Three recent developments in Australia signal a continued focus internationally on greenwashing by regulators and other stakeholders. This focus by Australian regulators is echoed in New Zealand, with both the Commerce Commission and the FMA having signalled a focus on greenwashing (see our earlier update here).
These Australian developments highlight the importance of organisations making "green" claims taking steps to ensure those claims are truthful and able to be substantiated. In relation to goals or targets (for example, emissions reduction targets), this will include taking steps to ensure that publicly announced targets are achievable and supported by realistic plans to meet them (in relation to "net zero pledges", see our earlier update here).
Brief details of these Australian developments are set out below.
The Australian Competition & Consumer Commission (ACCC) has released draft guidance for businesses in relation to making environmental and sustainability claims. This follows the ACCC's investigation into online greenwashing, which found 57% of businesses reviewed were making potentially misleading environmental claims (see our earlier insight on this here). The ACCC draft guidance explains businesses obligations under Australian Consumer Law when making environmental and sustainability claims and what the ACCC considers to be good practice when making such claims. Of particular note is the ACCC's guidance in relation to representations an organisation may make about the future, such as emissions reduction targets and other goals. The ACCC proposes the following "good practice" steps:
Carefully consider any claims about efforts to reduce your business' environmental impact, how you will measure your progress, and what this will be measured against.
Make sure your goals are clear and achievable, that you genuinely intend to meet them, and you have put realistic and verifiable steps in place to make them happen.
Base your goals on accepted methodologies, and resources and technologies that are effective and available to you now (or there is a reasonable basis to consider they will be available to you in the near future).
Provide consumers with regular updates about how you are performing against your goals, including disclosing if you are not on track to achieve them and what steps you are taking to address any setbacks so as to meet your goals.
Regularly revise your goals if you realise that you will not be able to meet them.
This guidance will likely be of interest to organisations in New Zealand grappling with setting climate change or other environmental targets in a way that balances both the need for sufficient ambition with the risk that a failure to meet targets could give rise to allegations of greenwashing.
While the Commerce Commission previously issued guidance in relation to environmental green claims in 2020 (see our earlier update here), it is possible that we will see further guidance in this space, as signalled by the Commerce Commission in response to concerns about greenwashing raised by Consumer NZ earlier in the year (see here).
The Australian Securities & Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against LGSS Pty Limited (Active Super) alleging misleading conduct and misrepresentations to the market relating to claims it was an ethical and responsible superannuation fund. Following representations on Active Super's website that it had eliminated investments that posed too great a risk to the environment and the community, ASIC alleges that Active Super held 28 holdings, either directly or indirectly, which exposed members to securities it claimed to restrict. These included investments in tobacco, gambling, Russian entities, and oil tar sands. This is ASIC's third greenwashing civil penalty proceeding, having previously taken action against Mercer Super and Vanguard Investments Australia.
The Australian Parents for Climate Action (AP4CA) have filed a first-of-its-kind claim in the Federal Court of Australia alleging greenwashing in respect of a consumer product by EnergyAustralia. In short, AP4CA alleges that EnergyAustralia is misleading customers by marketing its "Go Neutral" electricity as "carbon neutral" and having "a positive impact on the environment" in circumstances where the electricity in question is generated using fossil fuels and emissions are offset through the purchase of carbon credits. As well as being the first civil case in Australia to allege greenwashing in the context of a "carbon neutral" consumer product, the case also reflects growing international focus on the role of offsets in carbon neutrality claims. For example, lawmakers in the European Parliament recently agreed to pursue a ban on businesses claiming that products are carbon neutral as a result of offsetting schemes.
Russell McVeagh will continue to monitor the increasing regulatory developments in this space.
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