Green Marketing and the Trade Practices Act

by KEVIN ELKINGTON

~ 30^th April 2008

GREEN MARKETING AND MISLEADING CLAIMS

IIn February 2008, the ACCC has released a guideline entitled Green Marketing and the Trade Practices Act which is intended to assist manufacturers, suppliers and advertisers to avoid making misleading claims about the environment benefits of the products or services that they produce, supply or advertise.

BACKGROUND

Section 52 of the Trade Practices Act (“TPA”) prohibits a corporation from engaging in conduct that is misleading or deceptive or is likely to mislead or deceive. A corporation that breaches this prohibition may, among other things, be ordered by a court to pay damages for loss caused by the breach and to publish a corrective advertisement.

In addition, Section 53 of the TPA prohibits a variety of false or misleading representations about specific aspects of goods and services. In particular, a corporation is prohibited from falsely representing that goods are of a particular composition, or from representing that goods or services have performance characteristics or benefits that they do not have. Penalties for breaches of Section 53 include substantial fines.

GREEN MARKETING GUIDELINES ISSUED BY THE ACCC

In its guideline, the ACCC sets out the following general principles which are relevant to “green” claims:

Claims must be accurate,
Claims should be able to be substantiated,
Claims should be specific – general statements (eg that a product is ‘green’, ‘environmentally friendly’ or ‘environmentally safe’) run the risk of being interpreted in different ways, some of which might be misleading,
Claims should be in plain language,
Claims should only be made for a real benefit,
Claims must not overstate a benefit,
Images should be used in a manner that does not suggest that the product has environmental benefits that it does not have,
Claims should make it clear whether the claimed environmental benefits refer to packaging or content, and
Claims should consider the entire product life cycle, including the manufacturing, recycling, destruction and disposal processes.

SPECIFIC AREAS OF CONCERN TO THE ACCC

In addition to the general principles enunciated by the ACCC in its guideline, certain specific areas of concern to the ACCC in relation to “green marketing” are also set out. These include:

Claims using endorsement or certification should be used with caution.

Consumers may be unfamiliar with local or international environmental endorsement schemes and other certifications contained on products. When using a logo from such a scheme, it is pointed out that consumers may make assumptions and consequently be misled. e.g. a logo depicting a red panda is used on paper and stationery products. Consumers unfamiliar with the logo may believe that the production of the products do not harm the natural habitat of red pandas. In actual fact, the red panda logo represents a scheme that plants trees to offset those logged in the production of the paper products. Without some kind of qualification or further information given, the use of this logo on the paper products risks misleading consumers.
Claims should not overstate the level of scientific acceptance.

Where the scientific basis for a claim is under dispute or not conclusive, there is a need to be especially careful not to present that claim as being universally accepted.
Broad or unqualified claims that can be problematic.

Broad or unqualified claims can be risky as they are ambiguous and do not explain any specific environmental benefit. Below are some common claims that may raise concerns:
- 'Green’
  
  This statement is very vague, and conveys little information to the consumer. This term invites consumers to give a wide range of meanings to the claim, which risks misleading them.
- ‘Environmentally friendly’ or ‘environmentally safe’
  
  These claims are also vague and could potentially mislead consumers into thinking that the product causes no harm to the environment in its production, usage and disposal. Few, if any, products could make this claim as almost all products have some adverse impact on the environment in their manufacture, packaging, use or disposal.
- ‘Energy efficient’
  
  Energy efficiency claims should be quantified by comparison to existing benchmarks or rating systems, or otherwise explained in more detail. Simply claiming that a product is ‘energy efficient’ makes it difficult for consumers to compare products, and they may be misled into drawing incorrect conclusions by your material.
- ‘Recyclable’
  
  These claims can be potentially dangerous if the product is not recyclable, or if the facilities to recycle it are not available in Australia. Manufacturers and retailers should verify that their product can actually be recycled before using such claims.
- ‘Carbon neutral’
  
  Any claims made about carbon neutrality should be factually based and not overstated.
  
  Consideration should also be given to the entire life cycle of a product when making claims about carbon neutrality. Claiming that a product is carbon neutral if it only applies to the carbon produced in the manufacture of the product – and not its actual use and operation – may risk misleading consumers that the product is carbon neutral for its entire life cycle.
- ‘Renewable’ or ‘green’ energy
  
  Care should be taken when advertising renewable or green energy to ensure that any representations made about cost, amounts supplied or the associated benefits are truthful and correct. For example, a company advertising their energy as ‘green’ or ‘renewable’ should disclose the percentage of energy which is obtained from renewable sources if it is less than 100 per cent.
Checklist for marketers

When making environmental claims on your products or in your advertising, you should check the following:
- Be aware of and refer to the ACCC guideline when making “environmental” claims or statements.
  Avoid using terms like ‘safe’ and ‘friendly’ and unqualified pictures or graphics. At best they are unhelpful and encourage scepticism; at worst they are misleading.
- Spell out exactly what is beneficial about a product in plain language that consumers can understand.
- Link the environmental benefit to a specific part of the product or its production process, such as extraction, transportation, manufacture, use, packaging or disposal.
- Make sure any claims you make about your product can be substantiated. Think about how you would answer a query regarding the environmental benefits you are claiming about your product. For example, what scientific authority could you use to justify the basis of your claim.
- Explain how a product’s characteristic is beneficial to the environment. For example, explain that a phosphate-free fertiliser is less damaging to river systems because phosphate promotes algal growth which can clog up rivers.
- Avoid giving the impression that your product is completely environmentally benign if it is not.
- Use the claim only in an appropriate context or setting. For example, do not claim that a product is not tested on animals if it is a product that would never be tested on animals anyway.