According to a draft of rules created by the competition watchdog to put an end to “greenwashing,” businesses should have data to back up any claims they make about the environmental sustainability of their operations.
After conducting a recent internet sweep to look for instances of greenwashing, the Australian Competition and Consumer Commission (ACCC) uncovered a number of problematic practices. These tactics ranged from businesses overstating their climate action to businesses building their own certification schemes. On Friday, the ACCC published a draft of some recommendations regarding these practices.
To ensure that businesses are in compliance with Australian consumer law and that customers are able to make decisions based on accurate information, the draft guidelines offer eight guiding principles that businesses should adhere to if they choose to make environmental and sustainability claims.
The principles include making claims that are accurate and truthful, such as not exaggerating the environmental benefit of activities done by firms, and having proof that is unambiguous, independent, and scientific to demonstrate to customers that those claims can be believed. Other principles include not misleading customers about the environmental benefit of actions performed by companies.
In accordance with a second principle, businesses are cautioned against omitting or concealing vital information that might provide customers with a more comprehensive view of how they conduct business.
For instance, “highlighting the positive aspects of your product, service, or business while omitting information about the negative aspects,” which could give customers the erroneous impression that a product or service had a smaller impact on the environment than it actually did.
The report refers to a hypothetical case study of a plastic cosmetics pump bottle labelled “plastic-free”, but with a little paragraph on the back emphasizing that this only applied to the external bottle and not to the cap, pump, or internal tube that sits inside the bottle. The hypothetical case study is based on a cosmetics container that contains a pump and is made of plastic.
“We did observe in the businesses that we swept late last year that there were situations which we thought were likely to be exaggerating benefits or understating harm or omitting relevant information,” the head of the ANC, Gina Cass-Gottlieb, said. “We did observe that there were situations which we thought were likely to be exaggerating benefits or understating harm or omitting relevant information.”
The chief executive officer of the Consumer Policy Research Centre, Erin Turner, stated that the rules were required and an important first step to improve the green claims that were made by Australian companies.
“What we want is for businesses to provide information to customers that enables them to compare available options and select options that are meaningful to them.” “That is not taking place at this time,” she stated.
The research was carried out by the centre in the previous year, and it investigated claims that customers in Australia see on a daily basis in the market. It discovered that many of these claims were “vague and unhelpful.”
According to Turner, this included using phrases like “sustainable” or “eco” without stating that a corporation was actually doing anything specific.
She mentioned that the statement that “our freezers are greener” was the one that jumped out to her the most.
Turner asserted that in addition to guidelines, legislation was necessary in order to compel corporations to release further information into the market.
“We need claims that help people put options side by side and answer basic questions like, ‘How long will the product last,’ ‘Can I repair it,’ and ‘Is this better than another company,'” she added. “We need claims that help people put options side by side.”
In the past year, the Environmental Defenders Office (EDO) has been involved in the submission of ten complaints on greenwashing to the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission.
Kirsty Ruddock, managing counsel for EDO, stated that the company would continue to emphasize to the ACCC the requirement that businesses have a clear scientific basis for their statements regarding net zero emissions in particular.
She stated that “for net zero claims to be credible, they must reduce absolute emissions and limit the use of offsets to situations where there are residual or unavoidable emissions.” “For net zero claims to be credible, they must reduce absolute emissions and limit the use of offsets to those situations.”
“Too many net zero claims rely on offsets instead of actually reducing emissions.”
The deadline for providing feedback on the draft of the guidelines is September 15th. Following the conclusion of the work on the guidelines, the ACCC will develop guidance that is industry- and problem-specific.
The watchdog is asking firms for their views on what was feasible and what information they required so that companies that were actually investing in sustainable practices could make their claims with full conviction.
Cass-Gottlieb stated that they were also interested in hearing from customers regarding the information that they believed would be useful in evaluating claims made about green credentials as well as the manner in which they desired to view and obtain such information.
She stated that “false or misleading claims can undermine consumer trust in all green claims,” which is particularly problematic given consumers are often paying higher prices based on these promises.
“In a similar manner, businesses that are taking genuine steps to adopt sustainable practices are placed at a competitive disadvantage by businesses that engage in ‘greenwashing’ without incurring the same costs,”