News & Insights

The food manufacturing sector is always innovative with manufacturers looking for ways to differentiate their products in a crowded market and create customer demand through ESG claims. There is strong motivation to source, manufacture and market products as being more environmentally friendly, socially conscious or healthier. Consumers trends indicate an uptick in Australians seeking out eco-friendly products, with 1 in 2 actively looking for greener products or services. The catch, however, is that businesses are still responsible for complying with the existing laws and regulations that ensure the statements they are making are true.

The intersection between emerging technology and the law

Manufacturers of new foods technologies or products need to examine them within the existing legal frameworks. Often it is said that technology outpaces the law. For novel products, what is needed is a consideration of the underlying reasons for the law. The fact that technology or products may develop or be completely new does not change the need for or application of these underlying considerations. That much is true when it comes to product innovations that claim to be more ‘eco-friendly’, ‘sustainable’, ‘green’ or simply ‘better’. Similarly, for new products, making comparisons against the existing alternate products or adopting existing product language also need to be examined.

With respect to misleading and deceptive conduct – an ESG claim has a twofold impact:

1. There is an impact on the consumer.
   ESG claims permit the seller to increase its price. Consumers seeking such products will generally pay more for environmentally friendly, higher quality, locality, artisan, etc. When those claims are inflated or simply deceptive, the consumer has been misled to pay more.
2. There is a negative impact on other suppliers of similar products.
   The misleading seller may be promoting its products as better than, more enviro-friendly, healthier than those of its competitors or locally sourced or produced goods. By inference, it is also inferring that competitors’ products, not promoted by such false claims, are unhealthy, bad for the environment or somehow inferior.

If you’re going to claim it, be prepared to prove it

The name of the game is that if you’re going to claim anything in advertising – including the brand, product name, trade mark, or slogan – you need to be able to back up your claim and it must be easily understood by the consumer.

This counts for suggestive imagery as well. Trade marks need to be considered and interpreted as the layperson would see them. For example, a brand of eggs advertised as ‘roam free’ or a logo showing a chicken under the sun both represent ‘free range’. These sorts of claims are quite obvious – clear representations about a known product, made against the general backdrop of consumer awareness and demand for a more humane laying environment.

The problem that arises with new technologies is that known and generally understood terms are ‘borrowed’ or ‘adapted’ for use by manufacturers of new products. Those existing terms bring with them a level of understanding and meaning that may not be accurate when applied to the new product. It is very difficult to prove a claim about a new product when the scientific or other criteria relates to the existing or alternative product and is not referable to the new product. For example, calling a manufactured (non-dairy) milk ‘low fat’ is inherently ambiguous. One question (of several) is whether the comparison being made is that this plant derived milk has lower fat than other plant derived milks, or lower fat than dairy milk? ‘Low fat’ is also a term whose use is regulated with the prescribed food standard criteria that applies to dairy milk products.

From a broader ESG perspective, additional ESG claims are often made to describe new products. They are promoted as being more environmentally friendly, healthier or they come without side effects. Just because the existing product may not have the best environmental footprint (or other character), does not mean the new product is overall better. It may well be, but there would need to be an environmental assessment of the new product before any comparison could be made.

New products and borrowing existing names

The two most common and contentious examples are ‘meat’ and ‘milk’.

In the case of ‘meat’, it is important to consider what the consumer commonly understands as the meaning of the word. It is the protein from a named particular animal.

But new technologies have borrowed this term for two product types:

• lab grown meat or CELL-based meat (being a protein); and
• plant based meat (being purely plants, plant extracts and various other additives etc) combined to produce a similar looking and tasting product.

In the case of ‘milk’, this product can, by definition, only come from female mammals (leaving aside platypus and echidna). However, ‘milk’ has been widely adopted for products that are liquids, extracts or oils obtained through a manufacturing process from almonds, oats, soy, etc.

Strictly speaking, these products are not meat or milk, but alternates or substitutes. Borrowing another product’s name brings with it a whole range of knowledge, assumptions, preferences and prejudices. That brings risk. Simply saying a product is a different type of meat (lab grown), a substitute (plant based) or made from another product (soy), does not remove all this existing background. Product and marketing representations for a new product are not made in a vacuum, they are made to existing consumers of other existing products.

For example, the use of ‘milk’ in a trade mark for soy milk was considered by IP Australia. Vitasoy’s trade mark application for its tagline, ‘Growing Milk since 1940’, was accepted in 2019. Fonterra’s (a multinational dairy milk producer and supplier) opposed the application on the basis that using ‘milk’ without descriptors of SOY or RICE was deceptive and contrary to Food Safety Code. In this case, the hearing officer disagreed, considering the inclusion of ‘grown’ was key in explaining that it was not dairy milk.

Defining fair and forthright claims

While there is the potential for consumer confusion about what the product actually is (ie. almond milk, not dairy milk), that can probably be minimised by clear explanations and labelling. However, we cannot ignore the second impact of misrepresentation – the disparagement of the competitors eg. the farmers and fishers.

