ACCC deputy chair Catriona Lowe warns companies on greenwashing

The competition regulator has put companies on notice, warning them not to make claims about the environmental benefits of their products that can’t be substantiated.

The Australian Competition & Consumer Commission deputy chair, Catriona Lowe, has warned companies against making claims about the environmental benefits of their products which cannot be substantiated.

In a speech to the General Counsel Summit in Sydney on Tuesday, Ms Lowe warned that there were too many businesses “looking to take advantage of consumers and gain a competitive advantage by engaging in greenwashing.”

Ms Lowe said greenwashing false claims about the environmental benefits or aspects of products-caused “significant harm for consumers and businesses.”

“It cannot be taken lightly.”

ACCC’s Catriona Lowe has warned companies against making claims about the environmental benefits of their products which cannot be substantiated.

Ms Lowe warned that the cosmetics, clothing and footwear, and food and drink sectors were the industries with the most “concerning claims” about the environmental advantages of their products.

An ACCC survey had shown that these industries “were well above the average for concerning claims.”

Of the businesses reviewed, 73 per cent of those in the cosmetics industry made “concerning claims” with more than 60 per cent of businesses reviewed in clothing and footwear, and the food and drink sector making concerning claims about the environmental advantages of their products.

The energy business is another area of concern, with 64 per cent of companies surveyed making claims that raised concerns.

“The provision of energy involves a complex supply chain,” she said.

“There is a need for businesses to be transparent and make information clearly available to assist consumers in making informed decisions.”

Ms Lowe said businesses were increasingly making use of claims about products being “environmentally friendly”, “sustainable production” or “compostable.”

“Whilst some might regard such terms as ‘mere puffery’, they do carry meaning for consumers,” she said.

“The misuse of these terms could reasonably mislead consumers and cause harm to those businesses that are doing the right thing when it comes to sustainability.”

Ms Lowe said environmental claims, particularly those relating to recyclability, were being used by businesses to influence consumer decisions in which brands or products to choose.

Consumers are becoming a lot more sceptical about the environmental claims being made by companies or products.

Ms Loew said consumers were often willing to pay more for a product or service if they could be shown to have an environmental benefit, with 45 per cent of Australians taking into account sustainability when they were making purchasing decisions.

“False or misleading claims can undermine consumer trust in all green claims, particularly when they’re paying higher prices based on these claims,” she said.

“We need these claims to be genuine.”

Ms Loew said consumers were now becoming a lot more sceptical about the environmental claims being made by companies or products.

“The ACCC understands that increasingly more consumers are walking away from relying on environmental claims because this trust has been broken,” she said.

Ms Lowe said the ACCC’s crackdown on greenwashing was not only about protecting consumers.

“It is also about ensuring a level playing field for business, and helping governments reach their targets of net-zero by 2050.”

She said that businesses which were taking genuine steps to adopt sustainable practices were being put at a competitive disadvantage by businesses which engaged in ‘greenwashing’ without incurring the same costs.

“This can disincentivise businesses to continue investing in more sustainable products,” she said.

“If we are to reach our net-zero targets, we need both businesses and consumers to drive market innovation by investing in and choosing products with the lowest environmental impact.

“But for consumers to drive markets, they need to be able to trust that the products they are buying genuinely are sustainable.”