The Australian Government has issued a draft Environmental and Sustainability Guidance detailing the obligations under Australian Consumer Law that businesses must meet when making environmental and sustainability claims.
The guidance, released on July 14, 2023, sets out what the Australian Competition & Consumer Commission considers to be good practice when making such claims, to help businesses provide clear, accurate and reliable information to consumers about the environmental performance of their business.
The Guidance is extremely educational, not only for companies doing business in Australia, but given the global nature of trade, for companies around the world, including those in the United States; and especially at a time when companies doing business in the US do not have the benefit of the outdated, and in many ways no longer useful, Federal Trade Commission Green Guides for Environmental Claims last updated in 2012.
As we detailed in our recent post, H&M wins dismissal of Greenwashing lawsuitIn an era where accusations of greenwashing are the norm, it is important to note that properly vetted and drafted environmental marketing statements can successfully withstand a challenge. This Guide provides a literal checklist for that screening.
Environmental or sustainability claims will only help consumers make informed purchasing decisions if the claims are clear, not misleading and do not omit relevant information. A misleading, meaningless or unclear claim, whether made for marketing purposes or as a mandatory government disclosure, violates consumer trust and undermines confidence in both the claim itself and sustainability claims in general.
Companies that actually pursue more sustainable products and services often incur additional research or production costs. This fact, combined with consumers’ increasing interest in purchasing sustainable products, results in false or misleading sustainability claims, unfairly disadvantaging companies that make genuine claims. This undermines effective competition and can hinder companies from investing in sustainability.
In preparation for this update to the then existing 2011 Guidance, the ACCC carried out a series of environmental claims The conclusion shows that of the 247 companies across a wide range of industries with an online presence, more than 57% of these companies have made potentially misleading and deceptive environmental or sustainability claims. Companies making vague and unqualified claims topped the list of most common concerns, with many companies describing their products as ‘green’, ‘kind to the planet’, ‘eco-friendly’, ‘responsible’ or ‘sustainable’. Of the sectors studied, cleaning, cosmetics, clothing and footwear, and food and drink industries had the highest percentages of worrying claims.
The Accompaniment released from Canberra articulates the following principles and then provides real-world examples:
Principle 1: Make accurate and truthful statements
Principle 2: Provide evidence to support your claims
Principle 3: Don’t omit or hide important information
Principle 4: Explain any conditions or qualifications of your claims
Principle 5: Avoid broad and unqualified claims
Principle 6: Use clear and easy-to-understand language
Principle 7: Visual elements should not give the wrong impression
Principle 8: Be direct and open about your sustainability transition
All businesses, Australian or otherwise, can learn a lot from this new document about mitigating risks when making environmental claims, essentially using it as a checklist.
In addition, additional information can be gathered by participating in the ACCC online survey, available until September 15, 2023, which is being conducted to allow the agency to assess common issues faced by companies when making environmental claims ahead of finalization of the guidance, as well as as part of the information. process for companies. Take the Aussie online survey here.
Legal experts warn that the number of greenwashing claims will continue to grow in the coming years. With ever-increasing support for a transition to a zero-carbon economy to solve problems related to climate change, emissions reduction, recyclability and the like, consumers are increasingly interested in purchasing sustainable or environmentally friendly products and services. At the same time, the use of environmental and sustainability claims, currently valued at over $240 billion per year, will increasingly be used in advertising.
Sustainability is an important topic not only in Australia, but also internationally and certainly in the US. We chose to blog about this legal development some 10,000 miles away, not just because of the surprise that more than half of Australian companies surveyed made misleading environmental claims, but because it will help companies reduce the risks of greenwashing claims (…often an innocent misrepresentation by a company related to actually pursuing sustainable action) has become an important part of what we do.
As US companies continue to wait for the update to the 2012 FTC Green Guides, this draft guidance from Down Under is, to our knowledge, the best checklist for mitigating the risk of greenwashing claims.
A live webinar “Offsets and RECs for reducing your greenhouse gases” 30 Talking Points in 30 Minutes, Tuesday, August 15 at 9:00 am ET presented by Stuart Kaplow and Nancy Hudes on behalf of ESG Legal Solutions, LLC. The webinar is free, but you must register here.