Often in marketing these new products and technologies there is an assumption or even express statements that plant-based or manufactured products are environmentally friendlier, purer, safer, etc. Such ESG claims need to be substantiated to be true.

By way of illustration, many brands and products infer that meat growing causes global warming, meat and milk production is inhumane, eggs have high cholesterol, which are then followed up with statements claiming why these new alternatives are better. Maybe they are, maybe they are not, maybe they are in only some ways.

Firstly, the key is to ensure that any comparison claims that highlight a benefit by way of contrast can be backed up by rigorous testing and evidence (about both products).

Secondly, manufacturers need to consider whether the comparison is fair and direct. Simply calling a plant-derived milk ‘better than’ dairy milk begs the question, in what way? Probably not in terms of calcium or protein, unless added or enhanced. In terms of environment (eg. production of greenhouse gas or use of water), an assessment of the product inputs and greenhouse impacts of farming soybeans and manufacturing the soy milk needs to be made and then compared to dairy farming for a similar volume of milk.

Thirdly, any highlighted feature about the new product needs to provide the express benefits stated. For example, a statement that a manufactured fish product is ‘enriched with Omega 3 acids’ or an egg powder substitute has ‘more Omega 3 than eggs’ cannot simply be coupled with a conclusion it is better, healthier or reduces the risk of cancer. Equally, because something has more, that does not mean the body can absorb it, so the stated benefit may not exist.

Such health/benefit claims also need to comply with food standards laws and codes.

Intersection between ESG claims and food standards

All food and beverage need to comply with Food Standards Codes in relation to descriptions, labelling, ingredient lists (if processed). This includes making claims such as ‘low fat’, ‘high in’ and health outcome claims.

In Australia, Food Standards Australia New Zealand (FSANZ) considers both cell-based or plant-based alternatives as covered within its existing Code rather than as a ‘novel food’. Novel food is food without a history of traditional human consumption in Australia and New Zealand which needs to be assessed and approved before being sold.

Cell-based (or lab-grown) meat would then fall within all the various standards for meat products.

In relation to plant-derived ‘milk’, FSANZ is concerned with the representations and information being provided, given that plant-based milks do not have the same protein levels or vitamin and minerals as real milk. So, these products need an advisory label. Additional vitamins and minerals can be added, and these must be disclosed on the label.

Ultimately, compliance with FSANZ may actually help explain the claims being made about a product – whether that is for novel foods or for health or other benefit claims.

But be careful, even though a product may have an ingredient list that discloses no animal products, if the predominant name is stating or branding is representing ‘meat’, it will likely be misleading.

Government attention and action

In June 2021, there was a Senate Inquiry into the labelling of non-animal proteins, which delved into the use of terms such as ‘meat’ and ‘milk’. The Inquiry examined the impact of plant-based products on traditional investments and marketing of meat and dairy. It also looked at the potential misunderstanding of whether these two products were ‘equivalents’ in relation to health, protein, vitamin, minerals and the (sometimes) highly processed nature of alternates.

After 200 submissions by the farmers, livestock, Alternative Proteins Council, the following recommendations were made:

• reform to food labelling regulations;
• words like ‘chicken’ and ‘beef’ should not be used on plant-based foods;
• animal images should not be used on plant-based foods;
• restrict ‘meat category brands’ to animal protein products; and
• separate products in store.

Overseas, as with FSANZ, marketing of new or alternate products have been predominantly driven by compliance with existing food standards, with primary reliance on clear descriptions and existing regulations. The United States’ Food and Drug Administration (USFDA) is establishing a framework for regulating cell-based meat and poultry. However, in the European Union, it is likely cell-based meat will fall under the EU Novel Food Regulations.

Key takeaways

ESG claims can be stated or inferred through a product’s name, brand imagery, slogans, packing and marketing. They can be enlivened by adopting known terms for a novel or alternative product and in any comparisons made with those products.

All claims need to be considered and assessed to ensure they are true on all levels and not misleading. ESG claims will be challenged and will need to be substantiated by evidence and testing. Where a claim is or might (to some people) be ambiguous or infer benefits or outcomes that do not exist, then expressly clarify the claim. The more specific a claim is, the less chance it will be misleading.

Some claims – usually those promising to provide a health benefit or making a better nutritional claim – are already likely to fall under the food standard’s Codes.

For new foods or alternatives for existing foods, be especially aware that consumers will make comparisons and assumptions based on their understanding of the existing foods. Ultimately, consumer laws are for the protection of consumer. So, if your choice of terms, branding or marketing gives rise to a mistaken assumption or belief, whether you intended it or not, then it is likely you who are being misleading or deceptive.

Contact us for advice

If you have questions about whether your ESG claims can be considered deceptive or misleading, or might breach the food standards’ Codes under the current regulations, our expert team can assist. When in doubt, it pays to reach out.