It ain't easy being "green": Why the ACCC has greenwashing in its sights

Green sells. Sustainability is front and centre in the minds of today’s consumers, whether they be individuals or businesses. More and more Australians are choosing to buy from businesses that claim to be environmentally responsible. But what happens when environmental claims don’t stack up? What are the risks for businesses making environmental and sustainability claims that are too vague, or cannot be substantiated? The Australian Competition and Consumer Commission ( ACCC ) has its sights set on businesses engaging in the practice of greenwashing, and the financial and reputational loss that can result from making vague or unsubstantiated environmental and sustainability claims can be significant. What is greenwashing? Greenwashing occurs when a business markets a product, service or practice and makes claims that it is more environmentally friendly than it really is. In legal terms, greenwashing is the making of misleading envrionmental or sustainability claims in contravention of the prohibitions against misleading or deceptive conduct set out in s 18 of the Australian Consumer Law ( ACL ). Section 18 of the ACL operates to stop businesses from engaging in misleading or deceptive conduct in the course of trade or commerce. Put simply, this is conduct that leads a person into error in the course of a commercial transction. In the case of greenwashing, this might be leading an individual to believe that the product or service being purchased is less harmful to the environment than the product or service of a competitor. The intent of the business making the statement is irrelevant. It does not matter if the business intends to mislead or deceive, the fact that a statement is misleading or deceptive is enough to fall foul of the law. Claims about the environment or sustainability may be misleading or deceptive at law if they are: blatantly false; vague or undefined; unsupported by evidence; outdated or irrelevant; and/or overstated through symbols or visual representations. Why did the ACCC take an interest in greenwashing? In response to growing concerns about businesses making environmental and sustainability claims, the ACCC conducted an internet sweep of 247 Australian businesses of all sizes across a number of sectors, including: textiles and fashion; household and cleaning products; food and beverage; cosmetics and personal care; and takeaway packaging. They reviewed websites, social media, and advertisements. The aim of the sweep was to identify patterns in the use of environmental claims, not to name and shame individual businesses. The findings? 57% of businesses made environmental and/or sustainability claims that raised red flags with respect to compliance with the ACL. The 8 biggest mistakes businesses made when making “green” claims in advertising In its sweep, the ACCC identified 8 areas in which statements about the environment or sustainability raised concerns. Vague or unqualified claims : many businesses used terms like “eco-friendly”, “sustainable” or “green” without explanation. Without detail, these claims can mean little and may be misleading or deceptive. For example, claiming your product is packaged using “eco packaging” is vague as this term can encompass a range of different packaging types. No evidence to support claims : many businesses made environmental claims with no supporting data or evidence. In cases where such evidence or data was provided, it was not sufficient to support the claims being made. Consumers need to understand how and why a product is “sustainable” or “green” so they can make informed purchasing decisions. Supporting information should be accessible and easy for the consumer to understand. Absolute claims : an absolute claim is one that is presented as being undeniably true, and does not contain any qualifications or exceptions. Examples of absolute claims in an environmental sustainability context include “100% plastic-free” or “zero emissions”. These claims give a very strong impression. If even part of the product doesn’t meet the claim, the statement can be misleading. Absolute claims need to be supported by robust and verifiable evidence. Misleading comparisons : comparisons in advertising can be dangerous. The ACCC identified businesses that claimed to use “less water” or “less plastic” but didn’t say less than what. That does not help consumers to make informed decisions about the choices they make based on the environmental considerations. Exaggerated benefits or missing information : the ACCC identified examples where businesses exaggerated the benefits of their product based on their environmental or sustainability claims, including: Promoting products as recyclable, but where no recycling collection system exists. Businesses highlighting their green initiatives when most of their operations still relied on fossil fuels. Presenting legal compliance with environmental laws as if it were a voluntary exercise, rather than an obligation. Aspirational goals with no plan : many businesses examined in the sweep set net zero targets or promised packaging changes to bolster their environmental credentials, but offered no roadmap as to how these goals would be achieved or provided updates on the progress of achieving them . Misuse of third-party certifications : a