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Navigating the greenwashing frontier: Eight key principles for genuine environmental claims
In today’s climate-conscious era, setting ambitious emission reduction goals and transparently sharing your achievements are more than just regulatory requirements. These are now vital steps towards genuine environmental stewardship and earning public trust. However, navigating the complex landscape of environmental claims can be daunting. Missteps not only risk hefty fines and serious reputational damage but also undermine the very essence of your sustainability efforts.
To empower your journey towards authentic and impactful environmental action, we’re delving into the eight critical principles outlined by the Australian Competition & Consumer Commission (ACCC). This offers a roadmap to best practice applications that ensure your sustainability narrative is both compelling and credible.
Surprisingly, a mere 51% of Australia's high-emitting corporations have committed to net zero or carbon-neutral targets. A 2023 Greenpeace Australia analysis sheds light on a concerning trend: many of these industry giants position themselves as leaders in sustainability, yet fall short in articulating clear, actionable plans, or worse, engage in misleading practices. This gap between promises and actions sparks a crucial question: How can businesses avoid the pitfalls of greenwashing and instead, forge a path of genuine environmental responsibility?
Before we dive deeper, let's unpack the concept of greenwashing—a term that's become increasingly relevant in today's eco-aware society.
What is greenwashing?
Your organisation’s environmental activities can be negatively labelled as greenwashing when:
- You falsely (even inadvertently) portray your products, services, or the company itself as more environmentally friendly than reality.
- Your environmental claims imply that the business and its products/services may positively impact the environment or are less harmful than alternatives, without any real evidence.
- You state that your products/services provide specific environmental benefits without demonstrable proof.
In response to this lack of transparency and commitment, the Australian Competition and Consumer Commission (ACCC) has delivered the following eight principles on how to make environmental claims under Australian Consumer Law (ACL).
Eight principles for making environmental claims
Make accurate and truthful claims
- Don’t overstate the level of scientific acceptance of your claim. e.g. Use exact percentages when citing research – don’t round to a higher or lower amount.
- Don’t exaggerate the environmental benefits.
- Be transparent when detailing any comparisons.
- Ensure that your claims are achievable.
Have evidence to back up claims
- Use scientific and independent evidence, rather than an internally quantified study.
Don’t hide or omit important information
- Consider the environmental effects of the total life cycle of a product, such as emissions associated with the post-purchase usage.
- Provide information on how these activities impact across the life cycle.
Explain any conditions or qualifications on your claims
- Clearly explain if environmental claims are true only in certain circumstances or scenarios.
- Examples include when a claim:
- Is true when tested in laboratory conditions, but these conditions are unlikely to occur in normal use.
- Is accurate in some locations where the product is sold, but not in others.
- Can only be available or fulfilled with specific technology or infrastructure.
Avoid using broad and unqualified environmental claims and statements inferring that your products are “environmentally friendly” or you are “lowering greenhouse emissions”
- It’s important to substantiate all emission claims by conducting a comprehensive baseline assessment - using recognised Australian or international methodologies.
- It’s best practice to clearly detail the emission inclusions and exclusions in any assessment undertaken. This should also include the actions you’ve taken to substantiate the claims.
Use clear and easy-to-understand language
- Ensure that your communication is written in plain English.
- Avoid industry jargon.
Visual elements should not give the wrong impression
- Even the subtle use of green-coloured packaging can imply positive environmental impact.
- Logos or images representing the recycling process can influence a consumer’s impression of the environmental impact of a product or service.
Be direct and open about your sustainability transition
- Undertake all background assessments before making aspirational claims about future environmental objectives.
- Develop a clear and realistic transition plan that illustrates current actions that your organisation is undertaking and intends to take to meet your goal.
- Ensure you are measuring your progress against your transition goals.
Avoiding greenwashing
To confidently present environmental and sustainability claims within Australia’s consumer law framework, your focus must be based on commitment, truth and transparency. From a business perspective, the eight ACCC principles that we all must comply with appear straight forward. So, why do some ASX200 companies continue to greenwash? Often this happens due to a lack of clear environmental objectives, vague measurement, and misleading communications.
