The Australian Competition and Consumer Commission (ACCC) has announced its intention to investigate “greenwashing” among businesses across the nation.
Following an internet sweep of 247 businesses, the ACCC found that 57 per cent made misleading claims involving their environmental or sustainability practices.
The cosmetics, clothing and footwear, and food and drinks sectors were shown to have the highest proportion of concerning claims.
The ACCC said that it had become increasingly important for businesses to not mislead their consumers in regard to their environmental footprint.
“Our sweep indicates a significant proportion of businesses are making vague or unclear environmental claims,” ACCC Deputy Chair Catriona Lowe said.
“Consumers are now, more than ever, making purchasing decisions on environmental grounds.
“Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims.”
As part of the 2022-23 Compliance and Enforcement Priorities, the ACCC is vying to crack down on consumer and fair trading issues regarding environmental and sustainability claims.
Greenwashing creates uneven playing field
The ACCC said greenwashing not only affected consumers but also impacted other businesses trying to do the right thing.
“This conduct harms not only consumers but also those businesses taking genuine steps to implement more sustainable practices,” Ms Lowe said.
Greenwashing is the practice of making vague or unwarranted claims about environmental and sustainable practices. It has been highlighted by regulators as something to knuckle down on for a number of years.
“Businesses using broad claims like ‘environmentally friendly’, ‘green’, or ‘sustainable’ are obliged to back up these claims through reliable scientific reports, transparent supply chain information, reputable third-party certification or other forms of evidence,” Ms Lowe said.
“Where we have concerns, we will be asking businesses to substantiate their claims.”
The ACCC confirmed its investigations would cover the packaging, consumer goods, food manufacturing and medical devices sectors for alleged misleading environmental claims, citing that action will be taken.
The competition watchdog also said it planned to conduct educational activities to update economy-wide guidance material and target guidance for specific sectors.
ASIC launches first Court proceedings against greenwashing
On Tuesday, ASIC announced it had launched civil penalty proceedings against Mercer Superannuation for greenwashing.
The investments watchdog accused Mercer of making misleading statements regarding the sustainability and characteristics of some of its superannuation investment options.
ASIC Deputy Chair Sarah Court said it marked the first court proceeding of its kind.
“This is the first time ASIC has taken an Australian entity to court regarding alleged greenwashing conduct, and it reflects our continuing efforts to ensure sustainability-related claims made by financial institutions are accurate,” Ms Court said.
ASIC claimed that Mercer made statements about seven “Sustainable Plus” investment options offered by Mercer Super Trust, for members who were “deeply committed to sustainability”.
What the statements didn’t include were investments in companies involved in carbon-intensive fossil fuels. Additionally, some companies were involved in alcohol production and gambling, which were not included in the statements.
AGL Energy (AGL), BHP Group (BHP), LSE-listed Glencore and Whitehaven Coal (WHC) were among 15 companies involved as part of Sustainable Plus.
Fifteen companies were involved in the production of alcohol including Budweiser and Carlsberg, while an additional 19 companies were involved in gambling, including Aristocrat Leisure (ALL) and Crown Resorts.
As a result of this, ASIC claimed Mercer made false and misleading statements and engaged in conduct that could mislead the public.
ASIC has issued more than $140,000 in infringement notices following concerns of alleged greenwashing, including to Tlou Energy, Vanguard Investments Australia and Diversa Trustees.
ASIC reiterated that action against greenwashing was one of its 2023 Enforcement Priorities.