ACCC publishes draft guidance to reduce greenwashing

The ACCC has published draft guidance to help improve businesses’s environmental claims and reduce the number of greenwashing instances it has found.

ACCC chair Gina Cass-Gottlieb said educating businesses was crucial in light of the body’s recent greenwashing crackdown that found 57 per cent of businesses reviewed had made potentially misleading environmental claims.

“As consumers become more environmentally conscious, businesses need to be honest and transparent when making environmental or sustainability claims so consumers are not being misled,” said Ms Cass-Gottlieb.

“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers are often paying higher prices based on these claims.”

“Similarly, businesses that are taking genuine steps to adopt sustainable practices are put at a competitive disadvantage by businesses that engage in greenwashing without incurring the same costs.”

The ACCC said the draft guidance will help businesses understand what was considered proper practice when making environmental or sustainability claims.

“Our draft guidance sets out what the ACCC considers to be good practice when businesses make environmental claims about their products and services as well as making them aware of their obligations under the Australian Consumer Law,” said Ms Cass-Gottlieb.

“Businesses must provide clear, accurate and trustworthy information to consumers about any environmental or sustainability claims and be able to provide evidence to back them up.”

“If you make a claim about the environmental or sustainability benefits of your product or service – make sure it’s right, and if you are unsure or can’t substantiate these claims, then don’t make the claim.”

The ACCC also listed eight principles it encourages businesses to apply when making environmental claims.

They are: 

• Make accurate and truthful claims
• Have evidence to back up your claims
• Do not hide important information 
• Explain any conditions or qualifications on your claims 
• Avoid broad and unqualified claims
• Use clear and easy-to-understand language
• Visual elements should not give the wrong impression
• Be direct and open about your sustainability transition

Ms Cass-Gottlieb also called for feedback from businesses on the draft guidelines and what other information would be useful for organisations to avoid getting caught greenwashing. 

“We would like to hear from businesses on whether our draft guidance improves their confidence in making legitimate environmental and sustainability claims as well as if they have seen concerning green claims made by other businesses,” she said. 

“We also want to hear from consumers on how businesses can provide useful and relevant information about any green claims so they can be confident in the accuracy of these claims.” 

Consultation for the draft guidance is now open and will close on 15 September 2023.

This article was first published at Accountants Daily.