Businesses in the crosshairs over ‘greenwashing’ claims

• On Tuesday, the ACCC released new guidance for businesses making greenhouse gas emissions claims to consumers.
• Firms can still use carbon credits, but must be able to back up any claim that they cancel out their emissions.
• Misleading green claims hurt firms that genuinely cut emissions and can make the shift to cleaner technology less efficient, the regulator said.

Australia’s consumer watchdog has urged businesses making greenhouse gas emissions claims to be clear about whether they have cut their own emissions or are relying on “credits bought from projects that happen elsewhere.”

The Australian Competition and Consumer Commission (ACCC) released a guide for businesses on Tuesday, telling firms to back claims with sound data, disclose their reliance on credits and consider how shoppers read them.

Greenwashing has been one of the ACCC’s compliance and enforcement priorities since 2023, and the watchdog says it will consider targeted action against businesses that keep making problematic claims.

“Consumers should be able to trust the emissions-related claims that businesses make,” ACCC Deputy Chair Mick Keogh said in a statement.

What is greenwashing?

Greenwashing is marketing that overstates how environmentally friendly a product or business is, such as vague “eco-friendly” or “sustainable” labels with little evidence behind them.

“Greenwashing not only limits the ability of consumers to make informed purchasing decisions, but it also disadvantages businesses that have invested in the development of products or services that are genuinely more environmentally sustainable,” Keogh said.

A “carbon neutral” label can mean a business has cut its own emissions, or that it has bought carbon credits to offset pollution it still produces.

The ACCC said some large companies in aviation, energy, logistics and telecommunications have moved away from “vague, widely advertised, carbon neutral claims”, with some now telling customers that buying credits is “not the most effective way” to cut their own emissions.

Cuts versus credits

Under the ACCC’s six-point checklist, the “golden rule” is whether the impression a claim leaves on shoppers shows what is really happening.

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“If you say one thing is equivalent to or neutralises another, you need reasonable grounds to support this,” the guidance says.

Firms must also make sure no one else is claiming the same credit, and separate their voluntary efforts from what the law requires, the agency said.

“If businesses make misleading emissions claims, this can harm fair competition, reduce consumer trust and make the transition to low or no emission technologies less efficient,” the guidance reads.

Such claims can breach the Australian Consumer Law, and the watchdog flagged enforcement action against firms that persist.

“If any existing claims raise concerns, businesses should update their messaging, gather stronger evidence, or reconsider using it,” Keogh said.

The agency has already taken several businesses to court, with household products maker Clorox Australia ordered to pay $8.25 million in Federal Court penalties for falsely labelling its GLAD kitchen and garbage bags as made with “ocean plastic.”

The ACCC has also launched Federal Court proceedings against Australian Gas Networks and the Banana Boat maker over alleged greenwashing.