The Australian Competition and Consumer Commission (ACCC) is set to investigate numerous businesses suspected of engaging in “greenwashing” practices after an extensive review revealed that over half of businesses made troubling claims about their environmental or sustainability practices.
Out of the 247 businesses examined during the sweep, 57% were found to have made concerning assertions regarding their environmental credentials. The sectors with the highest proportion of such claims were cosmetics, clothing and footwear, and food and drink. However, other sectors also displayed a significant number of concerning claims.
“Consumers are now, more than ever, making purchasing decisions on environmental grounds,” said ACCC Deputy Chair Catriona Lowe. “Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims. This conduct harms not only consumers but also those businesses taking genuine steps to implement more sustainable practices.
“Businesses using broad claims like ‘environmentally friendly’, ‘green’, or ‘sustainable’ are obliged to back up these claims 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.”
The ACCC plans to request businesses to provide evidence to support their claims when concerns arise. The commission is already actively investigating alleged misleading environmental claims in various sectors, including packaging, consumer goods, food manufacturing, and medical devices.
To enhance compliance, the ACCC will engage in educational activities with businesses, updating economy-wide guidance materials and providing targeted guidance for specific sectors.
“The sweep has helped inform our forthcoming guidance about what steps businesses need to take to improve the integrity of their environmental claims,” Lowe added. “We want to see businesses taking steps to ensure that environmental claims are accurate as well as meaningful for consumers. Our sweep has shown that claims are most useful where they are relevant, clear, reliable and transparent.
“We will engage directly with businesses and industry associations to improve compliance with the Australian Consumer Law. Importantly, we encourage businesses to come forward if they become aware they have made false or misleading marketing claims. Businesses who cooperate and advise of any issues with their operations will be considered more favourably than those who wait for the ACCC to unearth these problems.”
Following the announcement the ACCC has urged both consumers and businesses to report any potentially misleading environmental or sustainability claims and provides a channel for reporting such issues.
About the ACCC
Each year, the ACCC announces a list of compliance and enforcement priorities to guide its activities for the following year. For the 2022-23 period, the ACCC has prioritised consumer and fair-trading issues related to environmental and sustainability claims.
Under the Competition and Consumer Act 2010, the ACCC possesses powers to acquire information, documents, and evidence under section 155 of the Act in relation to potential violations. The commission can also issue substantiation notices, requiring individuals or businesses to provide information and produce documents capable of substantiating or supporting their claims or representations.
How Europe is tackling greenwashing
Last month, the European Supervisory Authorities (ESAs) published their progress reports on greenwashing in the financial sector. As part of their progress report, the ESA defined greenwashing as a practice where sustainability-related statements, declarations, actions, or communications do not clearly and fairly reflect the underlying sustainability profile of an entity, a financial product, or financial services. This practice may be misleading to consumers, investors, or other market participants.
The ESAs also highlight that sustainability-related misleading claims can occur and spread intentionally or unintentionally in relation to entities and products that are either within or outside the remit of the EU regulatory framework.
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