'Greenwash (portmanteau of green and whitewash) is a term used to describe the perception of consumers that they are being misled by a company regarding the environmental practices of the company or the environmental benefits of a product or service'- http://en.wikipedia.org/wiki/Greenwash.
As more and more businesses put a 'green' spin on their marketing, the Commerce Commission (Commission) has become concerned that some may be making claims that breach the Fair Trading Act 1986 (Act). The Commission has released 'Guidelines for Green Marketing', giving its views as to what sorts of green claims are questionable. The Commission stresses the guidelines are not a substitute for legal advice. Only a court can decide if something breaches the Act. The guidelines are nevertheless a useful first port of call in ensuring your green marketing complies with the Act.
WHAT ARE GREEN CLAIMS?
The Commission classes as environmental or green claims, statements about:
- Environmental sustainability.
- Carbon neutrality.
- Energy efficiency.
- Use of natural products.
- Impact on animals.
- Impact on the natural environment.
The touchstone for all the Commission's guidance is that:
'Businesses making environmental or green claims should ensure that their claims are scientifically sound and appropriately substantiated. Consumers are entitled to rely on any environmental claims you make and to expect these claims to be truthful and not misleading'.
THE FAIR TRADING ACT
The Act applies to all forms of conduct or representation that take place 'in trade'. This applies to all types of marketing, including claims on labelling and packaging, and advertising or promotion in print, on TV, on the radio or over the internet. Sections 9 to 12 of the Act prohibit misleading or deceptive conduct, or conduct that is liable or likely to mislead or deceive consumers. Section 13 prohibits false or misleading representations relating to goods and services. It is not a defence to say you did not intend to mislead. If the conduct was misleading there is generally a breach of the Act.
Examples of questionable conduct/ representations
Examples of conduct the Commission considers potentially misleading include:
- Putting 'made from recycled material' on a product when only part of the product is made from recycled material.
- Predicting that 'by 2010 this product will be made entirely from wood pulp from plantation trees' if there are not reasonable grounds for believing that will happen.
- An energy company calling itself 'Completely Clean and Green Energy' if in fact it produces energy from an unclean source.
- Calling a business 'EcoProtect' if its products do not reduce harm to the environment.
In terms of false or misleading representations, the Commission refers to:
- Unauthorised use of trademarks.
- Claiming approval from a government agency or licensing board when no such approval has been given.
- Claiming goods or services have certain capabilities they do not.
- Claiming goods or services have certain environmental benefits when they do not.
- Claiming an endorsement which is not true, eg using a logo that denotes a form of endorsement but which is in fact crafted by the advertiser itself.
COMISSION'S PRINCIPLES RELATING TO ENVIRONMENTAL CLAIMS
- Claims must be accurate.
- Claims should be able to be substantiated.
- Claims should be specific, not unqualified and avoid general statements.
- The example the Commission gives is the statement 'safe for the environment'. This may mean different things to different people. Unless the statement is qualified there is risk a portion of the audience will be misled.
- Claims should be in plain language which an average member of the public can understand.
- Claims should only be made for 'real' benefits.
- The Commission gives as an example a claim that a product is CFC free. This would in the Commission's view mislead consumers as authorities prohibit use of CFCs in almost all aerosols. Therefore no competing products contain CFCs (and the benefit claimed is not 'real').
- Claims must not overstate a benefit.
- Claims must be based on tests or surveys supported by the test results.
- Pictures can also be representations/can mislead.
- The example given by the Commission is a picture of a dolphin on a tuna product. The Commission considers this may be taken by some consumers as meaning the tuna had been fished in a manner that did not harm dolphins. If that was not true the picture could be misleading.
- Claims should make it clear whether claimed benefits refer to packaging or content.
- The Commission says a non-recyclable product in recyclable packaging shouldn't be labelled simply 'recyclable'. It needs to say 'packaged in recyclable material'.
- Claims should consider the whole product life cycle.
- The Commission gives an example of a fuel-efficient car which is advertised as 'green' or 'eco-friendly'. Advertising the car as 'fuel-efficient', rather than 'green' may help to avoid misleading consumers. 'Green' fails to take into account the harm to the environment caused through the production process and the eventual disposal of the car.
- Use environmental endorsement or certification with caution.
- A qualification or further information on the endorsement or certification should be given to avoid misleading consumers. The Commission uses the example of a red panda logo on paper and stationery products. Consumers may assume the logo means that production of the products does not harm the red panda's natural habitat. However, the logo actually represents a tree planting scheme to offset trees logged for the production of paper products, potentially misleading consumers.
- Claims should not overstate the level of scientific acceptance for the claim.
- Claims should not be broad or unqualified.
- The Commission lists the following words that it considers particularly concerning:
- 'Green' - this word is vague and risks misleading consumers through inviting them to interpret the word in a wide ranging way.
- 'Environmentally friendly' or 'environmentally safe' - few products can make these claims as just about every product impacts adversely on the environment in some way either through its manufacture, packaging, use or disposal.
- 'Energy efficient' - this claim does not allow consumers to compare the energy efficient product with other products. The Commission suggests when using this claim, it should be quantified through a comparison with rating systems or existing benchmarks.
- 'Recyclable' - consumers may understand this term to mean that the product will end up in a recycling facility, when there may in fact be few or no recycling facilities readily available.
- 'Recycled' - if only parts of the product have been recycled, the Commission recommends specifying the amount of pre-consumer and post-consumer waste included in the claim.
- 'Carbon neutral' - the Commission advises that claims should be factually based, transparent and not overstated. The Commission intends to release a separate guide relating to carbon neutral marketing.
- 'Renewable' or 'green' energy/electricity - the Commission advises that representations made about cost, associated benefits or amounts supplied must be truthful and correct. An example is given of a company advertising their energy as 'renewable'. The percentage of energy obtained from renewable sources should be disclosed if it is anything less than 100%.
WHAT HAPPENS IF I BREACH THE ACT?
The Commission may take criminal or civil action under the Act. Some of the common penalties are injunctions, fines and corrective advertising orders.
WHAT STEPS SHOULD I TAKE TO AVOID BREACHING THE ACT?
Ensuring your marketing complies with the guidelines is a good first step. The guidelines are not the law - just the Commission's view of the law. Nevertheless, businesses that breach the guidelines can expect the Commission will stand by its view of the law by taking those businesses to court. The guidelines are available at http://www.comcom.govt.nz under 'Fair Trading'.
Ensure that your business has an up to date compliance programme in place which staff can refer to for checking that the business is not breaching the Act. As well as lessening your chances of breaching the Act, a compliance programme may be viewed favourably by the courts when imposing any penalties for inadvertent or one-off breaches of the Act.
We can provide you with assistance in tailoring a compliance programme to meet your needs and also act as a final check in respect of any 'green' advertising or promotional material.
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This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances and no liability will be accepted for any losses incurred by those relying solely on this publication.