As more and more companies rely on environmental claims to distinguish their brands and products, there is growing focus on what these claims mean and how they can be substantiated. This can be a complex area.
The Commerce Commission (Commission) has warned Glopac NZ Limited (Glopac) for misleading claims about the recyclability of its hot drink cups. The Commission considered that Glopac likely breached the Fair Trading Act 1986 (Act) by making representations that its hot drink cups are "recyclable", when in reality no hot drink cups can be recycled in New Zealand through kerbside recyling. The circumstances in which Glopac's hot drinks cups could be recycled in New Zealand were very limited, for example in a "closed loop" event where only Glopac hot drink cups were available.
Glopac's argument
Glopac provided test results that showed its hot drink cups are 100% paper, which is distinct from other hot drink cups which have a plastic lining. This means that the hot drink cups are technically capable of being recycled. Glopac told the Commission that a reasonable consumer would understand that the hot drink cups could not be recycled in New Zealand. Despite this, Glopac decided to remove all relevant representations from its website and social media and, at the time of the warning letter, Glopac was in the process of removing the relevant representations from the hot drink cups.
The Commission took the view that Glopac's conduct and representations about the recyclability of the hot drink cups likely breached sections 10, 13(a) and 12A of the Act by being (i) conduct which is liable to mislead the public as to the characteristics of goods; (ii) false or misleading representations that the hot drink cups are of a particular kind (ie recyclable); and (iii) unsubstantiated representations. The Commission, unsurprisingly, considered that the reasonable consumer would understand "recyclable" to mean more than a technical possibility for the hot drink cups to be recycled.
It's not easy being green
The Commission's warning letter confirmed that, to market a product as recyclable, the business should consider whether appropriate recycling facilities are available to consumers who are likely to acquire the product. Claims need to be considered for the New Zealand specific environment.
Items that are not accepted through kerbside recycling in New Zealand should specify where they could be recycled. This is consistent with the Commission's Environmental Claims Guidelines (Guidelines), which were released in July 2020. Please see our previous alert on the Guidelines here.
The fact that the Commission has taken action against Glopac is another reminder that businesses must consider the claims that they make carefully to ensure that they are accurate, reliable, not misleading and backed up by reasonable grounds. These considerations must be assessed under New Zealand conditions – Glopac had test results showing that the hot drink cups are capable of being recycled from a German testing facility but, under New Zealand conditions, the drink cups cannot be recycled except in limited circumstances.
Given that environmental claims can be a point of difference in appeal to conscious consumers, we expect that the Commission will continue to prioritise investigations of environmental claims to encourage compliance with the Act.
Please get in touch with one of our experts below if you would like to discuss how this update may impact you and your organisation.