ACCC warns about greenwashing – Strategy
IT companies should be prepared to substantiate environmental or sustainability claims they make as part of their marketing activities as the Australian Competition and Consumer Commission (ACCC) looks to clamp down on ‘greenwashing’.
In a speech during the Sydney Morning Herald Sustainability Summit on Tuesday, ACCC chair Delia Rickard said businesses that make false or misleading claims undermine consumer trust and confidence in the market.
Greenwashing is giving a false impression or providing misleading information about how an organization and its offerings are environmentally friendly.
“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalize on changing consumer preferences,” Rickard said.
“Broad terms like ‘environmentally friendly’, ‘green’, or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing.”
Rickard added that businesses should provide evidence to back up their claims, whether through reliable scientific reports, transparent supply chain information, reputable third-party certification, among others. “Where we have concerns, we will be asking businesses to substantiate their claims,” she said.
“The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims,” Rickard added.
Major technology vendors have been vocal about their sustainability goals and initiatives, though, but have also faced scrutiny and criticism on this front.
Rickard said making sustainability work for business and consumers requires a multi-pronged approach, starting with being truthful and policy reform.
“Through the consumer law, the ACCC plays a part in this by ensuring that businesses tell the truth, but there will also be roles for standards bodies, certification schemes, industry and governments via policy reform,” Rickard said.
“The ACCC is actively monitoring green claims in the market and will be considering what steps can be taken to improve their integrity. This will include engaging with industry and producing guidance for businesses.
“In looking at claims we are concerned about what the ordinary consumer will understand the claim to mean.”
Rickard said improving the veracity of environmental claims protects consumers and ensures competitive conduct in the market.
“Many businesses go to extraordinary lengths to make their processes, products and services more sustainable,” she said.
“This innovation and investment should be protected from unscrupulous behavior of other businesses making green claims without incurring the same costs. This can have a chilling effect on investment in this space, as businesses are not able to realize the full benefits of making environmental improvements.”
Rickard said businesses should step into the shoes of a consumer before making environmental claims about a product, and that the ACCC is working with other regulators to take a coordinated approach to addressing sustainability issues.
She also acknowledged businesses transitioning to more sustainable practices and that they have a right to promote the steps they are taking.
“A business’s sustainability transition doesn’t happen overnight – it’s a long process up and down the supply chain,” Rickard said.
“While businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures underway, it is important to convey accurate information to consumers. Businesses in these positions need to be careful not to overstate the status of their transition through the claims they make.”