Rebecca Maher, Paula McGrath (nee Mucha) and Peta Stevenson discuss the recent penalty awarded against Clorox Australia.
In the recent decision against Clorox, the Federal Court imposed a substantial penalty of $8.25 million on Clorox Australia for misleading environmental claims, underscoring the importance of ensuring that product representations are accurate and can be substantiated, and reflects the ACCC’s commitment to tackling greenwashing, which has been a key enforcement priority since 2022.
In this article, we:
- consider the background to Australian Competition and Consumer Commission v Clorox Australia Pty Limited [2025] FCA 357 (Clorox Decision);
- discuss how Clorox’s conduct constituted greenwashing, with Justice Neskovcin’s comments on the impacts of greenwashing to consumers more generally;
- analyse the penalty factors applied by the Court; and
- highlight key takeaways, including the importance for businesses to ensure the accuracy of environmental claims under the microscope of the ACCC’s commitment to tackling greenwashing.
Background
The case centred on Clorox’s marketing and supply of its “GLAD to be Green” range between June 2021 and July 2023. Representations were made that certain kitchen and garbage bags were partly made of recycled ‘ocean plastic’, i.e., presumably collected from an ocean or sea.
The ACCC alleged that Clorox’s statements about its plastic bags containing “50% Ocean Plastic” or “50% Ocean Bound Plastic” were misleading. The ACCC argued that visual elements accompanying these claims significantly influenced consumer perception of the products’ environmental impact. These elements included:
- Font size and colour
- Blue backgrounds and product colour
- Imagery, such as waves
The ACCC argued that Clorox’s statements, along with the images on the packaging, suggested that the products were made of 50% recycled plastic from the ocean or nearby areas. In reality, the plastic was collected up to 50km from the shoreline, in Indonesian communities, without formal waste management systems. The rest comprised non-plastic waste resin, processing aids, and dye/ink.
The ACCC alleged this Ocean Plastic Representation was false or misleading regarding:
- Product composition (violating s 29(1)(a) of the ACL)
- Environmental benefits (violating s 29(1)(g) of the ACL)
The ACCC also alleged Clorox had confused the public about the products’ nature, manufacturing, and characteristics, breaching sections 18 and 33 of the ACL.
At a case management hearing on 7 February 2025, the parties presented an agreed penalty of $8.25 million for the Court’s consideration. Senior counsel for the ACCC argued that the representations affected as many as 2.2 million customers over 2 years, without sufficient consideration as to how ordinary and reasonable consumers would understand the phrase ‘ocean plastic’.
Counsel Clorox sought to qualify that the “50% Ocean Plastic Recycled” represented the plastic was ‘ocean bound’, and not ‘ocean found’; however, conceded that the distinction was not clear enough. The ACCC noted that Clorox had demonstrated contrition and discontinued the product following the commencement of the investigation.
The Court approved the agreed penalty on 14 April 2025.
Greenwashing and the misstating of environmental benefits
Justice Neskovcin found that Clorox’s conduct constituted “greenwashing,” in breach of the ACL because it made “false or misleading environmental or sustainability claims in order to make a company or its business appear more environmentally friendly, sustainable or ethical, particularly in order to induce consumers to purchase its products or services or to invest in the company”.
The Court emphasised the societal harm caused by such conduct, noting that it “undermines consumer confidence in environmental claims and disadvantages competitors making genuine claims”, and “undermine(s) the efforts of businesses to pursue environmental goals accurately and fairly”.
The Court highlighted that the prominent statement “50% Ocean Plastic Recycled” on the front of the Packaging was not dispelled by any of the other information provided on the packaging. The Court held that these features “connoted a relationship between the Products and the ocean” and the “reference to ‘green’ on the Packaging connoted environmental-friendliness”.
Penalty considerations
The Court had regard to the fact that over 2.2 million products were supplied, which damaged consumer confidence and disadvantaged competitors making genuine claims. The penalty was said to appropriately reflect the company’s inadequate consideration of what “ocean plastic” meant to ordinary consumers, especially given the misleading blue colour and wave imagery on the packaging.
Given Clorox Australia’s substantial business operations and financial resources, a significant penalty was necessary to ensure compliance and deterrence, with the Court asserting that the penalty “ought not be regarded by Clorox, Clorox US, or any other comparably sized business as an acceptable cost of doing business in Australia”. It was noted that Clorox’s senior management was aware of the misleading nature of the claims but chose not to alter the packaging to avoid missing launch deadlines.
The Court did acknowledge Clorox’s cooperation with the ACCC, including voluntarily providing documents and making early admissions. The Court mandated that Clorox publish corrective advertising to inform the public about the misleading claims, and required Clorox to implement a compliance program to prevent future contraventions.
ACCC Chair Gina Cass-Gottlieb noted this was, “a significant matter because consumers have limited or no ability to independently verify the accuracy of the claims made on packaging and it also disadvantages competitors who are accurately communicating their environmental credentials.”
Key takeaways
The Clorox decision serves as a reminder to both Australian and global corporates to ensure the accuracy of environmental claims and to maintain robust ACL compliance programs. With the ACCC actively scrutinising environmental marketing, companies must be mindful of the potential for greenwashing and closely scrutinise their claims, to avoid facing hefty penalties.
The Court mandating that Clorox implement a compliance program further emphasises the need for ongoing vigilance and education in corporate compliance, urging businesses to integrate comprehensive measures into their operations, and to focus on ACL compliance.
