Australia’s competition regulator the Australian Competition and Consumer Commission (ACCC) announced the publication of new environmental and sustainability claims draft guidance, aimed at improving the integrity of green claims made by companies and protecting consumers from greenwashing.

The new guidance follows the publication of a study by ACCC earlier this year that found that 57% of companies examined made concerning claims about their environmental credentials. Following the release of the study, the regulator said that it will be investigating companies for potential greenwashing, and that it will conduct education activities with businesses and update guidance to help improve the integrity of environmental claims.

ACCC Chair Gina Cass-Gottlieb said:

“False or misleading claims can undermine consumer trust in all green claims, particularly when consumers are often paying higher prices based on these claims.

“Similarly, businesses that are taking genuine steps to adopt sustainable practices are put at a competitive disadvantage by businesses that engage in ‘greenwashing’ without incurring the same costs.”

Cass-Gottlieb said that the new guidance “sets out what the ACCC considers to be good practice when businesses make environmental claims about their products and services.”

The rules set out for businesses are focused on eight key principles, including ensuring that any environmental claims accurate, true and factually correct; having evidence to back up claims; not hiding important information; explaining any conditions or qualifications for green claims; avoiding broad and unqualified claims (such as “eco-friendly” or “sustainable”); using clear and easily understandable language; ensuring that visual elements, and being direct and open about the company’s sustainability transition.

The draft guidance also includes details on ACCC’s compliance and enforcement approach, including noting that penalties for making false or misleading representations could include fines of as much as $50 million, or three times the assessed value of the benefit from the contravention.

Cass-Gottlieb said:

“If you make a claim about the environmental or sustainability benefits of your product or service – make sure it’s right, and if you are unsure or can’t substantiate these claims, then don’t make the claim.”

The consultation for the ACCC’s new draft guidance is open until September 15.

Click here to access the draft guidance.