Sustainable practices and eco-awareness are increasingly expected from businesses of all sizes in the 21st century.

When businesses create environmental changes to minimize their carbon footprint and offer sustainable choices to consumers, they must also navigate the challenges in maintaining genuine environmental change and avoid ‘greenwashing,’ and potential reputational damage.

What is greenwashing?

Greenwashing is the deceptive practice of falsely exaggerating or misrepresenting a company’s environmental efforts to appear more environmentally friendly than it truly is.

Presenting an image of being environmentally friendly in order to gain an advantage over the competition without putting in the effort and expenditure to be environmentally friendly is dishonest and will now attract the attention of the Australian Competition and Consumer Commission (ACCC).

Greenwashing and the ACCC

The ACCC is the official body that monitors fair trading in Australia, and greenwashing falls under their umbrella.

Greenwashing can be considered misleading and deceptive conduct or false or misleading representation. The ACCC now has the power to apply penalties for such actions, including fines of up to $50 million for companies and $2.5 million for individuals.

Where does greenwashing occur?

The ACCC says environmental claims usually come in three forms:

• Claiming your products or services have a neutral or positive impact on the environment
• Claiming your products or services are less harmful to the environment than alternatives
• Claiming your products or services have specific environmental benefits.

These claims can be made on:

• Packaging or labelling
• Point of sale materials
• Marketing or advertising materials, including online and social media
• Corporate reporting materials.

As a business, you have a responsibility to maintain transparency and honesty when presenting, advertising and marketing your commitment to reducing your carbon footprint or contributing to environmental initiatives.

New guidelines to avoid greenwashing

The ACCC is aware that well-intentioned companies can still make mistakes and inadvertently break the rules.

This is why they have recently released a new guide to help businesses avoid greenwashing through the following steps:

1. Make accurate and truthful claims
2. Have evidence to back up your claims
3. Don’t hide or omit important information
4. Explain any conditions or qualifications on your claims
5. Avoid broad and unqualified claims
6. Use clear and easy-to-understand language
7. Visual elements should not give the wrong impression
8. Be direct and open about your sustainability transition.

By sticking to these eight principles, you should easily be able to avoid accusations of greenwashing, or at least be able to respond to them. You just need to be transparent and ensure your marketing materials reflect your genuine methods and intentions.

Need help to review your ESG policies and reporting? Reach out to AFS today.