It’s no secret that like many industries, building sustainability is awash with products and promises that aren’t as green as they claim to be.
This happens for a range of reasons. Not least because these days so many consumers and businesses are seeking the most sustainable solutions they can get and companies know this.
Earlier this month France passed a bill that specifically targeted greenwashing, threatening offending companies with fines and potential mandatory rectifying of misinformation in the form of billboard ads.
Would this approach pay off in Australia to help shut down misrepresentation of sustainability credentials, or are existing laws enough to keep most companies on the straight and narrow?
Is greenwashing against the law?
Partner at multinational law firm Baker McKenzie’s Sydney office and head of its Australian competition practice, Georgina Foster told The Fifth Estate that while Australia does not have specific anti-greenwashing laws, existing consumer laws should prohibit what most would consider unethical.
“We don’t have specific prohibitions against greenwashing as such, but…our general laws against misleading conduct can apply,” Foster said.
Australia’s consumer laws include prohibitions against deceptive conduct, which includes making a false or misleading representation that goods or services have “approval, performance characteristics, accessories, uses or benefits” or “are of a particular standard, quality, value, grade,” according to section 29 of the Competition and Consumer Act 2010.
“So if you’re claiming a product has certain environmental benefits when it doesn’t, then that is going to be a misleading representation in breach of those sections. So the ACCC (Australian Competition and Consumer) can bring proceedings and seek penalties for that,” Ms Foster explained.
Those penalties can be steep, reaching up to three times the benefit a company gets from contravening conduct, or if that can’t be determined, 10 per cent of turnover connected with Australia.
This is far harsher than the penalties connected with France’s new laws, which were stated as being equal to the cost of the offending marketing campaign.
In 2016, gas and electricity retailer, Momentum Energy paid penalties totalling $54,000 after being issued with five infringement notices by the ACCC.
According to the ACCC, Momentum was misleading consumers through phrases in one of its advertising campaigns which included, “We generate energy out of thin air and fresh water,” and “powered by Hydro Tasmania, all our electricity is 100 per cent renewable”.
While Momentum was, and still is, owned by Hydro Tasmania which generates hydroelectricity on the Apple Isle, the company was supplying its customers in mainland states with electricity from the National Electricity Market (NEM), which as of 2019/20 was over 75 per cent comprised of energy from fossil fuels.
“These sorts of claims may mislead consumers to buy a product thinking it is a “greener” option than it really is,” ACCC chairman Rod Sims said at the time.
“Such conduct not only harms consumers but also disadvantages competitors who may, for example, offer accredited GreenPower plans that provide a financial incentive for new renewable electricity generation.”
Momentum did not challenge the ACCC’s assertions in court and chose to pay the penalty associated with the infringements — the consumer law equivalent of getting a speeding ticket.
How to spot a greenwash
Standards and technical manager at industry overseer, GECA (Good Environmental Choices Australia), Judith Schinabeck told The Fifth Estate that despite the existing laws, she still encounters greenwashing on a regular basis.
However, in her eyes, the majority of greenwashing isn’t companies being deliberately misleading, but rather failing to take into account the holistic impact of their product.
“Often companies don’t necessarily want to mislead customers, more often it’s that companies are very enthusiastic about their products but didn’t necessarily think about the whole life cycle. I think that’s the majority of cases,” Ms Schinabeck said.
A common form of greenwashing is when companies focus on a narrow aspect of sustainability within their product, which they advertise to attract sustainable-minded consumers.
An example might be focussing on the high recycled content of a product, but which actually emits toxic materials and is harmful for consumers.
As well as overly narrow claims, claims that are too general are also tell tale signs of greenwashing. Terms such as green, sustainable, and eco-friendly can be vague and difficult to prove in the context a product.
“The word sustainable is itself so broad that you can’t really prove what it is. Any claim needs to be provable,” Ms Schinabeck said.
Another example could be if a company uses the word, biodegradable, without specifying how their products can actually biodegrade and under which conditions.
Last year the ACCC was unsuccessful in a case it launched against Woolworths in relation to the supermarket giant’s “W Select eco” picnic products.
Woolworths had labelled disposable plates, bowls and cutlery as “biodegradable and compostable” which the ACCC alleged to be “false and misleading.”
“The product itself was biodegradable, it just took a longer time to do that,” Baker McKenzie’s Georgina Foster explained.
Even though the products were made largely from naturally occurring fibres, the ACCC alleged Woolworths could not substantiate the suggestion that the products would biodegrade within a reasonable amount of time.
A federal court ruled that Woolworths had not misled consumers and that the claims it made referred only to the products themselves and not to the “future matters” of the products breaking down.
Contracts and ratings in buildings
Greenwashing can also relate not just to specific products, but to promises made by companies relating to their practices or results.
If a builder or construction company doesn’t deliver a building to the sustainability ratings they initially said would be achieved, this sort of greenwashing could also be covered under current Australian laws.
Ms Foster said that for instance if a company promised a 6-Star rated building and the building it delivered has a 5-Star rating it could be a contractual issue and warrant a breach of contract claim.
“In terms of it actually being misleading that would be a representation as to a future matter and so…the consumer law actually says that if you’re going to make a representation as to a future matter then you must have reasonable grounds for making that representation,” Foster said.
“And so the fact that the representation doesn’t come true, doesn’t mean that representation was misleading.”
Check your labels
With so much grey area in what companies can and cannot say the best way to tackle greenwashing remains for consumers to be as aware as possible of what they are buying.
Luckily, independent verifiers can be a great way to determine which product is greener, with rating systems like Green Star and GECA promising to take a comprehensive look at their subjects across all relevant categories.
“It’s important to have third-party verified labels, which take into account the entire life-cycle [of a product], then it is definitely not misleading for the consumer,” GECA’s Ms Schinabeck said.
“We are aware that consumers have to make quick decisions and that there are many different labels on products out there.”
“Ours is an easy label to understand on the product, in our case with the tick. And consumers can trust that this product has been verified and checked by us and by our assurance providers.”