Environmental claims: ensuring compliance with the Australian Consumer Law

It is common practice for businesses to align themselves with positive environmental values and boast how their goods or services are environmentally beneficial or minimise environmental harm. However, buzzwords such as “carbon neutral” or “environmentally friendly” are considered more than mere marketing tools – they are environmental claims and are subject to claims of misleading and deceptive conduct under the Australian Consumer Law.

The Australian Competition and Consumer Commission (“ACCC”) has recently published its guide for businesses in making environmental claims. You can read the guide here. The guide includes strategies to minimise the possibility of contravening the Australian Consumer Law (“ACL”) by setting out how to formulate an environmental claim in a way that is honest, genuine and reliable in the eyes of the consumer.

What is an Environmental claim?

Broadly speaking, an environmental claim is a representation made by a business concerning its environmental impact when delivering its products or services. Businesses need to consider their obligations under the ACL prior to making environmental claims so as to avoid ACCC claims of misleading or deceptive conduct.

Misleading or Deceptive Conduct

Misleading or Deceptive Conduct is captured under section 18 of the ACL and occurs when the consumer relies on representations made by a business and those representations are found to be false or misleading. When considered in the context of environmental claims, false or misleading claims are referred to as ‘Greenwashing’.

Breaching the ACL can result in serious penalties, such as a fine or in some criminal cases imprisonment. Businesses should consider the below when formulating environmental claims that are trustworthy and ACL compliant.

Be Honest

It sounds straightforward, but the best way to avoid claims of misleading and deceptive conduct is to ensure any environmental claims are accurate, truthful and genuine. If the environmental claim is made by a third-party supplier, you should conduct due diligence to determine the truth of those claims. It is important not to overstate scientific claims and ensure the science behind those claims is current, accurate and not biased.

Don’t Exaggerate

Avoid exaggeration. Environmental claims should clearly state the environmental benefit of your goods or services, without exaggerating the impact (or lack of impact) it has on the environment. Most goods and services will have some negative impact on the environment, so avoid broad claims that your good or service has only a positive impact on the environment.

Make Fair Comparisons

Be careful when making comparisons. Comparisons should be transparent and fair and should create a truthful representation when being viewed by the consumer.

Support your Future Environmental Claims

If you’re making a future environmental claim, you must have reasonable grounds for making that claim. For example, if you claim your good or service will be carbon neutral by a certain future date, you may require a report produced by an expert, or a company-authored document setting out dates when your business must reach its targets or KPI’s and how the business must achieve those targets.