Australian Competition and Consumer Commission

As community concern over the state of the environment continues to grow, consumers are increasingly considering environmental benefits as a factor in their purchasing decisions.

This, in turn, has seen businesses seeking to promote their environmental credentials to differentiate themselves and their products from the competition.

Where businesses are taking genuine steps to reduce their impact on the environment they deserve to be able to promote that to their customers. In doing so, however, they should ensure their claims are accurate, scientifically sound and appropriately substantiated. This is more than just good business practice – it is required by law.

The Australian Competition and Consumer Commission (ACCC) enforces the Trade Practices Act 1974 (the Act).

The Act states that businesses must not mislead or deceive consumers in any way. This can include misleading them through silence, if in all the circumstances there is an obligation to reveal a particular fact or issue, or through predictions being made where there is no reasonable basis for doing so.

It is also important to remember that an intention to mislead is not necessary. Businesses with the best of intentions have potentially misled their customers – and so breached the Act - in the past by not giving adequate consideration to the number of ways that their branding or product could be perceived.

The Act also prohibits a variety of false or misleading representations about specific aspects of goods and services.

Those most relevant to environmental claims include that a business must not falsely represent goods as being of a particular standard, composition or model, or as having a particular history or previous use. Businesses must also not represent that goods have sponsorship, approval, uses or benefits that they do not have.

Using endorsements or logos can be misleading or simply confusing if they are not well known or recognisable. Any claims of compliance with a certification must be verifiable and preference should be given to schemes that have wide industry, or government acceptance.

One of the greatest areas of concern in the green marketing sphere is ambiguous naming of products or relatively meaningless claims. Very few consumers are atmospheric scientists, and can’t therefore be expected to know when environmental claims are likely to be untrue. This is why the ACCC is particularly concerned about such claims.

In April 2008, the ACCC accepted court enforceable undertakings from De Longhi Australia that it would refrain from making misleading claims for its portable air conditioning products that use harmful greenhouse gases, and an "ECO" model cooler that uses a low impact global warming gas.

The ACCC was concerned that the company’s environmental claims were misleading, and gave the impression that the coolers and their component gases were ‘environmentally friendly’ when they weren’t. De Longhi agreed to refrain from using unqualified claims that its products are "environmentally friendly," amended its advertising and published corrective notices.

More recently, in January 2010, the ACCC obtained court enforceable undertakings against a Global Green Plan, a former GreenPower retailer that it would purchase more than 4000 renewable energy certificates which it had failed to buy on behalf of customers in 2007 and 2008 under the government's national GreenPower accreditation program.

Whilst operating GreenSwitch, Global Green Plan accepted payments from customers on the proviso that the money would be used to purchase certificates.

However, not all of the money provided to Global Green Plan by customers was used to purchase the certificates as promised.

The ACCC has also recently instituted proceedings against Prime Carbon Pty Ltd, alleging that company made false or misleading representations about the National Environment Registry (NER) and the National Stock Exchange of Australia Limited (NSX).

In addition to taking enforcement action, the ACCC provides businesses with guidance on ways to ensure their advertising and marketing materials do not fall foul of the Act.

In summary, when making green (or any other claims) businesses should remember that:
•    Claims must be accurate,
•    Claims should be able to be substantiated,
•    Claims should be specific, not unqualified and / or general statements,
•    Claims should be in plain language,
•    Claims should only be made for a real benefit,
•    Claims must not overstate a benefit,
•    Claims should make it clear whether benefits refer to packaging or content, and
•    Claims should consider the whole product life cycle.

Further information is available on the ACCC’s website, www.accc.gov.au