ACCC goes hard on greenwashing advertising

By AdNews | 26 September 2022
Credit: Markus Spiske via Unsplash

Competition watchdog the Australian Competition and Consumer Commission (ACCC) is cracking down on greenwashing - unsubstantiated claims of environmental sustainability.

The ACCC says it is hearing growing concerns that some businesses are falsely promoting environmental or green credentials to capitalise on changing consumer preferences.

"Advertising is a powerful tool in influencing consumers’ perceptions and purchasing decisions," says Delia Rickard, the ACCC's deputy chair

"This is particularly the case when it comes to green claims. Greenwashing is ultimately a form of advertising. And perhaps more so than many other types of claims, green claims involve a huge element of trust as you usually can’t tell just by looking, or even using, whether or not claims are true."

Rickard says businesses are increasingly advertising "sustainability benefits" to sell goods and services.

"This is not new," she says. "Businesses for many years have sought to capitalise on consumer preferences when advertising goods and services. 'Fat free', 'sugar free', 'guilt free' are all slogans that I’m sure you’ve seen over many years.

"As consumers demand more ethical and sustainable practices from businesses, and are often prepared to pay more for them, we see claims like 'environmentally friendly', 'sustainable production' and 'compostable' becoming more prominent on our supermarket shelves.

"When purchasing clothes, it’s no longer just about how it looks. Consumers are also looking at environmental and ethical claims to inform their decisions."

She says environmental and sustainability claims are designed to influence consumer behaviour. 

"Information asymmetry is a key problem here. It is difficult for consumers to verify the accuracy of a green claim as consumers are always going to have less information than the business making the claims.

"For example, a product may be labelled as being made from recycled materials. Consumers can’t independently verify where the materials come from, or whether the business audits their suppliers, or if they do, how robust that audit is.

"Consumers often rely on trust marks, including certification trademarks, which provide products and services with increased legitimacy to their claims.

"Information to verify claims, including the standards and criteria that lie behind trust marks, is often completely separate to, for example, the claim made on a product. It is often detailed and complex. Often it requires research into other entities, standards and processes. Sometimes it is completely unavailable.

"Many consumers are time poor, and only a very small portion of consumers will spend time researching an environmental claim prior to purchase.

"This is particularly the case where consumers are making everyday purchases at the supermarket or at a clothing retailer. Most consumers are not going to do the research required to verify claims when standing in aisle 12 at their local supermarket when choosing between two brands of detergent."

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