In a significant development for environmental marketing standards in Australia, the Federal Court of Australia has imposed an A$8.25 million penalty on Clorox Australia Pty Ltd (Clorox Australia) after it admitted to making misleading or deceptive claims on the packaging for its "GLAD to be Green" kitchen tidy bags and garbage bags.
The ruling marks the first civil penalty ordered in a greenwashing action brought by the Australia Competition and Consumer Commission (ACCC) under the new penalty provisions of the Australian Consumer Law (ACL), although only part of the relevant breach period fell within the scope of the new regime.
Background
Between June 2021 and July 2023, Clorox Australia promoted and sold three different versions of its "GLAD to be Green" kitchen tidy bag and garbage bags (Products), each featuring distinct claims about the content of ocean plastic within the bags.
The most prominent claim, '50% Ocean Plastic Recycled Bags', as shown in representation 1 below (Original Packaging), suggested that the plastic was recovered directly from the ocean. In reality, the plastic resins used were sourced from areas up to 50 kilometres inland from communities in Indonesia lacking formal waste management systems. The Original Packaging contained a statement located on the back which identifies the recycled plastic as 'ocean bound'.
Representation 1: 50% Ocean Plastic Recycled Kitchen Tidy Bags
Although Oceanworks (Clorox Australia's plastic resin supplier) later confirmed that there was no 'ocean recovered material' in the resins used, Clorox Australia submitted that it genuinely believed that its use of 'ocean plastic' was acceptable as Oceanworks used 'ocean plastic' as an umbrella term for various of categories of recycled plastic material including 'ocean bound', 'waterway', 'coastal', 'nearshore' and 'high seas'.
Following the launch of the first product representation, at least two members of Clorox Australia's senior management expressed concerns that the Original Packaging failed to clearly indicate on the front that the plastic was 'ocean bound', with this detail appearing only in a statement on the back of the packaging. As a result, Clorox Australia decided to update the packaging, as shown in representation 2 below (Second Packaging), and the Second Packaging was introduced after the First Packaging had sold out.
The Second Packaging included the claim '50% Ocean Bound Plastic'. However, it still prominently displayed the original 'ocean plastic' claim in a larger font and more prominent position. The Court also took into account Clorox Australia's use of wave imagery and blue colouring on both the packaging and the product itself, which reinforced the misleading impression that the plastic was sourced directly from the ocean.
Representation 2: 50% Ocean Bound Plastic Recycled Kitchen Tidy Bags
Representation 3: 50% Ocean Plastic Recycled Garbage Bags
Clorox Australia discontinued all of the Products in July 2023 following the commencement of the ACCC's investigation and prior to commencement of the proceeding in the Federal Court of Australia.
The Court's Orders
The Court held that all three representations were in contravention of sections 18, 29(1)(a), 29(1)(g) and 33 of the ACL and ordered an injunction restraining Clorox Australia from making further claims suggesting its Products comprise or contain recycled plastic waste collected from the ocean or sea, unless such claims are true. The Court also ordered that Clorox Australia implement an ACL compliance program and publish a corrective notice on its website and social media platforms.
The Court accepted the parties' agreed penalty of A$8.25 million and A$200,000 contribution to the ACCC's costs in the proceeding.
Although the ACCC's decision to commence proceedings and seek a pecuniary penalty is at odds with the enforceable undertaking recently accepted by the ACCC in relation to similar claims made by MOO Premium Foods Pty Ltd, the A$8.25 million penalty is still notably lower than the statutory maximum of A$10 million or A$50 million per breach (depending on the relevant breach period), and is less than the A$10 – A$13 million penalties secured by the Australian Securities Investments Commission in recent greenwashing cases.
In considering penalty, the Court took into account the fact that Clorox Australia "has demonstrated contrition through the degree of cooperation it has provided to the ACCC, and to the extent that it discontinued the Products in July 2023, following commencement of the ACCC's investigation leading to this proceeding".
The Court accepted that, while serious, the misleading representations were not in the most serious category, as Clorox Australia "genuinely believed that the Products would contribute to the reduction of plastic waste in the ocean and did not deliberately engage in a strategy to mislead consumers as to the composition of the Products".
Despite Clorox Australia's cooperation, the Court highlighted the need for deterrence, and considered the size and financial position of Clorox US, the parent company of Clorox Australia in considering an appropriate penalty. The involvement of senior management was also factored into the penalty.
Regulatory Context
This ruling follows the ACCC's release of its 2023 guide 'Making environmental claims: a guide for business', which outlines eight principles to help businesses make clear, evidence-based environmental claims.
The ACCC's 2025–26 enforcement priorities have reaffirmed its commitment to addressing concerns related to environmental claims and sustainability, with a focus on greenwashing.
Together, the guide and recent enforcement actions signal the ACCC's increasingly proactive approach toward greenwashing, as businesses continue to face scrutiny over sustainability marketing.
Implications for Advertisers
The Federal Court's decision highlights the importance of being able to substantiate environmental claims and the ACCC's proactive approach to enforcement. Businesses are advised to ensure that any environmental or sustainability claims they make are accurate and capable of substantiation to avoid legal action and to prevent the erosion of consumer confidence in environmental claims.
Importantly, businesses should avoid relying on disclaimers and qualifications claims in fine print. When making environmental claims – say it loud, say it proud.
The Federal Court's decision highlights the importance of being able to substantiate environmental claims and the ACCC's proactive approach to enforcement. Businesses are advised to ensure that any environmental or sustainability claims they make are accurate and capable of substantiation to avoid legal action and to prevent the erosion of consumer confidence in environmental claims.
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.
