Businesses need to be ready to substantiate any environmental or sustainability claims they would make in marketing their goods and services, according to ACCC Deputy Chair Delia Rickard.
In a speech at the recent Sydney Morning Herald Sustainability Summit, Rickard said that the ACCC is actively targeting ‘greenwashing’ this year, warning of consequences for businesses who make false or misleading environmental claims that undermine consumer trust and confidence in the market.
“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on changing consumer preferences,” 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,” Rickard added. “Where we have concerns, we will be asking businesses to substantiate their claims. The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims.”
Rickard also stressed that a multi-pronged approach is needed to make sustainability work for both businesses and consumers.
“The ACCC plays a part in this by ensuring that businesses tell the truth, but there will also be roles for standards bodies, certification schemes, industry and governments via policy reform,” she said. “The ACCC is actively monitoring green claims in the market and will be considering what steps can be taken to improve their integrity. This will include engaging with industry and producing guidance for businesses.”
Rickard warned that the ACCC will be looking into not only the nature of the claims but also what they would mean to the consumer.
“Many businesses go to extraordinary lengths to make their processes, products and services more sustainable. This innovation and investment should be protected from unscrupulous behaviour of other businesses making green claims without incurring the same costs,” she said. “This can have a chilling effect on investment in this space, as businesses are not able to realise the full benefits of making environmental improvements.”
Rickard acknowledged the efforts of businesses transitioning to more sustainable practices and recognised their right to promote the steps they are taking as part of that journey.
“A business’s sustainability transition doesn’t happen overnight – it’s a long process up and down the supply chain,” she conceded. “While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers. Businesses in these positions need to be careful to not overstate the status of their transition through the claims they make.”
Rickard urged businesses to step into the shoes of a consumer before making environmental claims about a product, adding the ACCC is working with other regulators to take a coordinated approach to addressing a range of issues relating to sustainability.
“Consumers generally need to take at face value that claims made are truthful, and accurate,” she concluded.
