Greenwashing risks for labelling and marketing of consumer goods in Australia

What you need to do

• Review marketing collateral, product labels and packaging, websites and social media content to ensure your environmental claims and promises comply with consumer law and applicable third party conditions.
• Make sure those persons and agencies responsible for your marketing and social media content understand the legal requirements and ACCC guidance in this area and act responsibly.
• Ensure you have scientific evidence to substantiate claims, and provide website links and QR codes in marketing and on packaging so consumers can verify the information themselves.
• Partner with experts who can audit your supply chain and determine whether practices and products are sustainable or otherwise support your environmental claims and goals.

Greenwashing is a term that has been making headlines with increasing frequency. While the focus in the press has been on what this means for the investment and energy sectors, every business should be taking notice.

The risk

In mid-July 2023, the ACCC published new draft guidance on making claims of environmental benefits associated with products and services. The guidance (available here) outlines a number of Principles including being truthful, not hiding relevant information, avoiding unqualified claims, and not using visual elements in a way that give the wrong impression.

Making deceptive, misleading or certain false claims in relation to products or services on packaging and in marketing (which includes in advertising, on websites and on social media) will breach the Australian Consumer Law. Penalties for corporations can be in the tens of millions of dollars and for individuals (which can include company directors), the maximum penalty is $2.5M per breach. Courts also have the power to order additional remedies including corrective advertising and payment of customer refunds. The ACCC takes these matters very seriously and is currently closely monitoring environmental type claims.

What to watch out for

The types of conduct that could attract complaints from the ACCC, climate action groups, competitors or consumers include:

• Using colours in marketing, for logos and on packaging that suggest a product or service is environmentally friendly eg, green, brown.
• Using images of trees, plants and the Earth in marketing in a way that may draw customers to conclude a link between the product or service and environmental benefits.
• Using words in taglines, logos and on packaging which suggest an environmental benefit eg, "sustainable practices", "better for the planet" or "supporting a green future".
• Using terms such as "Net Zero" or "Nature Positive" in product names and marketing if those statements are not scientifically accurate, or you do not have evidence to support the claim.
• Claiming packaging is recycled when only part of a package is made from recycled materials.
• Statements about future goals when no plan exists to achieve those goals (eg, "by 2025 we will have reduced our emissions by 30%").
• Using third party certification marks on product packaging that indicate compliance with environmental criteria which may not in fact be met at all or in every instance.
• Comparisons with competitor products - these must be fair and accurate and are likely to attract closer scrutiny.
• Small print disclaimers that contradict the main message.
• Selling "green" products that are not really any better for the environment than alternative products when the whole supply chain is considered, including methods of transport for goods.

News

The ACCC recently did a sweep of environmental claims being made by several hundred Australian business and found overall that the conduct of 57% raised concerns. While the ACCC guidance in this space is relatively new, there are several examples in recent years of consumer goods companies being challenged on their claims.

In November 2022, skin care company Sukin was sued in the Federal Court by the Carbon Reduction Institute claiming Sukin's use of the Institute's carbon neutral logos without permission misled consumers. The Institute owns several registered trade marks which it allows companies to use on products if certain requirements are satisfied. The Institute alleged that Sukin misled consumers by claiming the products on which the logos appeared were carbon neutral when they were not. The claim was settled earlier this year on confidential terms.

And in Europe, Gucci recently amended its environmental claims after advertising since late 2019 that it was "entirely carbon neutral". This has attracted unfavourable press coverage with headlines such as "Not so carbon neutral: Gucci adjusts sustainability goals". In fact, an issue with the legitimacy of third party sourced carbon credits appears to be the cause of Gucci's change in approach.

How we can help

• We advise clients across all sectors on the use of marketing, advertising, packaging, taglines, trade marks and product names that may promise or allude to environmental benefits.
• We undertake reviews of packaging, advertising, client websites and social media content.
• We can help if the ACCC comes calling seeking substantiation of claims or threatening proceedings.
• We defend clients against advertising standards complaints and claims of misleading or false advertising.
• We have experts across the firm who can audit internal processes, review and help improve regulatory compliance practices, and defend you if you are the subject of a consumer class action or claim by a climate action group.

Authors: Kellech Smith, Partner