Doing more harm than good: ACCC report reveals greenwashing conduct is rife

Doing more harm than good: ACCC report reveals greenwashing conduct is rife

The biggest culprits identified by the ACCC were found in the cosmetics, clothing and footwear, and food and beverage sectors.

The nation’s consumer watchdog has vowed to investigate a number of firms for greenwashing after an initial sweep of 247 Australian companies found that more than half exaggerated their environmental claims.

It comes four months after the Australian Competition and Consumer Commission (ACCC) announced it would launch a sweep into the matter, in addition to a separate probe identifying companies that are posting fake online reviews.

Of the 200-plus businesses reviewed, 57 per cent were found to have made concerning claims about their clean credentials, with the biggest culprits found to be in the cosmetics, clothing and footwear, and food and beverage sectors.

From the eight industries surveyed, only vehicles and the electronics and home appliance sectors had a majority of businesses that did not raise concerns.

"Our sweep indicates a significant proportion of businesses are making vague or unclear environmental claims. This warrants further scrutiny," ACCC deputy chair Catriona Lowe said.

"Consumers are now, more than ever, making purchasing decisions on environmental grounds.

“Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims. This conduct harms not only consumers, but also those businesses taking genuine steps to implement more sustainable practices.”

After conducting its sweep, the ACCC noted the most common issue it found was the high number of vague and unqualified claims being made by businesses, which often used terms like ‘green’, ‘kind to the planet’, ‘eco-friendly’, ‘responsible’ or ‘sustainable’ to describe their products.

“These claims have little value for consumers as they can have a variety of different meanings and rarely provide enough information to allow consumers to make an informed purchasing decision,” the ACCC said in its report.

Other problems highlighted include a lack of evidence from companies to back up their claims, the use of absolute claims such as ‘100% recyclable’ that had the potential to be false, as well as instances where comparisons to other products were not useful for consumers.  

The ACCC also found that companies exaggerated the sustainability benefits of their products and used third-party certification and symbols that gave the impression an entire product was certified when only certain components were given such certification.

Another issue was the use of aspirational claims with little to no insight from companies on how they would achieve their desired goals.

“Several businesses clearly set out their goals, had comprehensive plans in place for how these would be achieved, and actively monitored their progress,” the ACCC said.

“However, in many other cases it was unclear what practical changes were being implemented to achieve these goals. In other cases, goals were very general and not able to be measured. Several businesses also did not have a clear plan to reach their net zero targets.”

The watchdog’s report comes just days after the Australian Securities and Investments Commission (ASIC) initiated proceedings against superannuation giant Mercer with court action over its green claims. It marks the regulator's first-ever court action over alleged greenwashing conduct, claiming Mercer made misleading statements about the sustainable nature and characteristics of some of its superannuation investment options.

To help businesses understand their obligations, the ACCC will conduct a range of educational activities, including updating economy-wide guidance material, in addition to targeted guidance for specific sectors.

Where concerns have been identified with specific businesses, a more targeted assessment of the conduct will be undertaken to determine the appropriate compliance or enforcement approach.

Depending on the circumstances, the ACCC said it may lead to an administrative resolution, issuing an infringement notice, or legal proceedings.

"The sweep has helped inform our forthcoming guidance about what steps businesses need to take to improve the integrity of their environmental claims," Lowe said.

"Importantly, we encourage businesses to come forward if they become aware they have made false or misleading marketing claims.

“Businesses who cooperate and advise of any issues with their operations, will be considered more favourably than those who wait for the ACCC to unearth these problems.”

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