Australian Competition and Consumer Commission
Sustainability and environment claims are a priority focus of the Australian Competition and Consumer Commission (ACCC), with regulatory scrutiny and enforcement action to ramp up. They are planning an economy–wide Internet sweep of environmental claims made by Australian businesses. The ACCC will be challenging organisations to substantiate and verify their sustainability or environmental claims, including via the use of substantiation notices.
A similar review in 2020 found that 40% of environmental claims were potentially misleading and required further investigation. From their point of view, sustainability covers a broad range of issues including reduced materials usage, lower emissions, improve disposal and increased circularity.
Areas highlighted for concern include:
• information asymmetry: it is difficult for consumers to verify the accuracy of a green claim as consumers are always going to have less information than the business making the claims
• consumers often rely on trust mark’s, such as certification trademarks: information to verify claims, including the standards and criteria behind them is often detailed, complex, requires further research and sometimes completely unavailable
• many consumers are time poor: only a small portion of consumers will spend time researching an environmental claim prior to purchase
• consumers need to take at face value that the claims made are truthful and accurate, and this gives rise to the greater likelihood of consumers being misled.
Currently, sustainability and environmental claims which are false or misleading in breach of the Australian Consumer Law exposes businesses to significant consequences including reputational damage and heavy pecuniary penalties of the greater of $10 million, three times the value of the benefit, or 10% of the Australian group turnover, as well as other orders including corrective advertising, compliance programs and consumer re-dress.
However proposed reforms would see the penalties increase to the greater of:
• $50 million
• If the court can determine the value of the benefit obtained, three times the value of the benefit
• if the court cannot determine the value of the benefit obtained, 30% of the body corporate’s adjusted turnover during the period of the breach (increased from 10% of the body corporate’s annual turnover in the 12 months prior to the act or omission)
Preliminary guidance from the ACCC includes:
• avoiding the use of vague language
• avoiding the use of technical language (where possible)
• taking caution when using standards
• considering the entire life-cycle of the product
• being transparent, but mindful of detail
• thinking about the consumer’s perspective.
Disclaimer: This does not purport to be comprehensive or to render legal advice. You should not act based on any information contained in this publication without first obtaining specific professional advice. Consult your legal advisor to determine if this applies to you.
