Navigating the waves of greenwashing: Part 1- Implications for trade mark owners in Australia

Spruson & Ferguson


Established in 1887, Spruson & Ferguson is a leading intellectual property (IP) service provider in the Asia-Pacific region, with offices in Australia, China, Indonesia, Malaysia, Philippines, Singapore, and Thailand. They offer high-quality services to clients and are part of the IPH Limited group, which includes various professional service firms operating under different brands in multiple jurisdictions. Spruson & Ferguson is an incorporated entity owned by IPH Limited, with a strong presence in the industry.
Businesses that use trademarks to promote environmental credentials, must be able to substantiate those claims.
Australia Environment
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In the current global landscape, environmental awareness has become a pivotal aspect of consumer decision-making, with many brands eager to market their sustainability credentials. While for some brands this is a genuine commitment and the very ethos of their existence, the increasing trend of "greenwashing" by companies has prompted a rapid increase in regulatory scrutiny to protect consumers.

The Australian Competition and Consumer Commission (ACCC) has recently taken significant legal action against businesses for misleading environmental claims, signaling a clear warning to trade mark owners.

In Part One of our series, Navigating the Waves of Greenwashing, we look at recent actions in Australia. In Part Two, we review the regulatory approach in China.

What is 'greenwashing'?

As the global shift towards environmental consciousness has grown, the significance of sustainability in the business landscape has also escalated. With this emphasis on sustainability, a concerning trend of "greenwashing" has emerged, where businesses make deceptive claims about their environmental practices to portray themselves as more environmentally responsible than they actually are.

Greenwashing involves the dissemination of false, misleading, or exaggerated information about a business or its products. This can manifest through various means, including the use of terms like "eco-friendly," "clean," "sustainable," or "green," claims regarding production methods or material composition such as "100% recyclable," "compostable," "100% natural," or "zero emissions," and the incorporation of logos, symbols, or colours, particularly those featuring the colour green.

Beyond misleading consumers, the practice also bestows an unfair commercial advantage upon businesses that lack genuine dedication to sustainability.

In Australia, the recent crackdown by the ACCC could have far-reaching implications for businesses that rely on trade marks to showcase their environmental commitments.

How risky is greenwashing in trade marks?

With various studies showing that over 50% of all consumers consider environmental aspects in their buying decision, "green" trade marks can be a robust marketing tool; attracting environmentally conscious customers and creating a positive image. For this very reason, they are also under regulatory and legal scrutiny, and brand owners need to tread carefully.

"Green" trade marks can include any word or images related to the environment. There are hundreds of trade marks currently on the Australian Trade Marks Register that contain words such as "clean", "green", "sustainable" or "eco". The potential for greenwashing claims in trade marks is a pertinent issue.

Businesses that use trade marks to promote their environmental credentials must ensure that they can substantiate any claims they make about their sustainability practices. Failure to do so can result in legal action and penalties, including significant fines and corrective advertising.

The legal implications of greenwashing trade marks under the Australian Consumer Law (ACL) are significant. Greenwashing may breach sections 18 and 29 of the ACL, which prohibit misleading or deceptive conduct and false or misleading representations about goods or services. Businesses utilising trade marks with greenwashing elements risk running afoul of these provisions, especially if they fail to substantiate their environmental claims with evidence.

Under the Australian Trade Marks Act 1995 (Cth) (Trade Marks Act), the registration of a trade mark may be rejected if its use would contravene the law, such as in cases of potential ACL breaches. Section 43 of the Act also allows for refusal of a trade mark registration application if the use of the trade mark is likely to deceive or cause confusion regarding the nature of goods or services offered. For instance, if a trade mark conveys a positive environmental impact but contradicts this connotation in the goods or services it represents, it may face refusal.

