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“Greenwashing” is gaining attention as the fight to prevent it heats up. But what is it?
Greenwashing is a deceptive form of marketing in which an organisation’s policies or products falsely claim to be environmentally friendly. This misleading PR can affect both consumers and investors.
To help mitigate this risk, the Australian Competition and Consumer Commission (ACCC) published draft guidance, which aims to prevent greenwashing by explaining company obligations for reporting on environmental and sustainability claims.
ACCC chair Gina Cass-Gottlieb commented on the announcement: “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.”
“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.”
These introduced guidelines will help businesses adhere to environmental and sustainability standards and make it easier to take action against those who don’t. This decision is timely, as the ACCC’s greenwashing internet sweep revealed that 57 per cent of Australian businesses raised concerns in their environmental claims.
Ms Cass-Gottlieb continued: “Our draft guidance sets out what the ACCC considers to be good practice when businesses make environmental claims about their products and services as well as making them aware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.”
“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,” she said.
“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.”
The greenwashing internet sweep revealed eight key issues that businesses were doing:
- Vague and unqualified claims
- A lack of substantiating information
- Use of absolute claims
- Use of comparisons
- Exaggerating benefits or omitting relevant information
- The use of aspirational claims, with little information on how these goals will be achieved
- Use of third-party certifications
- Use of images that appear to be trust marks
The ACCC’s draft guidance offered eight ways to ensure that environmental and sustainability claims remain trustworthy:
- Make accurate and truthful claims.
- Have evidence to back up claims.
- Don’t leave out or hide important information.
- Explain any conditions or qualifications on your claims.
- Avoid broad and unqualified claims.
- Use clear and easy-to-understand language.
- Visual elements should not give the wrong impression.
- Be direct and open about sustainability transition.
Jack Campbell
Jack is the editor at HR Leader.
