The ACCC has announced two internet sweeps for ‘greenwashing’, to carry out two Compliance and Enforcement Priorities for 2022/23.
The two priorities are:
The ACCC describes the consumer and competition (fair trading) issues in this way:
The ACCC will closely scrutinise businesses making environmental and sustainability claims, including claims about consumer goods, manufacturing, the energy sector, and carbon neutrality.
“Many consumers are increasingly considering the environmental impact of the products and services they buy. We are aware of growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on these consumer preferences,” the ACCC Chair Rod Sims said.
“We are also seeing businesses incurring the costs of genuine environmentally friendly manufacturing processes face unfair competition from businesses making misleading environmental and sustainability claims without incurring the same costs.”
What is the ‘sweep’ all about, and why now?
It’s been years since the ACCC (Australian Competition & Consumer Commission) last targeted ‘green’ claims.
The last time was in the years 2007 to 2012. In the 2011 guide, Green marketing and the Australian Consumer Law , the ACCC said:
The purpose of this guide is to educate businesses about their obligations under the ACL (the Australian Consumer Law).
Environmental claims can be a powerful marketing tool. These claims come in a wide range of forms, including statements about environmental sustainability, recycling, energy and water efficiency or impact on animals and the natural environment.
Environmental claims are now relevant to a larger product range, from small household items such as nappies, toilet paper, cleaners and detergents to major whitegoods and appliances. Many consumers consider environmental claims, such as water or energy efficiency, as a major factor when evaluating products to purchase.
Therefore, it is essential that consumers are provided with accurate information in order to make informed decisions. Firms which make environmental or ‘green’ claims should ensure that their claims are scientifically sound and appropriately substantiated. Consumers are entitled to rely on any environmental claims you make and to expect these claims to be truthful.
The ACCC has been prompted to again target ‘green’ claims because ‘green’ claims are much more widespread than for household items, and are more sophisticated.
In the ACCC Media Release – Businesses told to be prepared to back up their environmental claims (20 September 2022), the ACCC warned:
“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on changing consumer preferences,” (ACCC Deputy Chair) Delia Rickard said.
“Broad terms like ‘environmentally friendly’, ‘green’, or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing.”
“It is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, or other forms of evidence. Where we have concerns, we will be asking businesses to substantiate their claims,” Ms Rickard said.
“The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims.”
Two weeks later, the ACCC has followed up by announcing that it is searching the internet to identify ‘green’ claims and ‘green’ reviews, promising a follow up.
In the ACCC Media Release – ACCC internet sweeps target ‘greenwashing’, fake online reviews (4 October 2022), the ACCC said:
The ACCC has today launched two internet sweeps:
1. Misleading environmental and sustainability marketing claims
At least 200 company websites will be reviewed in the sweep for misleading environmental claims across a range of targeted sectors including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear.
“As consumers become increasingly interested in purchasing sustainable products, there are growing concerns that some businesses are falsely promoting their environmental or green credentials. Misleading claims about products or services undermine consumer trust and confidence in the market,” ACCC Deputy Chair Delia Rickard said.
“This sweep forms a core part of our work in actively monitoring for ‘greenwashing’ in the market and will help inform what steps businesses can take to improve the integrity of their environmental claims.”
“In looking at claims we are concerned about what the ordinary consumer will understand the claim to mean. The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims,” Ms Rickard said.
2. Fake or misleading online business reviews
The ACCC will conduct a separate internet sweep targeting fake or misleading online reviews and testimonials. This will be the first of a series of smaller-scale sweeps focusing on deceptive practices in the digital marketplace. The sweep will target misleading reviews posted to business’ websites, Facebook pages and third-party review platforms. Misleading advertising by influencers on social media will be considered in a second sweep, which will focus on identifying posts that fail to clearly disclose advertising or sponsorship.
At least 100 businesses will be reviewed in this initial sweep, targeting areas in which consumers most commonly rely on reviews including household appliances, electronics, fashion, beauty products, food and restaurants, travel services, sport, home improvement, kitchenware, health products, as well as furniture and bedding.
Both positive and negative reviews and testimonials – including those that are incentivised – can be false or misleading, particularly if they are presented as impartial but are not,” Ms Rickard said.
“The sweeps will be followed up with compliance, education and potential enforcement activities and we also want to improve awareness to enable consumers to make more informed purchasing decisions.”
The ACCC will publish the findings of the sweeps once they are collated and analysed.
What should businesses do?
Businesses need to be pro-active and ensure that any ‘green’ claims or reviews on their websites, social media platforms and third party platforms are substantiated or else removed.
For examples of keywords which may be caught up in the ACCC sweep and for a checklist for marketers, refer to the Marketing Commentary which follows.
Marketing Commentary by Michael Field
Which Words Won’t (Green) Wash with the ACCC?
‘Greenwashing’ is a marketing tactic designed to convince the consumer that the company’s products are environmentally ‘friendly’, ‘responsible’ or ‘sustainable’. The range of terms used to describe environmental credentials is extensive, and is limited only by the imagination of the promoting company’s creative marketing team.
A typical selection of environmental keywords may include:
Why do companies greenwash?
According to a First Insight consumer report, consumers across all generations—from Baby Boomers to Gen Z—are willing to spend more for sustainable products. Today, nearly 90% of Gen X consumers said that they would be willing to spend an extra 10% or more for sustainable products, compared to just over 34% two years ago.
As such, brands have little choice but to embrace the green dollar, or risk losing market share and relevance to their consumers who are increasingly ‘environmentally aware’ and make informed choices about their purchases.
Companies that are tempted to make false or misleading claims about the environmental credentials of their brand should heed the ACCC warning, and consider the likely negative impact to their brand, customers, market and publicity if their claims are found to be false and misleading by the ACCC.
Checklist for Marketers
- Avoid using vague terms like ‘eco’, ‘friendly’, ‘green’ ‘responsible’, or ‘safe’ unless it is backed up by incontrovertible evidence to support the claim
- Make sure that descriptions clearly explain the environmental benefits derived by purchasing the product, and do not conceal any negative environmental impacts (if relevant)
- Clearly identify which part of the product provides the environmental benefit, such as sourcing, growing, manufacturing, packaging, transport, distribution, retail etc.
- Be specific about the exact environmental benefit generated by the purchase of the product. For example ‘reduce water usage by 30%’ with specific information on how this was achieved and measured
- Do not rely on stock images or ‘green’ icons such as ‘animals, flowing water, forests, and fields’ and other clichéd environmental symbolism, unless the images are a genuine representation of the product origin or manufacturing process, or a true representation of the environmental benefit
- Prove it! Back up your claim with irrefutable evidence that backs up the veracity of your environmental claim
- Do not rely on the ‘halo effect’ whereby one small portion of the product offers some environmental benefit, however the whole product, or range is presented as ‘environmentally responsible’ when it is not.