The Australian Competition and Consumer Commission (ACCC) is stepping up its efforts to deal with greenwashing — where businesses make misleading environmental claims. ACCC’s deputy chair, Catriona Lowe, emphasised their commitment to addressing this issue, which affects businesses who are genuinely aiming for sustainability. To address this problem, the ACCC has released draft guidelines for businesses making environmental claims. These guidelines aim to make sure businesses are compliant with the law and are transparent. The ACCC encourages businesses to give accurate and honest information about how their products or services benefit the environment.
Eight Fundamental Principles
The draft guidelines are based on eight fundamental principles, which create a framework for accurate and transparent environmental claims:
Principle 1: Accurate and Truthful Claims – Businesses should make sure their claims are honest and accurate, avoiding any misleading impressions, including through visuals, and not exaggerating benefits or scientific support.
Principle 2: Evidence-Based Claims – Claims should be supported by credible evidence, with transparency in providing access to research and data.
Principle 3: Full Disclosure of Information – Relevant information about environmental impact must be transparently communicated to consumers.
Principle 4: Clarification of Conditions – Businesses should outline any conditions or steps necessary for claims to hold true. If claims only apply to certain situations, this should be clearly stated.
Principle 5: Specific Claims with Qualifications – Clear and specific claims are preferred over broad statements that could be misinterpreted. Claims should be qualified with prominent disclaimers if limitations exist.
Principle 6: Clear and Understandable Language – Use simple and easy-to-understand language, as most consumers may not have specialised knowledge.
Principle 7: Accurate Visual Representation – Pictures, such as packaging or logos, must accurately show the product’s environmental impact. The overall impression created from pictures, colors, and logos must align with the claim.
Principle 8: Honesty in Sustainability Transition – If you make ambitious claims about future environmental goals, you should have actionable plans. When moving toward sustainable practices, be open and honest about the process. Clear rules for reporting help others check and trust the information.
In addition, the ACCC is looking into potential cases of greenwashing and is providing more education to businesses. They are also updating their guidance for different industries. The ACCC wants businesses to remember that Australian Consumer Law already says they cannot lie or mislead people. To make sure businesses are honest, the ACCC will check how much effort they put into checking their claims. They understand that smaller businesses might have limited resources, so they will consider that when deciding if a business is doing the right thing.
The Increasing Role of Accountants
Sustainability standards are going to be important in stopping greenwashing. Accounting groups like CPA Australia and Chartered Accountants ANZ say these standards help businesses report how sustainable they are. When someone from outside the business checks this information, it makes people trust it more. Accountants also have a key role in stopping greenwashing. They are supposed to be honest, and having someone from outside check their work will make people trust what they say. Clear rules for reporting will make this checking easier and make people trust the information more.
You can view the ACCC’s guidelines by clicking on this link: https://www.accc.gov.au/about-us/publications/environmental-and-sustainability-claims-draft-guidance-for-business
If you have any questions regarding ESG reporting for your business, the Kreston Stanley Williamson team is available to provide assistance. Feel free to get in touch with us without any hesitation.
Kreston Stanley Williamson
*Correct as of 16 August 2023
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is for general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability is limited by a scheme approved under professional standards legislation.
