In our recent article, we detailed the Australian Competition and Consumer Commission (ACCC) announcement that it would prioritise regulating “greenwashing” in 2023, by targeting businesses making false and misleading statements in respect of ethical and sustainable practices.
The ACCC has also confirmed that consumer and competition issues in essential services, environment claims and sustainability, financial services and other critical areas will be among the ACCC’s compliance and enforcement priorities during 2023 to 2024.
ASIC launches court action against “greenwashing”
Surprisingly, it is the Australian Securities and Investments Commission (ASIC) who has launched the first court action against alleged “greenwashing” misconduct, and very early into 2023. ASIC has stated that “this is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects [ASIC’s] continuing efforts to ensure sustainability-related claims made by financial institutions are accurate.”
ASIC claims that Mercer Superannuation made statements on its website about ‘Sustainable Plus’ investment options offered by the Mercer Super Trust, of which Mercer is the trustee. The Sustainable Plus options were marketed towards members who are “deeply committed to sustainability” as they excluded companies involved in carbon intensive fossil fuels.
ASIC alleges that members who took up the Sustainable Plus options had investments in companies involved in industries that the website statements said were excluded. Therefore, Mercer made false and misleading statements and engaged in conduct that could mislead the public.
ASIC is seeking pecuniary penalties from the Court, declarations, and also injunctions preventing Mercer from continuing to make any of the alleged misleading statements on its websites.
ACCC conducts internet sweep
The ACCC has reiterated that its stated priorities reflect the issues impacting the Australian economy, consumers and businesses in Australia.
The ACCC recognises that consumers increasingly base their purchasing decisions on environmental grounds. As a result, some businesses, rather than changing their practices, are simply relying on false or misleading greenwashing statements to entice consumer transactions.
Although the ACCC has not yet issued any formal proceedings, it has conducted a preliminary internet investigatory sweep. It says 57% of the 247 businesses reviewed were identified as having made concerning claims in relation to sustainability and environmental practices.
The ACCC will be engaging with businesses and industry associations directly to improve compliance with greenwashing statements. Businesses will be asked to substantiate their claims on sustainability and environmental practices.
When making a “green” statement, you need to make sure that your business:
- makes clear the sustainability benefit the product / service offers;
- considers the entire lifecycle of the product;
- avoids overly technical language;
- substantiates sustainability statements with facts;
- is honest and specific about the business’ sustainability efforts; and
- makes the product labels useful and not misleading or confusing to consumers.