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ACCC issues enforcement warning on sustainability claims

Sheep Central, September 20, 2022

ACCC deputy chair Delia Rickard Image – ACCC.

AUSTRALIAN businesses have been warned they can expect enforcement action if consumers were misled or deceived by ‘green’ or sustainability claims.

Australian Competition and Consumer Commission deputy chair Delia Rickard said today businesses need to be ready to substantiate any environmental or sustainability claims when marketing their goods and services.

In a speech to the Sydney Morning Herald Sustainability Summit this morning, Ms Rickard said the ACCC is actively targeting ‘greenwashing’ this year, warning businesses who make false or misleading claims undermine consumer trust and confidence in the market.

“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on changing consumer preferences.

“Broad terms like ‘environmentally friendly’, ‘green’, or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing,” Ms Rickard said.

“It is important that businesses can back up the claims they are making, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, or other forms of evidence.

“Where we have concerns, we will be asking businesses to substantiate their claims,” she said.

“The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims.”

Sustainability requires a multi-pronged approach

Ms Rickard said making sustainability work for business and consumers requires a multi-pronged approach.

“Through the consumer law, the ACCC plays a part in this by ensuring that businesses tell the truth, but there will also be roles for standards bodies, certification schemes, industry and governments via policy reform,” Ms Rickard said.

“The ACCC is actively monitoring green claims in the market and will be considering what steps can be taken to improve their integrity.

“This will include engaging with industry and producing guidance for businesses,” she said.

“In looking at claims, we are concerned about what the ordinary consumer will understand the claim to mean.”

Ms Rickard said improving the veracity of environmental claims protects consumers and ensures competitive conduct in the market.

“Many businesses go to extraordinary lengths to make their processes, products and services more sustainable.

“This innovation and investment should be protected from unscrupulous behaviour of other businesses making green claims without incurring the same costs,” she said.

“This can have a chilling effect on investment in this space, as businesses are not able to realise the full benefits of making environmental improvements.”

Ms Rickard acknowledged those businesses transitioning to more sustainable practices, recognising their right to promote the steps they are taking as part of that journey.

“A business’s sustainability transition doesn’t happen overnight – it’s a long process up and down the supply chain,” Ms Rickard said.

“While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers.

“Businesses in these positions need to be careful to not overstate the status of their transition through the claims they make.”

Ms Rickard urged businesses to step into the shoes of a consumer before making environmental claims about a product, adding the ACCC is working with other regulators to take a coordinated approach to addressing a range of issues relating to sustainability.

“Consumers generally need to take at face value that claims made are truthful, and accurate,” Ms Rickard said.

Ms Rickard’s full speech can be found on the ACCC website.

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