Australian risk managers put on greenwashing alert as regulator warns of concerns

The Australian Competition & Consumer Commission (ACCC) has published draft guidance designed to improve the integrity of environmental and sustainability claims made by businesses and protect consumers from greenwashing. Australian risk managers will need to make sure that their colleagues in compliance, investor relations and legal are aware of the ACCC’s latest initiative, which it says is a top priority for 2023/24. The commission’s draft guidance aims to address the “concerning conduct” identified by the recent greenwashing internet sweep, which found 57% of businesses reviewed were making potentially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 ACCC chair Gina 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,” she continued. “Our draft guidance sets out what the ACCC considers to be good practice when businesses make environmental claims about their products and services as well as making them aware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,” Ms Cass-Gottlieb said. The draft guidance identifies eight practical principles the ACCC encourages businesses to apply when making environmental claims. By following these principles, businesses are less likely to mislead consumers and contravene the Australian Consumer Law, it said. “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,” explained Cass-Gottlieb. “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,” she added. The ACCC is seeking feedback from businesses, consumers and other stakeholders on the draft guidance. The consultation period closes on 15 September. “We would like to hear from businesses on whether our draft guidance improves their confidence in making legitimate environmental and sustainability claims as well as if they have seen concerning green claims made by other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,” Ms Cass-Gottlieb 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,” she added. Each year, the ACCC announces a list of compliance and enforcement priorities. These priorities outline the areas of focus for the ACCC’s compliance and enforcement activities for the following year. As part of the 2023-24 Compliance and Enforcement Priorities, the ACCC has prioritised consumer, product safety, fair-trading and competition concerns in relation to environmental and sustainability claims, which will put Australian risk managers on high alert.

Australian risk managers put on greenwashing alert as regulator warns of concerns

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