On 4 October 2022, the ACCC announced internet sweeps intended to identify misleading environmental and sustainability (greenwashing) claims and fake or misleading online business reviews.
The greenwashing sweep was foreshadowed by ACCC Deputy Chair Delia Rickard in a recent speech to the Sydney Morning Herald Sustainability Summit.
It forms part of the ACCC’s broader work on greenwashing as a 2022-23 compliance and enforcement priority, which was announced earlier in the year (see our earlier blog post on this).
To recap, greenwashing is where a company or individual makes false or misleading representations about environmental practices or the environmental attributes of products or services (including claims about carbon neutrality and ‘net zero’ targets). Greenwashing will breach the Australian Consumer Law (ACL) prohibitions on misleading or deceptive conduct and false or misleading representations. You can read more about this and our top tips in our alert here.
We expand on the sweep, and key takeaways from Ms Rickard’s speech, below.
No time to sweep it under the rug
The internet sweep will occur over the coming weeks and will involve the ACCC reviewing at least 200 company websites for misleading environmental claims. The review will target several sectors including energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear.
Once the sweep has concluded, we can expect a report summarising the ACCC’s findings as well as compliance, education, and potential enforcement activities. In fact, Ms Rickard noted that the ACCC will use data from the sweep to produce guidance for businesses and information for consumers.
This activity follows a global trend of increased scrutiny of greenwashing. For example, the International Consumer Protection Enforcement Network conducted a similar review and found that ~40% of green claims were potentially misleading and required further investigation.
What else can we expect from the ACCC?
Aside from this internet sweep, Ms Rickard identified a number of ways in which the ACCC is tackling greenwashing to improve the integrity of environmental claims. They include:
- Substantiation – Asking businesses to substantiate its environmental claims, particularly where a business makes a claim and does not provide information to consumers to substantiate that claim. The ACCC has the power to do this through issuing a substantiation notice, something which ACCC Chair, Gina Cass-Gottlieb, also flagged in her address to the Law Council Annual Competition and Consumer Law Workshop.
- Enforcement action – Taking enforcement action where the ACCC sees that consumers are being misled or deceived by green claims. Ms Rickard referred to the recent enforcement action taken by its Netherlands counterpart against H&M and Decathlon, which has seen those global businesses remove or amend misleading sustainability claims.
- Cross-regulator coordination – Continuing to work closely with ASIC and the Clean Energy Regulator to take a coordinated approach to greenwashing.
- Consumer focus groups and surveys – Conducting consumer focus groups and surveys to gain insights into how consumers think and respond to advertising claims, which will inform the ACCC’s understanding of how consumers understand express and implied environmental representations.
- Policy reform – Considering whether greater regulation is needed on the meaning and use of specific environmental claims or for clearer standards and government regulations (e.g., a common definition for terms like ‘biodegradable’).
Fake online reviews: At the same time as announcing the greenwashing sweep, the ACCC also announced internet sweeps targeting fake or misleading online reviews and testimonials. The ACCC’s announcement suggests that a series of sweeps will follow, focusing on deceptive practices in the digital marketplace and misleading advertising by influencers on social media (failures to disclose advertising or sponsorship). At least 100 businesses will be targeted in the initial sweep.
What steps can businesses take?
Businesses should assume that any environmental claims they make will be more highly scrutinised by the ACCC than ever before.
Constant and careful consideration of any such claims is necessary to ensure that businesses do not suggest that their business operations, or products or services they supply, are more environmentally positive or friendly than they actually are.
Some golden rules for your environmental claims are:
- Be clear
- Avoid technical language and relying on technicalities
- Be careful about aspirational claims, and promoting progress towards achieving aspirations
- Always substantiate, substantiate, substantiate!
We are undertaking reviews of environmental claims for clients and helping them apply our golden rules.
This article was written by Carla Massaria and Lynette Poon.
