Joseph Abi-Hanna, Senior Associate
Lucy Hardyman, Lawyer

[1] With thanks to Kermit the Frog, Joe Rapaso, and Jim Henson.

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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