Mallesons Stephen Jaques

On 16 January 2008, the ACCC released an Issues paper entitled “The Trade Practices Act and carbon offset claims.” The paper identifies particular types of claims as to carbon neutrality in advertising that the ACCC considers to be problematic for the purposes of Part V of the Trade Practices Act 1974 (TPA).

The ACCC is inviting stakeholders to comment on these issues with the eventual aim of developing a guide for business and consumers on “green” advertising.

The release of this Issues paper follows recent ACCC investigations into “green” marketing campaigns and their compliance with section 52 of the TPA.

Given the rapid growth of the carbon trading market and the marketing power of “green” products, it is in the interests of all interested stakeholders to submit a response to the preliminary issues identified by the ACCC in the Issues paper.

ACCC concerns in relation to carbon offset claims

The ACCC has produced the Issues paper in light of the growing and as yet unregulated carbon trading market, and the clear marketing benefits associated with environmentally friendly products. Claims as to carbon neutrality are currently very difficult to verify, as there is a diverse range of standards as to how carbon footprints or the effectiveness of offsets are to be measured. The result is that claims as to the environmental benefits of certain products and services may be misleading to consumers who are trying to reduce their own carbon footprint.

The ACCC has identified five main areas of concern when it comes to “green” marketing campaigns:
•    Effectiveness of the “offset” – The lack of accepted standards relating to carbon credits means that consumers may be misled as to the effectiveness of particular offsets at yielding reductions in carbon emissions. For example, the effectiveness of tree-planting as a method of offsetting carbon emissions is highly variable, and often disputed.
•    Accuracy of the carbon footprint calculation – Similarly, the process of auditing carbon emissions is currently unregulated, so that there are no clear standards as to how a carbon footprint is to be measured. As a result, a product or a service claiming to be carbon neutral may only be “green” to the extent of a potentially inaccurate carbon calculation.
•    False claims of carbon-neutrality – The ACCC is also concerned that companies may make claims as to carbon neutrality that are simply false, and clearly in breach of the TPA.
•    Claims as to future carbon neutrality – Claims as to future carbon neutrality are also potentially misleading where there are insufficient disclaimers as to expected timeframes of the offset process.
•    Claims of “low carbon” – Where the proportion of carbon neutrality is not specified, the ACCC is concerned that consumers could be misled as to the extent to which carbon emissions associated with a product or service have been offset.

Recent ACCC investigations
The ACCC released its Issues paper following recent investigations into “green” advertising by certain companies. One of the companies under investigation claimed that use of its electricity would be the same as “not driving your car for two years”. Another company claimed that its products would provide “100% green electricity at no extra cost”. In each case, the companies acknowledged that this advertising might be misleading.

Going forward
Due to the ACCC’s current interest in “green” advertising, clients should be wary when making claims as to carbon neutrality, and ensure that all claims are substantiated.

The ACCC Issues paper provides an important opportunity for input in the development of standards for green marketing.

The closing date for submissions on the Issues paper is 15 February 2008.