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Standards and Regulation to counter ‘greenwashing’?

Wednesday 21 September 2022

The Australian Competition and  Consumer Commission (ACCC) could be considering clearer standards and regulations to ensure that ensure that consumer confidence is not undermined by allegation of ‘greenwashing’.

This is from speech given by ACCC Deputy Chair Delia Rickard speaking at the Sydney Morning Herald Sustainability Summit. 

To increase consumer confidence in environmental claims, and to protect those businesses that legitimately make environmental claims, it might be necessary to consider introducing clearer standards and regulations.”

Before any new standards or regulation, the competition and consumer regulator will be looking the sustainability claims in the market. 

Volkswagen knows firsthand about ACCC’s low tolerance with false sustainability claims having been ordered a $125 Million for failing to meet Australian diesel emission standards. 
Greenwashing & Advertising
At the moment the competition regulator is considering the greenwashing through the context of advertising and the impact that could have on consumer confidence on sustainable certifications and claims on products. 

“Advertising is a powerful tool in influencing consumers’ perceptions and purchasing decisions. 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 said that the problem is that businesses are intentionally, or unintentionally, making misleading sustainability claims. 

The unintentional side of greenwashing manifests where there might the robust enough due diligence in the in processes and supply chain management.
The other challenges for businesses will the increased costs to meet regulatory demands:

  1. Improving processes and materials;
  2. Investigating the entire supply chain for a product; and
  3. Conducting scientific testing to determine a product’s impact.
Regulatory Overlap
 The Australian Securities and Investment Commission (ASIC) warned regulated entities about playing the ‘green card’ just last month. 

ASIC Deputy Chair Karen Chester at the start of last month, “We expect issuers to — and hope you will too — review practices against the nine questions set out in INFO 271 to ensure investors have adequate information to make informed investment decisions. The questions are designed to facilitate truth in promotion and clarity in communication, and give examples of practices that may fall short of meeting current regulatory obligations.”
The INFO 271 that Chester mentions is essentially a ‘how to avoid greenwashing’ for managed investments. 

There is also an overlap with the Clean Energy Regulator.
Rickard said, “The ACCC won’t hesitate to take enforcement action where we see that consumers are being misled or deceived by green claims.”