Australia: It´s Not Easy Being Green: ACCC Cracks Down On Environmental Claims

Last Updated: 25 March 2008
Article by Kirsten Webb and Nick Thomas

Key Point

  • The ACCC's new Green marketing and the Trade Practices Act highlight some potential pitfalls for companies making such claims in connection with their products.

The Australian Competition and Consumer Commission recently released its green marketing guidelines entitled Green marketing and the Trade Practices Act, which seek to:

  • ensure consumers receive accurate information about environmental claims; and
  • set out what the ACCC would consider to be a breach of the Trade Practices Act when making claims about "green" or "environmentally friendly" products.

A breach of the Trade Practices Act as a result of misleading "green" claims made on advertising, packaging, labelling and promotions could cost companies up to $1.1 million in criminal fines as well as additional costs such as those associated with rectifying the claims in question and damage to reputation.

The Guidelines make clear that when making environmental claims, there are important considerations to help prevent a possible breach of the Trade Practices Act:

1. Be precise about environmental claims - A claim that a product is "made from recycled material" where only part of the product is made from recycled material could mislead customers into thinking that the entire product is comprised of recycled material. If your paper product is made of 10 percent recycled paper, then an accompanying ad or label should state "made from 10 percent recycled paper" rather than "made from recycled paper". Be aware that customers could be misled by silence where they are not made aware of the accurate circumstances.

2. Read the future - Avoid claims about the future unless you have reliable information to back up your predictions. Ensure you have reasonable grounds for making claims such as "by 2010 this product will be made entirely from wood pulp from plantation trees".

3. Back it up - If you claim your product has a special quality or is better than other products for some reason, make sure your claim can be substantiated. If your product is 60 percent more efficient than all other similar products on the market, make sure you have research and evidence to back it up.

4. Examine the coolness factor - Ensure the environmental claim has real benefit attached to it. Irrelevant, meaningless or insignificant claims are potentially misleading. For example, a product advertised as "CFC free" is meaningless since all products must, by law, be CFC free. This means that this particular product has no advantage compared to any other product and may mislead consumers. Similarly, claims that go over the top and overstate a benefit are also at risk of misleading consumers. For example, a claim such as "now 50 percent more recycled content" is irrelevant and potentially misleading if the original product was only 1 percent recycled content.

5. State whether the inside or the outside matters - Clarify whether your environmental claims relate to packaging or content or both. If your product is not "environmentally friendly" but your packaging is made of 50 percent recycled materials, simply specify that the product is "packaged in 50 percent recycled materials" to avoid potentially misleading claims.

6. No go words - Avoid the use of the following words/claims:

  • "green" - a vague word which could be interpreted as having various meanings (even that your product is the colour green);
  • "environmentally friendly" or "environmentally safe" - other than that the product is less harmful to the environment than other products, this phrase is vague and does not convey any other benefit;
  • "energy efficient" - how efficient? Efficiency claims should be quantified using accepted measures such as rating systems;
  • "recyclable" - if you make this claim, ensure your product is in fact recyclable and that appropriate facilities are available in which to recycle the product. Also, if the product is intended to be "reused", the word "recycled" is inappropriate and potentially misleading;
  • "carbon neutral" - be sure to consider the entire life cycle of the product and ensure this process is in fact carbon neutral based on that entire cycle;
  • "renewable" or "green" energy - ensure that any representations about renewable or green energy are accurate and substantiated. Customers will depend on information such as cost, amounts supplied and associated benefits when making informed decisions.

These words are imprecise and could encompass a wide range of environmental benefits. Is the product "fuel efficient" or "100 percent recycled material" or "biodegradable"? As noted above, be precise about the benefits leading to the environmental claim.

7. A picture or a 1000 words - Using an image or a symbol to convey an environmental claim may lend itself to various meanings. An image of a tree or animal could be interpreted in various ways. If you use a symbol or image, ensure that it is a widely recognised one such as the triangle which is well known as indicating that a product is recyclable.

8. Remember the not-so-environmentally friendly too - If the product is not completely benign or even potentially harmful to the environment, be careful not to give the impression that the product is environmentally beneficial.

9. Endorsements and logos - If you use a logo from a particular endorsement or certification scheme, such as a red panda used to indicate a scheme that plants trees to offset those logged in the production of paper products, be sure to provide additional details regarding the scheme so as to not mislead customers, who may make assumptions based on that logo.

10. Check the overall impression - When making environmental claims, it is important to consider the overall impression that is created by the claim. In general, if claims are precise, truthful, simply stated, explain the context of the benefit and are able to be substantiated, the risk of misleading consumers is minimised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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