Recent activity overseas against 'greenwashing' provides a timely warning of the need for caution when making environmental claims. Consumer NZ also has an active campaign focused on greenwashing, and it is likely only a matter of time before the Commerce Commission takes more enforcement action in this area. In this update, we highlight some overseas developments in this area, and what businesses can do to reduce risk when making claims about environmental benefits.
Australian sweep raises concerns across range of industries
Last year, the Australian Competition and Consumer Commission (ACCC) issued its findings on an internet sweep of environmental claims. The sweep looked at nearly 250 different Australian businesses and brands across eight sectors, and found that sectors with the greatest proportion of concerning environmental claims were cosmetic and personal care, textiles, garments and shoes, and food and beverages. The sweep resulted in new greenwashing guidelines being issued by the ACCC.
A key trend identified in the sweep was aspirational claims about environmental and sustainability goals made by many businesses. It found some businesses clearly set out their goals, had comprehensive plans in place for how these would be achieved, and actively monitored their progress. However, in other cases, it was unclear what practical changes were being implemented to achieve the goals, goals were very general and not able to be measured, and there was no clear plan to meet the goals.
The scrutiny in Australia, which has similar consumer protection laws to New Zealand, will likely have flow on effects to New Zealand – and it sounds like there will be more to come in this space soon from across the Tasman. Recently, the ACCC has taken action in relation to "ocean plastic" claims on food packaging and rubbish bags, and said that it has a number of greenwashing investigations underway, including in the consumer and electronics products sectors. A Senate inquiry into greenwashing is also active, looking at claims made by companies and the impact on consumers, and potential regulatory options to protect consumers.
UK warning to fashion retailers
Earlier this year, the UK Competition and Markets Authority completed an investigation into possible greenwashing in the fashion sector, and obtained undertakings from several major fashion retailers that commit them to specific rules around the use of green claims. The commitments made include:
- Statements made about types of fabric must be objective and specific (eg only using ‘organic’ or ‘recycled’ if certain criteria are met), rather than more subjective descriptions like ‘eco’ or ‘responsible’
- ‘Natural’ imagery or logos/icons – such as green leaves – must not be used in a way that suggests a product is more environmentally friendly than it is
- Any claims made about environmental targets must be supported by a clear and verifiable strategy, and customers must be able to access more details about it (eg in terms of what the target is aiming to achieve, the date by which it is expected to be met, and how the business will seek to achieve that target).
Things to look for
The focus on greenwashing overseas provides a good reminder to keep Fair Trading Act obligations top of mind when making environmental claims, as does the fact that the Commerce Commission recorded 117 complaints about environmental claims in the three-year period between January 2021-January 2024.
Many businesses are taking positive steps to focus on reducing their impact on the environment, and there are of course benefits in telling consumers about it. But making green claims that are misleading or not backed up by evidence could result in significant costs, including the costs of a Commerce Commission investigation and potential penalties, as well as reputational damage.
Issues identified in Australia and the UK reflect similar issues highlighted in the Commerce Commission's Environmental Claims Guidelines (issued in 2020). Some key things for businesses considering making green claims to look for and think about (drawn from the Commerce Commission's guidelines and overseas developments) are:
- Is the claim truthful, accurate and specific? Vague claims like 'green', 'kind to the planet', 'eco-friendly' and 'sustainable' may be misleading and difficult to back up, particularly if not properly explained. It's also important to consider the full life cycle of a product and be clear which part of the life cycle a claim relates to (eg transportation, manufacture or packaging).
- Can the claim be backed up with credible evidence? A business must have reasonable grounds for a claim at the time that it is made – such as research, test results, or similar credible information to substantiate the claim. Claims should be reviewed regularly to check they remain true. Particular care is needed if relying on overseas studies or test results, to make sure they are relevant in the New Zealand context.
- Are any important conditions/qualifications clearly set out? Important information, such as any conditions or qualifications to a claim, should not be left out. Think about how consumers would interpret a claim, looking at the overall impression that an advertisement or product packaging creates. The basis for any comparative claims (eg 'less plastic packaging' and 'lower environmental impact') also needs to be clearly explained.
- Does the imagery used on a product or advertisement give a misleading impression? Claims can be inferred from images or branding (eg the Earth, plants, or colour green), and could be misleading if they give the impression of environmental benefits that are not true.
- Are aspirational claims about environmental goals supported? Having clear and actionable plans detailing how environmental goals will be achieved, and being direct and open about steps being taken, helps to reduce the risk of being misleading. For example, the ACCC's recent guidance states "if you can’t reduce your greenhouse gas emissions in the short term, but are instead offsetting your impact on the environment, make this clear to consumers".
Specific types of claim to look out for that are identified in the Commission's guidance, like 'recyclable', 'plastic free', 'carbon neutral', and 'renewable energy', are set out in more detail in our previous update, “Green”, “eco-friendly” and “good for the environment” – Commerce Commission releases new guidance on making environmental claims.
If you have any questions about reducing greenwashing risk, or would like help reviewing your environmental claims, please contact a member of our consumer law team. For more information on our climate change and sustainability expertise, please see our climate change and sustainability webpage.
