On 7 March 2023, the new chair of the Australian Competition and Consumer Commission ('ACCC'), Gina Cass-Gottlieb, announced the Commission's 2023-2024 Compliance and Enforcement Priorities in relation to competition and consumer issues.

One of the top priorities is combatting 'greenwashing' claims by businesses.

What is greenwashing?

Greenwashing refers to the practice of businesses making claims in relation to their environmental and sustainability goals or credentials, when such claims may be false, misleading or dubious.

These type of marketing claims include the use of broad phrases such as "environmentally friendly", "green", "sustainable" and the like. While some businesses may view such statements as innocuous marketing claims, the ACCC has flagged that such unsubstantiated claims may be in breach of the Australian Consumer Law ('ACL'), in particular misleading or deceptive conduct under section 18.

The recent ACCC announcements come off the back of the Australian and Investment Commission ('ASIC') commencing proceedings against Mercer Superannuation (Australia) Ltd ('Mercer') for misleading statements in relation to their superannuation investment options. ASIC contends that Mercer made misleading statements that particular investment options were in sustainable businesses. Some of these 'sustainable businesses' were identified as being within the fossil fuel industry.

Issues relating to greenwashing were flagged in March 2022 by the ACCC, but have now become an increased focus of the ACCC for 2023. With other regulatory bodies, such as ASIC, undertaking enforcement proceedings, it is critical that businesses are aware of this issue.

How prevalent is greenwashing in Australia

The ACCC undertook a 'sweep' of business websites, across a range of sectors, which revealed that 57% of these businesses made greenwashing claims. The industries that had the highest levels of greenwashing claims were the cosmetic, clothing and footwear, and food and drink sectors.

The ACCC argue that as consumers are becoming more environmentally aware, they are willing to pay a premium for goods and services from businesses that are perceived as environmentally conscious. As the main objective of the ACCC is to protect consumers, it intends to investigate and undertake enforcement action against businesses that make greenwashing claims.

Key takeaways

Given this heightened regulatory environment it is critical that businesses:

  • review their marketing materials to ensure that there are no greenwashing claims, or other misleading statements; and
  • if there are any environmental or sustainability claims made, businesses should ensure that those claims made are supported by evidence.

Holman Webb's Business, Corporate and Commercial Team is happy to assist in that review, and has provided advice on advertising claims for many of our clients, across a wide variety of industries.

With the recent increase in penalties of the ACCC of up to $50 million for each contravention, it must become a priority of businesses to ensure that its marketing material is not misleading or deceptive.

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.