Consumers and regulators taking closer look at greenwashing

There is no doubt that the move towards sustainable consumption is intensifying, as shoppers of all generations look to brands that seek to leave a positive impact on the environment.

A recent survey reported that just two years ago, only 58% of consumers were willing to spend more for sustainable options. Today, nearly 90% of Gen X consumers – compared to just over 34% two years ago – would be willing to spend 10% extra or more for sustainable products.

This trend is not without its risks to businesses and brands. Whilst consumers may be willing to pay more for sustainable products, it is challenging for them to verify the sustainability credentials made by businesses, leading to concern that some brands are making sustainability claims that cannot be substantiated or verified.

This phenomenon has led to the coining of a new term, ‘Greenwashing.’

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, companies are on notice for 2023, with the Australian Securities and Investment Commission (ASIC) launching its first court action against alleged greenwashing, and the ACCC releasing the findings of their internet sweep which has resulted in the investigation of a number of businesses for potential greenwashing, after it was found more than half made concerning claims about their environmental or sustainability practices.

The ACCC internet sweep focussed on what the ordinary consumer would understand sustainability claims to mean, reviewing 247 different businesses and or brands across 8 sectors. The outcome of this sweep highlighted the cosmetic, clothing and footwear and food and drink sectors as the greatest proportion of concerning claims among the industries targeted. 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.”

There were eight key issues identified in the sweep:

 

Vague and unqualified claims

 

Issue: vague claims such as ‘green,’ ‘sustainable’ and ‘kind to planet,’ as well as those that do not provide an explanation around what is meant by the claim  or how it is calculated e.g. ‘biodegradable,’ ‘compostable’ or claims about ‘carbon neutrality’.

ACCC comments: such claims have a variety of different meanings to consumers, and do not provide enough information to allow consumers to make an informed purchase decision.

A lack of substantiating information

 

Issue: making environmental and sustainability claims without providing appropriate evidence to back them up.

ACCC comments: evidence would include information on calculations or certifications as the source for claims, providing accessible click through links, or up to date evidence as the source.

Use of absolute claims

 

Issue: absolute claims such as 100% recyclable, made from 100% recycled content, zero emissions, kerbside recyclable (whereby it is only recyclable in certain jurisdictions).

ACCC comments: these claims give a very strong impression to consumers and may be misleading if robust evidence is not provided. Claims that products are made from 100% recycled materials will face further scrutiny.

Use of comparisons

 

Issue: making comparisons between the environmental benefits of one product over another, or those sold by another business without stating what it is being compared to. E.g. X product uses less water.

ACCC comments: such claims may be misleading as they may not allow consumers to objectively assess the merits of one product over another. It may also give an inflated impression of a particular product.

Exaggerating benefits or omitting relevant information Issue: overstating the sustainability benefits of product or omitting negative attributes that might be relevant to a consumer’s purchasing decision e.g. stating that a product is recyclable or compostable when there is no system in place to collect it or claims that do not reflect the life cycle of a product e.g. zero emissions claims that do not consider other associated emissions such as the transport, or disposal of a product

ACCC comments: these attributes are relevant to a customers purchasing decisions. There are other businesses that provided full supply chain traceability or clearly stated the emissions generated from different parts of their operation.

The use of aspirational claims, with little information on how these goals will be achieved Issue: making aspiration sustainability claims (e.g. to reduce the amount of packaging, using energy from renewable sources, reducing waste landfill and net zero targets) with little information on what practical changes were being implemented to achieve these goals, or the measurement of these goals.

ACCC comments: in many cases it was unclear what practical changes were being implemented to achieve the goals, or the goals were very general and not able to be measured.

Use of third party certifications Issue: use of certification trade marks (CTMs) without detailing the nature of the certification, or whether it applies only to the entire product range, only certain products, or to the whole business operations.

ACCC comments: it can be difficult for consumers to understand what every CTM means or to assess how robust the scheme is, raising concerns that some CTMs may become meaningless.

Use of images which appear to be trust marks Issue: using logos or symbols on websites and packaging related to nature or green based imagery to insight a positive environmental image, or a Trustmark.

ACCC comments: imagery may mislead consumers into believe the business or product has been certified by a reputable third party, when this may not be the case.

 

In a recent presentation to ARA members, the ACCC emphasised the importance of ongoing engagement with industry, consumer groups and government agencies. They will also conduct a range of education activities with businesses, including updating economy-wide guidance material to improve compliance with Australian Consumer Law, as well as targeted guidance for specific sectors.

In the first instance, the ACCC encourages businesses to come forward with potential false or misleading claims, rather than waiting for the ACCC to unearth these problems in order to foster a cooperative compliance process. The ARA encourages businesses to conduct a review of their environmental claims and assess whether they are not only well-intentioned, but well substantiated.

The ARA will continue to engage with the ACCC and relevant government departments as the conversation continues on greenwashing. In the mean time, please reach out to our sustainability team with any queries – sustainability@retail.org.au

 

Karla Elkington is the ARA’s Sustainability Advisor

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