When Green Wash Will not Wash – Avoiding Misleading Environmental Claims

Firms are increasingly keen to present an environmentally friendly or ‘green’ image to their consumers. Both massive and small firms realise that it tends to make great enterprise sense to offer you environmentally conscious shoppers the alternative of a green solution or service. Consumers are usually willing to pay a important cost premium for a green solution.

However, several firms, including big businesses, have made fundamental blunders in their green marketing and advertising. Instead of obtaining good publicity for supplying a green option, these organizations have received negative publicity for their “green wash”. In some cases, these companies have had to grapple with unwanted consideration from the ACCC.

This post explores some of the green advertising and marketing mistakes that businesses have produced in attempting to sell their green credentials and propose some recommendations that practitioners can use to aid their consumers to stay away from these sorts of errors.

Relevant law

The Trade Practice Act 1974 (TPA) includes two primary civil provisions which can be employed to attack false or misleading green claims. Section 52 prohibits corporations from engaging in conduct which is misleading or deceptive, or is likely to mislead or deceive, while s.53 prohibits corporations from falsely representing:

that goods are of a specific normal, good quality, composition or have had a certain history or
that goods have overall performance traits or benefits they do not have.
These provisions are mirrored beneath state fair trading legislation which applies to corporations, men and women and unincorporated entities.

The treatments obtainable for a contravention of ss.52 and 53 incorporate injunctions, declarations, damages, corrective marketing and non-punitive orders.

Practitioners need to be conscious criminal penalties of up to $1.1 million per contravention might be accessible to punish far more critical misrepresentations about environmental rewards.

A single essential aspect of the civil liability regime below the TPA is that it establishes a reverse onus of proof for representations about future matters. Therefore, if your client makes a representation about the future environmental positive aspects of their product, it may bear the onus of demonstrating that it had reasonable basis for such representations.

Acquiring caught out

There are many groups monitoring the green claims made by enterprise and there is a higher likelihood of acquiring caught out if you make false green claims. Initial, the Australian Competition and Consumer Commission (ACCC) appears to have made green claims an enforcement priority. The ACCC has been quite active in this area, having taken an rising number of green representation situations in the final 12 months.

Second, there are a big number of vigilant and sophisticated non-government organisations consistently on the lookout for green claims that are misleading. For instance, a complaint by the Total Atmosphere Centre prompted the ACCC to investigate EnergyAustralia (discussed under). These organisations can also initiate their personal private actions of breaches of the relevant civil provisions of the TPA.

The final major danger is posed by competing firms. Competitors will be very keen to complain to the ACCC about a green claim which does not stack up.

ACCC enforcement

The ACCC is increasingly active in the region of green advertising and marketing claims. In the final 12 months it has concluded eight investigations into green claims.

The initial notable series of environmental investigations taken by the ACCC relate to claims produced by the Australian air-conditioning business that its merchandise were “environmentally friendly”. The 1st case was taken against Sanyo Airconditioning Manufacturing Singapore Pte Ltd, which claimed that its Eco Multi Series air conditioners had “environmentally-friendly HFC ‘R407C’ Added” and had been “for a new ozone era – keeping the globe green”.

A difficulty with this representation is that R407C is deemed to be a potent greenhouse gas and as such is hardly “environmentally friendly”. Another gas used in the Eco Multi Series was R22, an ozone depleting hydrochloroflurocarbon, is clearly not useful to the ozone layer.

Two important concerns arise from this case (which was settled by consent).

Initial, the ACCC seems to have taken the view that “environmentally friendly” is a representation that a product will have a neutral effect, as opposed to a advantageous effect, on the environment. Therefore a solution that does not harm the atmosphere could arguably be described as environmentally friendly.

Second, the ACCC took action against Sanyo Airconditioning for each the text utilised in its marketing materials as effectively as the pictures of trees, the sea and the moon. The ACCC formed the view that such pictures conveyed a sturdy environmental message to shoppers.

Following this case, there had been two further notable investigations into Daikin and Dimplex for producing related representations. In every single of these instances the businesses entered into s.87B undertakings to cease producing the green representations and carry out a variety of corrective treatments, including publishing corrective notices on their internet sites and sector magazines and writing corrective letters to customers and distributors.

Pathway Environmental of ACCC activity relates to green representations produced in relation to motor vehicles.

Lately, the Federal Court declared by consent that representations made by GM Holden Ltd about the environmental positive aspects of Saab motor cars have been misleading. In certain, GMH made the claim that “Each and every Saab is green. With carbon emissions neutral across the whole Saab variety”. The basis for this claim was that GMH would plant 17 native trees per car to offset the emissions generated in the course of the life of each motor vehicle. In actual reality, the 17 trees would have only offset the carbon emissions for 1 year of motor vehicle’s operation.

GMH was ordered to refrain from generating such representations in the future and to re-train its advertising and marketing employees. However, the biggest price to GMH (apart from the damage to its credibility as a seller of “green” products) was its offer to plant an further 12,500 trees to offset the carbon emissions from the motor cars which it did sell during the Saab “Grrrrrreen” advertising campaign.

One more current ACCC matter involved green representations by V8 Supercars as portion of its ‘Racing Green Program’. V8 Supercars claimed that planting ten,000 native trees would offset the carbon emissions from the V8 Championship Series as properly as all related transport emissions of the racing teams travelling to events. The ACCC was concerned that buyers would realize that the 10,000 trees would absorb the carbon emissions in a brief period of time, when in actual fact the emissions from one particular year of racing would only be absorbed by these trees more than numerous decades.

The final matter involved representations produced by Goodyear about its Eagle LS2000 variety of tyres. Goodyear mentioned that this tyre variety was environmentally friendly, designed for minimal environmental influence, and that its production processes resulted in decreased carbon dioxide emissions. Goodyear settled this matter with the ACCC by supplying a s.87B undertaking in which it admitted that these environmental positive aspects could not be substantiated.

The ACCC has also looked at green claims made by power organizations. It investigated EnergyAustralia’s representations about its CleanAir and GreenFuture non-accredited electrical energy products. EnergyAustralia claimed that customers who signed up would get “one hundred% green electrical energy at no extra price” and that “for each and every kilowatt hour of electricity you buy, the very same quantity of electrical energy will be generated from 100% renewable sources, and that is guaranteed”.

The ACCC was concerned that consumers would conclude that they had been supporting new sources of renewable power rather than just offsetting their electricity against existing sources. Although EnergyAustralia did not admit that its representations were misleading, it did acknowledge that consumers might have been confused by the representations. EnergyAustralia agreed to a range of treatments like compensation, corrective letters to consumers and a contribution of $100,000 to an educational brochure to explain the distinction accredited and non-accredited goods.

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