News & Insights

In an effort to improve compliance with the Australian Consumer Law, the Australian Competition and Consumer Commission (ACCC) has released eight guiding principles to businesses so that they can avoid misleading consumers on environmental claims. The release of these principles forms part of the ACCC’s achievement of its 2023-2024 Compliance and Enforcement Priorities, which has had a strong focus on preventing misleading environmental and sustainability claims.

For information about the ACCC’s Compliance and Enforcement Priorities for 2024-2025, see our Insight article here.

What are environmental claims?

Also known as ‘greenwashing’, misleading environmental claims are false or exaggerated claims pertaining to a business’ products or services. The ACCC has been targeting such claims due to the growing number of businesses that are making environmental claims about their products or services.

The ACCC has previously noted that misleading environmental claims impact consumers by:

• Limiting their ability to make informed choices;
• Leading consumers to incorrectly perceive more value in a product;
• Disadvantaging businesses with legitimate environmental and sustainability claims; and
• Undermining consumer trust in environmental claims which ultimately reduces the incentive for businesses to invest in sustainable practices.

The introduction of these principles marks the end of the ACCC’s “education” phase for businesses.

The eight guiding principles

The eight principles outlined by the ACCC are as follows:

1. Make accurate and truthful claims;
2. Have evidence to back up your claims;
3. Don’t hide or omit important information;
4. Explain any conditions or qualifications on your claims;
5. Avoid broad and unqualified claims;
6. Use clear and easy-to-use language;
7. Visual elements should not give the wrong impression; and
8. Be direct and open about your sustainability transition.

The aim of these principles is to provide “common sense” guidance to businesses so they can make clear and evidence-based claims that consumers can understand and trust. The ACCC has a range of investigations underway for misleading environmental claims and having these principles in place denotes this increased interest.

When making any environmental claims, be sure to consider the guiding principles to avoid drawing the interest of the ACCC – who is becoming increasingly active in this space.

What’s next?

The ACCC is expected to release further guidance for businesses and consumers on emissions and offset claims, as well as ‘trust marks’ in 2024. Additionally, the ACCC is developing advice aimed at consumers to help them identify reliable environmental claims.

How MK can assist

We can expect greater enforcement action to be undertaken by the ACCC now that it has released its final guidance to businesses.

If you’re making environmental claims and you’re not sure if you are compliant, contact one of our MK experts. We can assist you in preparing and reviewing your claims to ensure compliance with the ACL.

For further information about greenwashing practices, see our other insight articles:

• Brainwashing by greenwashing – Macpherson Kelley (mk.com.au)
• Greenwashing action taken in 2023 – Macpherson Kelley (mk.com.au)
• ESG claims in marketing and advertising – it’s gotta come out in the (green)wash – Macpherson Kelley (mk.com.au)
• ‘Greenwashing’ targeted by ACCC – Macpherson Kelley (mk.com.au)

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.