Businesses on notice as ACCC sweeps covers off greenwashing

The ACCC will investigate after uncovering evidence of widespread greenwashing.

The ACCC has indicated it’s not taking any prisoners after an internet sweep for greenwashing activity discovered more than one hundred businesses making “concerning claims” about their environmental or sustainability practices.

The news comes just days after ASIC launched court action against Mercer Superannuation for alleged greenwashing.

The ACCC has announced it will investigate multiple businesses for potential greenwashing, after an internet sweep of 247 businesses found that 57 per cent had made claims about their environmental credentials that may not stack up.

In a new report, the ACCC released the results of its sweep, which focused on marketing claims made in October and November last year. 

It picked up company websites in targeted sectors including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear.

The cosmetic, clothing and footwear, and food and drink sectors were found to have the highest proportion of concerning claims.

Key issues picked up in the sweep include the use of vague or unclear environmental claims, insufficient evidence for business’ claims, the setting of environmental goals without clear plans for how these will be achieved, the use of third-party certifications and symbols in a confusing way, exaggeration of benefits, use of potentially misleading comparisons, and the use of images that look like they might be associated with a certification, but are in fact not. Use of so-called absolute claims, like ‘100 per cent carbon positive’, was also identified as a problem.

“Our sweep indicates a significant proportion of businesses are making vague or unclear environmental claims. This warrants further scrutiny,” ACCC deputy chair Catriona Lowe said.

“Consumers are now, more than ever, making purchasing decisions on environmental grounds. Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims. This conduct harms not only consumers, but also those businesses taking genuine steps to implement more sustainable practices.”

She said broad claims used by businesses like ‘environmentally friendly’, ‘green’ or ‘sustainable’ needed to be backed up with evidence like scientific data, reputable third-party certifications or transparent information about the supply chain.

Where the ACCC has concerns, businesses will be asked to provide proof of their claims, she added.

The ACCC currently has investigations open into businesses in the packaging, consumer goods, food manufacturing and medical device sectors.

Consumer and fair-trading issues relating to environmental and sustainability claims was announced as one of the ACCC’s 2022-23 priorities.

Lowe said the list of active investigations “may grow, as we continue to conduct more targeted assessments into businesses and claims identified through the sweep”. 

The regulator will also work with businesses to provide education on the issue, including updating economy-wide guidance material and targeted guidance for specific sectors.

“The sweep has helped inform our forthcoming guidance about what steps businesses need to take to improve the integrity of their environmental claims,” Lowe said.

“We want to see businesses taking steps to ensure that environmental claims are accurate as well as meaningful for consumers. Our sweep has shown that claims are most useful where they are relevant, clear, reliable and transparent.”

“We will engage directly with businesses and industry associations to improve compliance with the Australian Consumer Law.” 

Lowe encouraged businesses to step forward if they have made false or misleading marketing claims.

“Businesses who cooperate and advise of any issues with their operations, will be considered more favourably than those who wait for the ACCC to unearth these problems,” she said.

Reports can be made through the ACCC website or by contacting the ACCC Infocentre on 1300 302 502.

“Greenwashing is out of control”

The Greens welcomed the ACCC’s announcement of further investigations, and called for the government and regulators to make greenwashing illegal.

“It should be illegal to lie about how green or carbon-friendly products and services are,” said Greens spokesperson for the environment Senator Sarah Hanson-Young.

“The majority of Australians want to do the right thing by the environment and will be shocked by these findings. They expect that in choosing their products or services carefully they are in some small way making a positive choice for the environment, but this review shows that this is likely not the case.”

She singled out the fashion industry as of particular concern.

“The fashion industry has been flagged as one with the highest proportion of concerning claims. Considering it is the second most polluting industry globally, responsible for up to 10 per cent of annual carbon emissions, a crackdown on green claims is urgent,” Hanson-Young said.

“The Albanese government signed an international commitment to ensure businesses transparently disclose their environmental credentials, and that consumers are provided with accurate information. Greenwashing is out of control. Everyday Australians are being ripped off and misled. The government must act urgently to implement rules that hold business to account to ensure truth of claims and public confidence in environmental action.”

CHOICE CEO Alan Kirkland said businesses that make false claims about their green credentials “are the worst of the worst”.

“They are taking advantage of people’s desire to do the right thing, in the most cynical way,” he said.

“What makes it worse is that businesses often charge a premium for environmental products. People should always get what they pay for but that’s even more important when people are paying more for a product that promises something special.

“Business are now on notice: if you make false environmental claims, you should expect to be taken to court.”

Further greenwashing action

Hot on the heels of the ACCC’s announcement, Greenpeace asked the regulator to investigate Toyota for what the activist alleges are “misleading or deceptive” environmental claims.

The request, made by the Environmental Defenders Office on behalf of Greenpeace Australia Pacific, focuses on claims made by Toyota Motor Corporation regarding the environmental performance of its vehicles and its net-zero ambitions. 

“We believe Toyota Motor Corporation’s advertising is misleading Australian consumers by understating its cars’ emissions and overstating its commitment to clean transport,” said Lindsay Soutar, director of Greenpeace Australia Pacific’s Electrify campaign.

“Toyota Motor Corporation makes claims in its advertising that give the false impression the company is leading the transition to clean cars, but the truth is Toyota is not leading the transition but is acting globally to block the take-up of electric vehicles.

Greenpeace’s complaint alleges that Toyota misleadingly markets itself, making claims in its advertising that give the false impression the company is leading the transition to clean cars.

Greenpeace says Toyota’s net zero by 2050 plans appear inconsistent with its current plans for car production, and alleges the carmaking giant is not seeking a rapid transition to eco-friendly cars and has a global track record of lobbying to delay, block or weaken vehicle emissions standards. Greenpeace also says Toyota’s vehicles may not meet emission standards in real-world use as opposed to test conditions.