Communicating your greenhouse emissions to consumers
When claiming specific greenhouse emissions or their broader influence on climate change, you must be transparent about your emission reduction activities vs. reliance on purchased offsets. Explain clearly how emissions are accounted for, including those associated with electricity use. Provide information about the types of projects that generated offsets and account for all types of GHG (greenhouse gas) emissions.
Examples of environmental benefit claims made by organisations
- Energy use and emissions
- Water usage
- Pollution and use of harmful substances
- Deforestation, land or aquatic degradation, and associated biodiversity impacts
- Resource use and waste management
- Types of materials used and how they are sourced
- Product durability and repairability
- End-of-life and disposal options
Avoiding breaches and fines
When determining whether to enforce penalties under Australian commercial law, the ACCC focuses on three areas:
- Is the benefit derived ‘reasonably attributed’ to the misleading claim?
- Has the conduct harmed the competitive process or resulted in widespread consumer harm or small business detriment?
- Has the conduct resulted in real or potential harm?
Stringent penalties under ACL for corporations and individuals
The penalties for breaching the relevant Australian Consumer Law (ACL) provisions vary significantly depending on the nature of the breach and the entity responsible. For corporations, the maximum penalty for each violation can be substantial, being the greater of $50 million, three times the value of the benefit received by the corporation from the breach, or 30% of the corporation's adjusted turnover during the period relevant to the breach. The latter option is considered if the benefit's value cannot be determined.
In addition to these financial penalties, criminal liability may also be imposed in certain cases, further emphasising the seriousness of such breaches. Individuals are not exempt from penalties; those found to be in contravention of the ACL could face a maximum penalty of $2.5 million for each violation, underscoring the significant consequences for non-compliance with these provisions.
Case study: Company adopts best practices to substantiate its environmental claims
A company has proactively embarked on a journey to diminish its environmental impact, crafting a transparent and comprehensive strategy to voluntarily lower its emissions footprint. This strategy has been promoted through television advertisements, marketing materials, and detailed information available on their website, inviting consumers to explore their commitment to sustainability.
In their transition plan, the company successfully quantified its greenhouse gas emissions, implemented operational changes to decrease its overall emissions, and meticulously tracked its progress towards achieving its reduction objectives.
The highlights of this exemplary plan include:
- Employing esteemed accounting methodologies to accurately calculate its emissions.
- Comprehensive accounting for emissions across the product lifecycle, encompassing both direct operational emissions and those arising from the consumer’s usage of the products and services.
- Maintaining transparency regarding the scope of emissions included in its calculations and explicitly identifying emissions sources that are excluded.
Dedicated to achieving tangible environmental goals, the company has initiated several significant actions.
Notably, it has:
- Transitioned to sourcing 100% of its energy needs from renewable sources, demonstrating commitment to sustainable energy.
- Invested in high-quality offsets to compensate for the emission footprint of its entire operations, ensuring a comprehensive approach to mitigating its environmental impact.
This forward-thinking approach not only positions the company as a leader in sustainable business practices but also sets a benchmark for others to follow in making a positive environmental impact.
[Adapted with enhancements from the ACCC Guide to Making Environmental Claims, Dec 2023, p32]
Next steps to enhance your business's environmental credibility
To align your business practices with these standards and enhance your environmental credibility, consider the following steps:
- Educate yourself on regulatory guidelines: Familiarise yourself with the ACCC's comprehensive guidelines on Making Environmental Claims. This foundational knowledge will help you navigate the complexities of green marketing with integrity.
- Formulate or refine your emissions reduction strategy: Whether you're establishing a new emissions reduction plan or revising an existing one: setting clear, achievable goals is critical. This plan should outline specific steps your organisation will take to minimize its environmental footprint.
- Conduct independent emissions analysis: Engage third-party experts to assess your business's carbon emissions comprehensively. This objective analysis will provide a baseline for measuring progress and identifying areas for improvement.
- Consult with renewable energy specialists: Explore how entering into renewable energy supply agreements can complement your emissions reduction efforts. Our SmartestEnergy experts can offer tailored clean energy recommendations based on your organisation's size, industry, and specific needs.
By proactively embracing these strategies, your organisation can authentically showcase its dedication to sustainability, steering clear of the pitfalls of greenwashing. This not only elevates your brand's reputation but also paves the path towards a 100% renewable energy system, delivering a better future for all—a commitment aligned with SmartestEnergy's vision.
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