ACCC V Clorox Australia

In a significant development that took place on 18 April 2024, the ACCC took a decisive step by commencing legal proceedings in the Federal Court of Australia against Clorox Australia Pty Ltd (Clorox). The ACCC alleges that Clorox made false or misleading representations regarding its GLAD-branded kitchen tidy and garbage bags, asserting that they were made of "50% ocean plastic".

ACCC's Chair Gina Cass-Gottlieb underscored the deceptive nature of Clorox's marketing tactics, pointing out that phrases like "ocean plastic," coupled with wave imagery and blue-coloured bags on the packaging, created a false impression that the products contained plastic waste sourced directly from the ocean. This marks a significant milestone as the ACCC's first enforcement action concerning greenwashing claims, following the agency's explicit prioritisation of environmental and sustainability claims two years prior.

The ACCC's allegations against Clorox delve into the specific claims made by the company, particularly regarding the composition of its products and the use of terms like "50% Ocean Plastic" or "50% Ocean Bound Plastic." The visual elements accompanying these claims, such as font size, colour schemes, and imagery, played a pivotal role in shaping consumers' perceptions of the products' environmental impact, according to the ACCC.

Central to the ACCC's case is the contention that Clorox misrepresented the composition of its products by insinuating that they were predominantly made from recycled plastic waste directly collected from the ocean or sea. In reality, the products were found to be a blend of resin derived from recycled plastic collected from communities near shorelines and other non-plastic materials. These alleged misrepresentations potentially run afoul of sections 18, 29 and 33 of the ACL, prohibiting deceptive conduct and misleading representations about the nature and characteristics of products.

In response to Clorox's alleged greenwashing practices, the ACCC is seeking a range of remedies, including declarations, penalties, injunctions, corrective notices, the implementation of a compliance program, and costs. The outcome of this legal action against Clorox is anticipated to have broader implications for future enforcement actions in the realm of greenwashing and environmental claims in various sectors.

Consumer protection measures in Australia

This enforcement action underscores the ACCC's commitment to combating greenwashing and upholding consumer protection laws in the context of environmental claims. As regulators intensify efforts to ensure transparency and accuracy in sustainability messaging, businesses must prioritise adherence to regulatory guidelines, provide clear and truthful information to consumers, and avoid engaging in practices that could erode trust and tarnish their reputation.

The Clorox case aligns with wider regulatory initiatives aimed at addressing greenwashing practices across various industries. As the legal proceedings unfold and regulatory scrutiny increases, businesses are urged to remain vigilant in their environmental claims, ensuring that they are substantiated with credible evidence and align with ethical marketing practices.

By fostering a culture of transparency and accountability, businesses can build consumer trust, enhance brand reputation, and contribute positively to sustainability efforts in the marketplace.

Key takeaways for Trade Mark owners

1. Understand greenwashing: Trade mark owners should be aware of what greenwashing is and how it can impact their business.

2. Be cautious with greenwashing elements: Trade mark owners should be cautious when using elements like "eco-friendly," "clean," "sustainable," or when incorporating the colour green in their trade marks, as these can be associated with greenwashing and may draw regulatory scrutiny.

3. Legal implications: Greenwashing may constitute a breach of the ACL , particularly sections 18 and 29, which prohibit misleading or deceptive conduct and false or misleading representations about goods or services.

4. Trade Marks Act compliance: Trade mark owners should ensure that their trade marks comply with the Trade Marks Act, particularly sections 42(b) and 43, which prohibit registration of trade marks that would be contrary to law or likely to deceive or cause confusion. Greenwashing elements in trade marks may lead to refusal of registration.

5. Substantiate environmental claims: To counter potential greenwashing allegations or legal proceedings, trade mark owners must be able to substantiate the environmental claims made in their trade marks. Providing evidence of environmental policies, studies on environmental impacts, or other relevant information is crucial for defending against greenwashing accusations.

By staying informed about greenwashing practices, being mindful of greenwashing elements in trade marks, complying with relevant laws, and substantiating environmental claims, trade mark owners can avoid legal issues and maintain credibility with consumers.

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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