Consumer watchdog refuses to certify green labelling scheme

The consumer watchdog has not certified a key federal government program used by more than 500 companies to promote their environmental credentials because the department has been unable to clarify the scheme’s rules.

A Senate inquiry probing greenwashing on Monday scrutinised the government’s Climate Active Carbon Neutral scheme, which allows companies to pay a licence to get the label if they measure, reduce, offset and publicly report on their emissions.

Greens senator Sarah Hanson-Young is calling for tougher laws to stamp out greenwashing. Credit: Alex Ellinghausen

The Australian Competition and Consumer Commission (ACCC) told the inquiry the Department of Climate Change, Energy, the Environment and Water had asked the watchdog to pause the assessment of the scheme while the department finalised a review of the program.

“We didn’t have clarity on the rules because they cross-reference others,” said Tom Leuner, ACCC mergers and digital division manager. “There was a bit of back and forth, and they resubmitted the rules several times over a long period. Eventually, they advised us that they were seeking to redo the rules and then review the whole scheme.”

Leuner said he anticipated the department would seek ACCC approval once it had finalised reviewing its rules. The scheme was referred to the ACCC by the Australia Institute, and described as “greenwashing” by its climate and energy program director Polly Hemming.

Appearing shortly after the regulator, Hemming said Climate Active needed to be referred to the Auditor-General for administrative failures.

Hemming said organisations that had a single carbon-neutral product, or ran a carbon-neutral event, could receive a Climate Active label even if their entire business was not environmentally sustainable.

The inquiry’s chair, Greens senator Sarah Hanson-Young, slammed the federal government’s program and called for stronger laws to stamp out greenwashing, which involves making false or unfounded claims about sustainability and climate action.

“Australian customers are fed up with greenwashing lies,” Hanson-Young told reporters. “They’re fed up with walking into the supermarket and seeing an array of different products, and being told lies about how environmentally friendly they are, and whether they are saving dolphins or saving the climate.”

In a statement last year, assistant climate change and energy minister Jenny McAllister said the government was opening consultation on a reform to strengthen the Climate Active label.

“Climate Active certification should be a trusted signal to Australian consumers that a business is taking credible climate action,” McAllister said.

“Proposed changes will make it difficult for companies and organisations who are not genuinely committed to climate action to be certified under the Climate Active program. We are sending a clear signal to the market that climate claims must be legitimate and that consumer trust must be maintained.”

The federal government last year revoked the Climate Active certification given to British American Tobacco after the endorsement was found to be in breach of a World Health Organisation treaty, which Australia is a signatory to.

Regulators including the ACCC and the Australian Securities and Investments Commission have been cracking down on greenwashing over the past year. Last week, the ACCC launched Federal Court proceedings against the manufacturer of Glad garbage bags for allegedly falsely claiming certain bags were made partly from recycled ocean plastic.

Meanwhile, AustralianSuper told the inquiry it would join a protest vote against Woodside’s climate plans, but support Woodside chairman Richard Goyder, at the company’s annual general meeting on Wednesday.

“After a lot of consideration we’ve decided that we still have some ongoing concerns about Woodside’s plans to be net-zero by 2050, so we’ve decided to vote against it and will continue our discussions with the company,” said head of Australian equities Shaun Manuell.

Norway’s largest pension fund, KLP, and Britain’s biggest asset manager, LGIM, have announced they would also vote against Woodside’s climate report, citing concerns over its carbon transition plans.

Woodside chief executive Meg O’Neill last week said the energy giant’s climate plan was “upfront, credible and honest”, and the company was working to address the biggest concern of investors: that it was not moving fast enough to reduce its own emissions nor help its customers reduce their carbon footprint.

Forty-nine per cent of investors voted no to the company’s climate plan in 2022, which, despite being advisory and non-binding, was a huge blow to the environmental credentials of Australia’s largest oil and gas company.

With Peter Milne

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