third-party certification is a certification from an independent organisation that a product, service or practice meets certain standards or requirements. Often certification is denoted with a certification trade mark such as the Australian Certified Organic logo. The ACCC found that some environmental and sustainability certification trade marks were being used in such a way that made it seem like an entire product or business was certified, when only a single product, or part of the business was in fact certified. False or misleading trust marks : A trust mark is a visual symbol that connotes trust in a product, service or practice. The ACCC noted that some businesses created their own green logos using nature imagery or including terms associated with the environment and sustainability which might lead consumers to believe a business was somehow certified in respect of its environmental credentials when they weren’t. What will the ACCC do next? Greenwashing is firmly on the ACCC’s radar, and it has the power to take enforcement action against any business it considers has engaged in greenwashing. This could include issuing warnings and/or infringement notices, or the commencement of legal proceedings. Earlier this year, the ACCC had its first win in a court action for greenwashing. Clorox Australia was been ordered to pay $8.25 million in penalties after misleading consumers about their GLAD kitchen and garbage bags being made from "ocean plastic". Between June 2021 and July 2023, the company sold over 2.2 million bags with packaging claiming the bags were made from "50% Ocean Plastic Recycled" material. The court found these claims were false. The plastic was actually collected from communities in Indonesia located up to 50 kilometers inland from the shoreline, and not from ocean waste. Aspects of the packaging such as the blue-colored packaging with wave imagery strengthened the misleading impression that the bags had a genuine connection to ocean cleanup efforts. Beyond the financial penalty, Clorox was required to establish a compliance program, publish a correction notice on their website, and pay part of the ACCC's legal costs. This case serves as a warning to other businesses about the importance of accuracy in environmental marketing claims, especially because the ACCC invites the reporting of conduct that may constitute greenwashing (as well as other conduct that may break the ACL). In the Clorox case, and in many instances of greenwashing, ordinary shoppers had no way to verify whether environmental claims on packaging are true, and false claims undermine consumer confidence in legitimate environmental products. You can read the full ACCC press release about the Clorox case here . What does this mean for your business? Effective communication about the environmental benefits of a product or service typically involves several key principles that may help businesses to build credibility and avoid potential legal issues. Businesses that make environmental claims should generally focus on being specific and clear in their messaging, ensuring that statements are concrete rather than vague, and can be supported with credible, up-to-date evidence. Successfully communication of environmental and sustainability benefits of a product or service also tends to avoid exaggerations or overly broad language that might misrepresent the actual impact or scope of those benefits. Transparency plays a crucial role, with businesses often disclosing relevant limitations or boundaries of their sustainability efforts. When using certification marks or third-party endorsements, proper usage and clear attribution help maintain authenticity. Businesses will benefit from expert consultation when developing environmental and sustainability messaging, as the cross-over of environmental science, marketing, and legal compliance can be complex. This approach helps balance effective communication with accuracy and compliance considerations. Some useful resources for businesses making such claims include: Australian Association of National Advertisers, Environmental Claims Code , March 2025 National Retail Association, Using green claims - with minimal regulatory risk , August 2024 ACCC, A guide to making environmental claims for business , December 2023 Final thoughts The takeaway here isn’t to stop talking about the environment or sustainability, it’s to make sure your claims are accurate, clear and fair. Businesses that are legally literate when it comes to issues of greenwashing and get their environment and sustainability claims right build trust with their market, avoid legal trouble, and they lead the way in a world that’s only becoming more environmentally conscious. Want to keep up to date with the latest developments in law affecting Australian small businesses? Sign up to our newsletter and get a FREE copy of our eBook - “The Pathway to Legal Literacy” .

It ain’t easy being “green”: Why the ACCC has greenwashing in its sights

Erica Taylor

Related Posts

Unfair conduct: What small business owners need to think about now

Payday super: The biggest change to Australia’s superannuation system in decades

Australian Businesses Spend $160 Billion Annually on Regulatory Compliance

ACCC Issues Black Friday Warning to Retailers

Mitigation avoids litigation!

Create New Account!

Retrieve your password