On 2 March 2023, the Australian Competition and Consumer Commission (ACCC) released its report ‘Greenwashing by businesses in Australia’ (Report), which contains the results of its ‘internet sweep’ conducted in October 2022. The internet sweep involved the review of the online presence of 247 businesses across eight industries and found that 57% of these businesses made concerning claims about their environment credentials. Following the release of the Report, the ACCC announced on 7 March 2023 that ‘consumer, product safety, fair trading and competition concerns in relation to environmental claims and sustainability’ is one of its key compliance and enforcement priorities for 2023-24.
In the financial space, the Australian Securities and Investments Commission (ASIC) has listed misleading conduct in relation to sustainable finance including greenwashing as one of its 2023 enforcement priorities. On 28 February 2023, ASIC launched its first court action for ‘greenwashing’. It alleges that Mercer Superannuation (Australia) Limited made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.
What is ‘Greenwashing’?
Both the ACCC and ASIC identify ‘greenwashing’ as a key risk to consumers. The term ‘greenwashing’ refers to misleading and false environmental advertising. This might look like:
- making vague and unqualified claims like ‘kind to the planet’ and ‘green’;
- making unsubstantiated environmental and sustainability claims or future goals;
- using absolute claims like ‘100% plastic free’ or ‘non-polluting’ that are not entirely true or without clearly identifying what the claims apply to;
- making comparison claims that mislead consumers;
- exaggerating the sustainability benefits of products or omitting relevant information;
- using third-party certifications or trust marks (a leaf, the planet, etc.) ambiguously;
- offering ‘environmentally friendly’ or ‘sustainable’ investment funds without substantiating the claim.
What happens next?
The ACCC has indicated that it will begin undertaking enforcement, compliance and educational activities to address the high-level concerns identified in the Report. To assist businesses, the ACCC will release updated economy-wide guidance material and targeted guidance for specific sectors. ASIC has already released an information sheet for financial service providers.
The increased penalties under the Competition and Consumer Act 2010 (Act) (potentially $50 million or more for a corporation) apply to misleading and deceptive conduct, which may include ‘greenwashing’ where there is ‘a real or not remote possibility’ that the target audience has been misled. Our article on the amendments to the Act contain further discussion on these changes.
What do you need to do?
We recommend that businesses review their marketing materials on a regular basis. Ensuring that any claims made are substantiated and that adequate information is provided to the consumer will help to avoid the risk of greenwashing. Our Corporate & Commercial team is available to provide advice in this area to ensure regulatory compliance.
More information
If you have any queries or would like further information about this article, please contact:
Kathryn Speed
Principal
M: 0408 446 013
E: kspeed@pageseager.com.au
Sarah Standen
Lawyer
T: (03) 6235 5147
E: sstanden@pageseager.com.au
Sophia Sadri
Lawyer
T: (03) 6235 5161
E: ssadri@pageseager.com.au
Published: 19 May 2023
