The ACCC's Eight Commandments for Environmental and Sustainability Claims and Avoiding Greenwashing and Breaches of the Australian Consumer Law

The ACCC's example states that a statement "made from recycled materials" is likely to be misleading or deceptive in breach of the ACL if, for example, the product contains only 20% recycled material. 

The ACCC instead recommends the statement "made from 20% recycled material."

Without making an express statement to this effect, the ACCC's example is seeking to ensure specificity in claims. 

The additional tenets and related examples of relevance are as follows: 

Do Not Overstate the Level of Scientific Acceptance

Principle 2 requires evidence to substantiate a claim. The overlap here is that where the basis of a scientific supporting claim is disputed or inconclusive, it is important to not overstate the level of scientific acceptance.

The example here is to have regard to 'laboratory' conditions versus whether the claim is sustainable in real-world conditions.

Do Not Exaggerate Environmental Benefit 

Claims should not exaggerate environmental benefit or understate environmental harm. Again, specificity is important: the ACCC is stating that a claim on plastic bottle packaging that "this product does not harm the environment" is misleading if only the bottle is made from recyclable material, but the cap, external packaging and its contents are not.

Instead, the ACCC suggests an alternative claim that the product "reduces harm to the environment" which discloses which parts of the product are made from recycled material. 

Only Make Meaningful Claims

Claims must only be made about genuine environmental benefits. 

Here, the ACCC states that a business must not claim that a product has a specific environmental benefit when all similar products have the same feature. 

Make Sure Comparisons Are Transparent and Fair

An ordinary and reasonable consumer may be misled by comparisons that are not transparent or fair. Comparisons should be like-for-like, up to date, easy to understand and include further information where necessary. 

For instance, claims that a product is 'made with less plastic' may be false and misleading where the point of comparison is not specified and it is unclear how much plastic is being used.

Representations About the Future

This is closely related to Principle 8. As required more generally by the ACL, there must be reasonable grounds for making such representations about the future at the time the representations are made. 

In addition, businesses should have regard to the overall impression created by the claim. 

The ACCC states that "it is good practice to be able to substantiate any environmental claims you make."

However, the ACCC makes stronger statements in speeches, noting that it will seek substantiation or issue businesses with Substantiation Notices if it is concerned with any environmental claims.

The ACCC states that ideally, this evidence should be scientific and independent. 

Using Third-Party Certifications as Evidence

Third-party certifications are reputable ways of substantiating environmental claims. However, certifications should be chosen with caution, and ongoing compliance with the rules of the certification scheme must be maintained to avoid making misleading claims. 

Small Print Shouldn’t Hide the Truth

The headline claim must not give the wrong impression or must be appropriately qualified. Small print should provide supporting information, not conflict with the overall message of the claim.

Consider the Full Lifecycle of Your Product or Service

The full lifecycle of products and services must be considered in making environmental claims, including the raw materials sourced, the packaging used and end-of-life options. Where an environmental claim applies only to one stage of the lifecycle, this should be specified or the overall impression may be misleading. 

The ACCC's example is of a manufacturer of electric vehicles which claims that it "creates zero emission electric vehicles." Such a claim may be misleading as it only considers the emissions produced while driving the vehicle but not during the manufacturing process, charging, or end-of-life.

Instead, a more specific claim may be "zero exhaust emissions while driving."

Explanations may be necessary where environmental claims are only true under certain conditions.

For instance, a claim that a product is 'recyclable' may depend on the consumer's actions, the location where the product is sold, and the availability of certain technology or infrastructure. 

Environmental claims should consider the product or service's normal use by consumers, conditions in which it is sold, and normal access to infrastructure and resources required for the environmental benefit to be realised. 

Broad and unqualified environmental claims may be misleading, especially as most products and services carry some environmental harm. Common claims include: 

Green,' 'Go Green,' 'Choose Green'

Claims that a product or service is 'green' are vague but suggest that there is less damage to the environment than like products and services. 

'Environmentally Friendly' or 'Eco-Friendly'

These claims give the impression that no environmental harm is caused in the overall lifecycle of a product or service. 

'Sustainable'

These claims give the impression that resources are used at a rate that does not contribute to environmental harm. 

Claims that provide only partial information should be qualified or reworded. Common claims include: 

'Recyclable'

This suggests that a product can be recycled in an ordinary local recycling facility, and hence may be misleading where the product cannot be recycled through a household or local council waste collection program. 

'Recycled'

This gives the impression that a product has been through a previous life cycle or has been recycled by a third party. 

'Renewable Energy'

These claims should be supported by information about how renewable energy use has been calculated. 

'Free'

This gives the impression that the product is 100% free from an ingredient, component or characteristic.

Emissions Related Claims

• The ACCC states that "businesses should exercise particular caution when making representations… about the greenhouse emissions associated with their products."
• The ACCC's view is that consumers are unlikely to readily understand claims such as 'Carbon Neutral,' 'Climate Neutral' or 'Net Zero.' It states that where claims about emissions are made, it is good practice:
  • To make an emissions baseline assessment using established and recognised methodologies;
  • To clearly communicate the actions that underpin your claim, such as emissions reduction versus reliance on purchasing offsets; and
  • To disclose how you have accounted for emissions, including accounting for all types of greenhouse gas emissions.

Environmental Claims in Highly Polluting Industries

Consumers should not be misled by understating the environmental impacts of a business that operates in a highly polluting industry, where overall environmental detriments can eclipse any benefits.

Avoid Technical or Scientific Language

Environmental claims must be understandable by ordinary and reasonable consumers. 

Use Words to Convey Their Common Meaning

Avoid using language where the technical definition is different from the ordinary meaning, and avoid using language that has multiple potential interpretations. 

Where various interpretations arise, claims should be explained or qualified. 

Visual elements can create a misleading impression or give rise to various interpretations and broad claims.  

Symbols 

Where potentially misleading symbols are used, a clear and prominent explanation of the symbol may be necessary. 

As an example, the recycling 'mobius loop' may represent that a product is made from recycled materials or that a product is recyclable. Further explanation may be required where this is not the case, or where only one interpretation applies. 

Trust Marks 

Self-designed symbols that resemble trust marks used by third-party certifiers may be misleading if the symbol has not been certified or verified by a third party. 

Third-Party Labels and Certifications 

Certification logos from third-party schemes may create an impression that differs from the actual environmental benefits of a product, service, or business, and it may be necessary to provide consumers with further information. 

Businesses should be transparent about their environmental goals and initiatives and must not misrepresent their progress or environmental performance. 

In ensuring that environmental claims are not misleading throughout the business's sustainability transition, businesses should:

• Be realistic about achievable changes; 
• Understand and use appropriate terminology that consumers are likely to understand; 
• Disclose details about their initiatives; and 
• Provide regular updates about progress. 

The ACCC may formally require persons to give information and produce documents to substantiate an environmental claim by way of substantiation notices. 

Individuals are not required to provide information or documents that may incriminate them or expose them to a penalty.

Section 155 of the Competition and Consumer Act 2010 gives the ACCC information gathering powers to investigate potential contraventions of the ACL. Failure to comply with a section 155 notice can attract penalties or jail time.

An infringement notice may be issued where the ACCC has reasonable grounds to believe that a person has contravened particular ACL provisions, for instance, by making false or misleading representations. The person will be liable to pay a penalty amount under the infringement notice. 

For Corporations

Per breach, the greater of:

AU$50 million;

30% of annual turnover during the breach period; or

Three times the gain.

For Individuals

AU$2.5 million per civil breach.

Criminal liability for offences under the ACL may apply.