This article was first published in B & T
The Australian Competition and Consumer Commission announced
its intentions in October last year under the heading,
"ACCC Scrutinises 'Green' Marketing".
Commissioner John Martin noted that "there has been a
steadily increasing number of inquiries and complaints about
'green' marketing" and indicated that the ACCC
would take action given the importance of environmental claims
to the purchasing decision.
It is only a few months down the track and the ACCC has
already concluded investigations into Hagemeyer Brands
Australia's marketing of its Dimplex air conditioners
(November 14, 2007), Energy Australia's promotion of its
green electricity (December 21, 2007) and Origin Energy's
promotion on switching electricity suppliers (December 21,
2007). On January 17, the ACCC released a consumer update on
environmental claims. The very next day, it announced that it
was prosecuting Holden over various environmental claims made
about its Saab range. This is clearly a risky area, but we can
learn much about the Commission's attitude and approach
from the actions it has already taken.
The clue to the ACCC's approach is in its press release
on the Origin Energy matter, where the Chairman stated that
"consumers can easily be confused when it comes to green
claims". Where there is such a lack of knowledge,
consumers are apt to take all sorts of things from an ad that
the advertiser simply would not have intended. That is
potentially explosive. As I have emphasised in previous
articles, advertisers are held responsible for not only their
express claims, but any other claims the target audience could
reasonably take from the ad. The recent action against Holden
is a good example. The ads claim that "Every Saab is Green
... Grrrrrreen". The Federal Court will need to consider
whether Holden is impliedly representing not only that there
are zero net carbon emissions over the life of the vehicle, but
that every Saab vehicle has improved carbon emissions compared
to those models available previously. Is that what Holden
meant? The Commission alleges that was implied.
The same issue arises with the use of the term
"biodegradable". It has been used for ages; so, you
would think it is pretty unproblematic. Not so. Daubing a
product with a "biodegradability" label implies that
it is necessarily good for the environment. However,
"biodegradability" simply means "the
decomposition of organic material by micro organisms". The
process could produce harmful substances, as well as good ones.
A "biodegradable" label would be misleading if it
were the former. It will also be misleading if the process
Often, advertisers push the environmental credentials of
their products simply because they are less harmful than
competitor products. This was Hagemeyer's problem.
Hagemeyer Brands is the Australian distributor of the Dimplex
brand of air conditions. Its Come Home to Cool
brochure claimed these air conditioners were
"environmentally friendly". The ACCC appears to have
accepted that competing air conditioners were more harmful to
the environment, as they used more destructive
hydrofluorocarbon refrigerants. Despite that, the Commission
remained concerned that Hagemeyer was in breach of the law. The
gas used in the Dimplex product was nevertheless "... a
potent greenhouse gas (which) will contribute to global warming
if released into the atmosphere". Even if it is friendlier
than its competitors, it remained unfriendly to the
All advertisers must be aware of what the public is likely
to understand from their advertisements, as it is that for
which they will be held accountable. That is no different for
environmental claims. However, there is a difference
– it is now a priority of the ACCC. Not only is the
ACCC targeting these claims – and, so, you will be
noticed – but the ACCC is particularly concerned
where an advertisement fails to provide adequate explanation.
In its press release on the Origin Energy matter, the Chairman
noted that "Origin's remedial actions demonstrate why
it is important that companies engaging in green marketing
educate their customers about the basis underlying claimed
environmental benefits ...".
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