Australian businesses making greenhouse gas emissions claims should use credible, science-based accounting standards, be transparent about the use of purchased credits, and, above all else, consider what average consumers would understand their claims to mean.
These recommendations are contained in new ACCC guidance to assist businesses in making accurate and credible emissions claims, titled Making emissions claims to consumers – a guide for business.
Businesses that want to promote their efforts to address climate change are encouraged to use the guidance to understand potentially problematic behaviour and risks in failing to consider the consumer perspective when advertising emissions data.
False or misleading environmental claims risk breaching the Australian Consumer Law.
“Consumers should be able to trust the emissions-related claims that businesses make,” ACCC Deputy Chair Mick Keogh said.
“Greenwashing not only limits the ability of consumers to make informed purchasing decisions, but it also disadvantages businesses that have invested in the development of products or services that are genuinely more environmentally sustainable.”
“We recognise that greenhouse gas emissions accounting is complex and increasingly regulated. Our guidance is particularly aimed at helping businesses to understand their consumer law obligations when making voluntary marketing claims to consumers,” Mr Keogh said.
“We strongly encourage businesses to review their consumer facing emissions claims in light of our guidance. If any existing claims raise concerns, businesses should update their messaging, gather stronger evidence, or reconsider using it.”
The guidance emphasises the need for transparency, so consumers truly understand what emissions changes are occurring, and can distinguish direct emissions reductions from credits bought from projects that happen elsewhere.
The ACCC also urges businesses to:
- Ensure that emissions claims are based on complete, reputable and clear accounting.
- Avoid highly selective, broad or non-specific claims.
- Avoid “double counting” changes to emissions.
- Be clear in any marketing claims about individual business efforts, broader changes available to all, and legal obligations; and,
- Only make claims about the future where they have reasonable grounds to do so.
The guidance recognises the role of carbon credits and other certificates as a complement to direct emissions reductions. However, if marketing gives the impression two activities are equivalent, neutralise or cancel each other out, businesses must have a reasonable basis to make these claims.
Consumer and fair-trading concerns in relation to environmental claims and sustainability, with a focus on greenwashing, is a current ACCC compliance and enforcement priority.
Since making greenwashing a compliance and enforcement priority in 2023 and releasing its first set of Environmental Claims Guidance, the ACCC has observed significant changes in some of the sustainability claims of large companies across sectors such as aviation, energy, logistics and telecommunications.
The ACCC has observed some companies move away from vague, widely advertised, carbon neutral claims, distant future targets and limited transparency about their reliance on credits, to be more transparent with customers about their actual, real-world environmental impacts. This includes making clear that certain activities are not sustainable and purchasing credits is not the most effective way for consumers to reduce their emissions.
The ACCC will continue to monitor this positive trend, which supports informed consumer decision making, and will consider targeted enforcement action for on-going problematic conduct where it is appropriate.
Background
The ACCC published general guidance on environmental claims in 2023 to address growing concerns of greenwashing in the marketing claims of Australian businesses.
The new emissions claims guidance complements and builds on the 2023 general guidance, applying the same principles and providing examples in the context of emissions-related claims.
Businesses have broad obligations under the Australian Consumer Law not to make false or misleading representations or engage in misleading or deceptive conduct, including in relation to environmental claims.
ASIC also enforces laws that require businesses offering sustainability-related financial products, such as managed funds, to comply with misleading statement prohibitions under the ASIC Act.
The ACCC has taken enforcement against several companies for alleged greenwashing in recent years. This includes:
- The Federal Court ordering Clorox Australia to pay $8.25m in penalties for misleading “ocean plastic” claims about certain GLAD products.
- Commencing Federal Court proceedings against Australian Gas Networks over allegations of greenwashing in its renewable gas campaign.
- Commencing Federal Court proceedings against the maker of Banana Boat and Hawaiian Tropic sunscreens for allegedly engaging in greenwashing when claiming its sunscreens were “reef friendly”.
