'Greenwashing': The Edge in the Sustainability Market Is No Longer 'Environmentally Friendly' Products.

Authors: Abrisham Vincent, David Baggs, Nana Bortsie-Aryee

Consumers and businesses are increasingly looking towards products that lower their environmental impact. Recently the ACCC has conducted a broad surveillance sweep on environmental claims and found the many products were exaggerating their product's environmental benefits or even making outright false environmental claims (ACCC, 2023). False, exaggerated, or vague environmental claims are misleading and can disincentivize companies that are investing in environmental management systems for supply chain traceability, transparency, and improved environmental performance across various sustainability indicators.

However, in the near-term it will be the companies who are consciously or unconsciously making these misleading environmental claims that will progressively get caught out as Environmental, Social and Governance (ESG) financial market reporting shifts away from recommendations towards legislation. So, while these reporting requirements will directly affect companies on the ASX it would be naïve to think they will not indirectly affect small to medium manufacturers. They will affect small to medium manufacturers because as more projects gear up to align themselves with ESG reporting measures for financing, manufacturer environmental claims will increasingly need to be verified for inclusion in projects.

It is not just the ACCC that is enforcing the Australian Consumer Legislation, Not-for-Profits have joined and been pursuing companies making environmental claims using allegedly misleading and deceptive conduct in court using the Australian Consumer and Competition Act Schedule 2 of The Australian Consumer Law. In a recent case, the Australian Centre for Corporate Responsibility has instigated legal proceedings against Santos over their 'Net-zero 2050' claims alleging that the company has engaged in misleading representations which impacts investors (ACCR, 2022). Such activism will increasingly set further precedents for the ACCC to enforce claims alongside any legislation adopted after the current Parliament of Australia senate inquiry into greenwashing reviews its recommendations.

In Europe, sustainability finance is already well underway with numerous regulations, directives and recommendations guiding the broader economy and manufacturing industry. Underpinning marketing claims within Europe is the enforcement of ISO 14021. The difference between ISO 14021 and the ACCC's current Green Marketing and Australian Consumer Law document can be currently described as stark; the ACCC Green Marketing and Australian Consumer Law under Schedule 2 approaches problematic and vague environmental claims like 'environmentally friendly' with a 'you should consider' while ISO 14021 is a regulatory document addresses these terms are ones with mandatory removal that they 'shall not be used'. For example, up until now a product in the Australian Market could more likely use the term 'Sustainable Fabric' and argue compliance with the ACCC because of some ambiguous environmental performance improvement while the European Market would disallow this under ISO 14021 section 5.5. However recently the ACCC does appear to have changed its tone, given they are now requiring clients as part of their 2023 sweep, to back up any vague claims when using broad claims like 'environmentally friendly' which 'few, if any, products' can make (ACCC, 2011, p. 12).

Ultimately, what may happen is that Australian product manufacturers fall behind an increasingly regulated international ESG market and becoming uncompetitive and non-complaint that is, unless they actively adopt strategies such as third-party verified environmental claims, update and adjust their environmental management strategy, and advocate for government funding to update production processes to achieve international best practice sustainability metrics outcomes. This is because green procurement processes for major projects could easily preference products from European countries over Australia knowing they have made the necessary investments in their manufacturing sector to improve sustainability across the product supply chain and their claims are more trustworthy.

Global GreenTag International is at the forefront of these changes given all its certification services ensure that environmental claims are substantiated and comply with ACCC requirements, with the option to undertake the ISO 14021 compliance audit. Not only do these processes form part of the core requirements that clients have to meet in order to progress any certification under the GreenTag certification mark but, they help frame businesses to remain relevant within the global and local ESG markets.

If you do have any questions on how GreenTag can guide your products in the market in relation to environmental claims, please contact info@globalgreentag.com

References and Bibliography

Australasian Centre for Corporate Responsibility (2022, August, 25), "Australasian Centre for Corporate Responsibility expands landmark Federal Court case against Santos". Retrieved Tuesday, April 2023 from

www.accr.org.au/news/australasian-centre-for-corporate-responsibility-expands-landmark-federal-court-case-against-santos/

Australian Competition and Consumer Commission (2023, March). Greenwashing by businesses in Australia: Findings of the ACCC's internet sweep of environmental claims. Retrieved 12, April, 2023 from

www.accc.gov.au/system/files/Greenwashing%20by%20businesses%20in%20Australia.pdf

Australian Competition and Consumer Commission. (2011). Green marketing and the Australian Consumer Law. www.accc.gov.au/system/files/Green%20marketing%20and%20the%20ACL.pdf

United Nations Economic Commission for Europe. (2022). Recommendation No. 46: Enhancing traceability and transparency of sustainable value chains in the garment and footwear sector.

thesustainabilitypledge.org/toolbox/2200030_E_ECE_TRADE_466_WEB.pdf