8 ACCC Principles to Avoid Greenwashing


The Oxford English Dictionary added the word ‘greenwashing’ in 1999. As an issue then, greenwashing is older than most people think. In fact, it’s taken 25 years to become a topic hot enough to be regulated.

As Australian consumers wake up to their environmental responsibilities, they are demanding more proactive sustainability from companies and organisations and their products and services.

Unfortunately, a significant number of Australian companies, large and small, have stretched the truth a long way and given misleading impressions to consumers about the environmental profile of their products.

Finally, the ACCC has stepped in and produced eight principles for companies to follow which demonstrate “good practice when making environmental claims, as well as making businesses aware of their obligations under the Australian Consumer Law” (ACL) (ie not to make false or misleading claims or engage in misleading or deceptive conduct).

A dry earth and lush green earth are joined in the middle as an analogy for green issues

The 8 Principles

  1. Make accurate and truthful claims
    All your claims should be true and accurate. Even claims that are factually correct can sometimes still mislead consumers. You should consider the overall impression created, including through use of visual elements. Only make claims that represent a genuine environmental impact and do not exaggerate the benefits or level of scientific acceptance of a claim.
  2. Have evidence to back up your claims
    It is good practice to ensure you have clear evidence to back up all your claims. Evidence that is independent and scientific is the most credible. Making the research, evidence, or data that you are relying on easily accessible to consumers helps consumers to understand and trust your claims. If you are making a representation about a future matter (e.g. something that you promise, forecast or predict will happen in the future), you must have, and be able to show that you have, reasonable grounds for making that representation. Otherwise the representation will be taken to be misleading under the ACL.
  3. Do not hide or omit important information
    Consumers cannot make informed decisions if they are not provided with relevant information that gives the full picture, or if important information is placed where they are unlikely to notice or find it. Consider all the relevant information about your environmental impact and be transparent about it.
  4. Explain any conditions or qualifications on your claims
    Theoretical environmental benefits, which are not clearly explained, are likely to mislead consumers. Ask yourself if there are any conditions that need to be met or steps that need to be taken for your claim to be true. If claims are only true in certain circumstances, you should explain this to consumers clearly and prominently.
  5. Avoid broad and unqualified claims
    Broad claims can be interpreted widely and more easily mislead consumers than clear, specific claims that are substantiated. Ensure that you clearly qualify your claims, with prominent disclaimers, if there are any limitations to them.
  6. Use clear and easy-to-understand language
    Most consumers do not have specialist scientific or industry knowledge. It is good practice to use clear and easy-to-understand language and to avoid technical terms.
  7. Visual elements should not give the wrong impression
    Visual elements (for example green-coloured packaging, or logos representing a recycling process) on packaging and/or in advertising material can significantly influence a consumer’s impression of the environmental impact of a product or service. Avoid visual elements that would give the wrong impression about the environmental benefits of your product or service. You need to consider the overall impression that is created, taking into account not just the words used (or information that is left out), but also visual elements, colours and logos.
  8. Be direct and open about your sustainability transition
    You should be cautious about making aspirational claims about your future environmental objectives unless you have developed clear and actionable plans detailing how you will achieve those objectives. If you can transition to more sustainable business operations and want to tell consumers about it, be direct and open. Transitioning to a more sustainable business model takes time and is often not linear. For example, if you can’t reduce your greenhouse gas emissions in the short term, but are instead offsetting your impact on the environment, make this clear to consumers.

Enforcement Action

Under the ACL, the ACCC can take court action against a person for making false or misleading representations and for engaging in misleading or deceptive conduct. If convicted, any penalty will depend on the circumstances of each individual case.

The maximum penalty for each contravention of the relevant penalty provisions of the ACL by a corporation is the greater of:

  • $50 million
  • if the Court can determine the benefit obtained that is “reasonably attributable” to the contravention, 3 times the value of that benefit
  • if the Court cannot determine the value of the benefit, 30% of the corporation’s adjusted turnover during the relevant period.

Individuals can also be responsible for contravening the ACL. The maximum penalty for each contravention by an individual is $2.5 million. Criminal liability for corporations and individuals for offences under the ACL may apply in respect of some claims.

Takeaways

A clear takeaway from the Final Guidance, was a warning by the ACCC that businesses using industry schemes or standards to support environmental claims need to exercise caution. The ACCC has issued a clear warning that compliance with a standard does not necessarily equate to complying with the ACL.

Businesses must remember that it is the overall impression (from an ACL perspective) in the mind of an ordinary consumer that is key, not whether a representation is correct when compared against relevant industry standards.

The ACCC has confirmed that it will continue providing guidance on making meaningful claims during 2024 with plans to release more tips on emission and offset claims, and on the use of trust marks.

If you have any questions or concerns about complying with the ACCC guidance on environmental claims, please contact us.


This communication (including any attachment) has been prepared by BWES and is based on the available information at the time of publication and is believed to be true and accurate. The information contained in this communication should be used as a guide only and may cease to apply if applicable regulation or the product’s design or application is altered. BWES does not take responsibility for any Injury, Loss for damage suffered by any party’s interpretation or decisions made by any party on the information provided in this communication.