Both retailers and consumers are keen to see more sustainable and lower environmental impact products that are sourced through ethical supply chains and consider end-of-life impacts. In a recent survey to ARA members, over 55% of those surveyed believed greenwashing was of highest importance to the sector, and to their businesses.
As explored in a previous blog, greenwashing refers to the false or misleading claims made around a business’ or product’s sustainability credentials, in order to deceive consumers into believing the product is more environmentally friendly, or has a greater positive environmental impact than it actually does.
Until now, deception by greenwashing has not been enforced by law. However in 2023, that is beginning to change after an internet sweep conducted by the ACCC to expose businesses for potentially ‘greenwashing’. This sweep found that more than half of businesses investigated made concerning claims about their environmental or sustainability practices. ACCC Deputy Chair Catriona Lowe said that misleading conduct “harms not only consumers, but also those businesses taking genuine steps to implement more sustainable practices.”
In light of this report, the Senate referred an inquiry into greenwashing for inquiry and report by 5 December, with particular reference to the following: the environmental and sustainability claims made by companies in industries including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear;
- the impact of misleading environmental and sustainability claims on consumers;
- domestic and international examples of regulating companies’ environmental and sustainability claims;
- advertising standards in relation to environmental and sustainability claims;
- legislative options to protect consumers from green washing in Australia; and
- any other related matters
The ARA recognises that greenwashing causes considerable harm in terms of public trust in sustainable products even though the impact of misleading environmental and sustainability claims may not always constitute a significant financial harm to an individual consumer. It is therefore critical that greenwashing in advertising is curtailed to maintain consumer trust in sustainable products and the efforts of product developers, manufacturers and retailers to deliver a more sustainable, circular retail economy.
Our consultation with members highlighted the need to improve guidance and education around greenwashing, to facilitate diligence and to restore consumer trust in sustainability claims. A standard definition of greenwashing, one that is explicit to the diverse audience it caters to is needed, to eliminate misleading conduct.
The ARA submission to the Inquiry focussed on the following:
- The current regulatory framework is sufficient to address greenwashing
The ARA submits that existing consumer protection and competition laws are fit for purpose and should be relied upon in the first instance, supported as necessary and appropriate by education and awareness building, so that retailers have guidance on what behaviours are acceptable or unacceptable, shedding light on currently ‘grey’ areas.
As greenwashing is effectively a misleading representation about an organisations sustainability credentials, it is prohibit under Chapters 2 and 3 of the Australian Consumer Law, which prohibit misleading and deceptive conduct and the making of misleading representations. Further regulation will increase costs and complexity, without necessarily reducing greenwashing claims.
However, the ARA welcomes general and targeted guidance or education, or the development of an industry Code of Conduct for the retail sector which would provide clarity and reduce the need for businesses to guess where the boundary is when making a sustainability claim.
- Education campaign needed to guide industry
While we believe the current regulation is adequate to address proven instances of greenwashing, the ARA recommends an education campaign be developed and deployed to give guidance to industry about greenwashing and the limits around acceptable advertising claims.
An approach that the ARA would support is to develop case study examples around common issues, or best practice standards around credentialing or certification of products.
We strongly believe greenwashing can be achieved through education and guidelines or industry codes of practice, rather than black letter law or regulation.
- Clarity needed on certification schemes
With over 57 certification labels in Australia alone, retailers face significant challenges in identifying appropriate schemes for their business model. Members highlighted challenges identifying which schemes will deliver the most benefit to the company, and the consumer.
Clearer guidelines and discussions around best practice for these schemes would facilitate the due diligence process for businesses, and further allow the consumer to make an informed decision on the product they are buying.
The ARA also noted the high benchmark and cost of joining some certification schemes for not only the retailer, but the supplier, farmer or producer involved in production. This cost of participation is a great barrier to smaller businesses, which may prevent them joining and building sustainable credentials creating a competitive disadvantage for smaller businesses.
To read the full ARA Submission to the Inquiry, see here.
Reach out to our sustainability team with any queries – sustainability@retail.org.au
