Future-proofing environmental claims: what you need to know now

Across the globe, businesses are keen to appeal to increasingly ethical consumers by promoting ambitious ESG initiatives. This has led to a flood of “green” claims – such as “sustainable”, “environmentally friendly” and “net carbon zero” – in almost every sector. 

The Australian Competition and Consumer Commission (ACCC) recognises the direct impact that environmental claims have on consumers. Customers are willing to pay a premium for more environmentally friendly alternatives. But consumers can find it difficult to verify whether the claims are true or not and can be swayed by inaccurate or exaggerated environmental claims. Businesses can also inadvertently fall into the trap of exaggerating, or not fulling understanding, their own claims in error. Regulators are concerned and watching the market, and therefore businesses, especially in the consumer markets space, must take care so as not to be on the receiving end of an investigation.

Caught out? 

It is worth noting that in 2022, the ACCC undertook an internet sweep, which identified that 57 per cent of 247 businesses were making concerning environmental and sustainability claims. Some of those organisations would have been inadvertently making misleading claims, while others may have been actively greenwashing. 

As a result, environmental claims and sustainability remains a key enforcement priority for the ACCC, with the regulator: 

• updating and publishing its much-anticipated guidance on environmental claims (Greenwashing Guidance) in December 2023;
• establishing a Sustainability Taskforce within the ACCC so it can upskill; and 
• taking targeted enforcement action under the Australian Consumer Law (ACL).

• commencing proceedings in April 2024 against a manufacturer of kitchen and garbage bags for claims its products were made from 50 per cent recycled “ocean plastic” where the claim was combined with wave imagery and the use of blue coloured bags, creating an impression that the products were made from plastic waste collected from the ocean, when that was not the case; and 
• accepting an undertaking from a yoghurt manufacturer following an investigation into its claim its tubs were made from “100% ocean plastic” in November 2023 because the resin used was collected from coastal areas, but not directly from the ocean, rendering it misleading. 

Australian Securities and Investments Commission (ASIC) has also been active in this space: 

• In September 2024, the Federal Court ordered Vanguard Investments Australia to pay a $12.9 million penalty for making misleading claims that it screened its funds to restrict investments from being made in companies with significant business activities in fossil fuels. 
• The Federal Court found a trustee of the superannuation fund Active Super made a number of misleading representations that it excluded investments that posed too great a risk to the environment and community, when they were not in fact eliminated.  

Why does this matter?

With a number of regulators closely scrutinising environmental claims, the risk profile has increased significantly and is only intensifying. 

• The ACCC has made it clear it will not hesitate to set a clear precedent where it is likely to have the most impact on consumers and healthy competition and deter other businesses from engaging in similar conduct. We expect to see greater scrutiny and action in the next year. Breaching the ACCC’s Greenwashing Guidance will likely result in a breach of the ACL. With the full range of enforcement measures at its disposal, you should carefully consider your claims to avoid being on the receiving end of enforcement action. 

• The Australian Association of National Advertisers (AANA) has also recently published a revised Environmental Claims Code (Code), which took effect on 1 March 2025. The new Code:
  • largely aligns the definition of “Environmental Claim” with that in the ACCC’s Greenwashing Guidance;
  • expands its reach to include images and sounds;
  • prohibits broad or vague environmental claims; and 
  • requires advertisers to ensure claims about goals and targets are realistic, achievable and substantiated with robust evidence. 

What you can do?

We would be very happy to help your business ensure its environmental claims are compliant. Please reach out to a member of our team if you would like to discuss how you can frame your business’ green credentials or if you would like tailored training on this topic. 

In the meantime, here are some practical tips to keep in mind when preparing claims: 

• Do spend the time scrutinising your environmental claims to ensure they are genuine and accurate 
• Do avoid using broad, unsubstantiated statements such as “sustainable”, “environmentally responsible” or “eco-friendly” 
• Do include appropriate qualifications for terms consumers tend to be less familiar with (e.g. “net zero”, “renewable” and “recyclable)
• Do ensure supporting evidence is independent, transparent, reputable and robust and do not make claims that go beyond this evidence
• Do not discount the impact of accompanying imagery, audio and copy on the overall impression made on consumers
• Do differentiate between claims based on offsetting and claims based on emission reduction
• Do not make future claims (e.g. about “carbon neutral” targets) unless you have reasonable grounds to do so and you have a plan setting out your goals and how progress will be measured against milestones
• Do consider the whole lifecycle of a business, product or service. If your claim only pertains to a particular part of that lifecycle, do make that clear in the claim itself
• Do not cherry-pick environmental benefits which are insignificant when the business, product or service is considered holistically or simply advertise the observance of existing law (unless this is made clear)
• Do take especial care with certification marks and do not imply you have been endorsed or certified when you have not been
• Do limit exposure to the risk by updating your claims clearance process and conducting internal training