The Australian Competition & Consumer Commission (ACCC) has stepped up its vigilance on greenwashing. This week it has declared it will be conducting ‘internet sweeps’ on over 200 company websites for false and misleading environmental and sustainability marketing statements. The sweep will target several consumer sectors, like clothing, energy, food and drink and household products.
A secondary sweep will also look at misleading reviews posted to third-party review platforms, including social media platforms like Facebook. This review will include non-disclosure of paid partnerships, sponsorships, or advertising by influencers.
The writing has long been on the wall
In March 2022, the ACCC announced its enforcement and compliance policy for FY23, noting “consumer and fair trading issues in relation to environmental claims and sustainability” as an issue of growing importance that would be in focus this year. As recently as 20 September, the ACCC again highlighted that it is “actively targeting ‘greenwashing’ this year”.
For well over 12 months now, the ACCC’s regulatory contemporaries, including the Australian Prudential Regulation Authority (APRA), the Australian Securities & Investments Commission (ASIC), and the Australian Securities Exchange Limited (ASX), have also been clear on their priorities to stamp out greenwashing through unsubstantiated environmental, social, and governance (ESG) disclosures. ASIC declared the “disclosure of future prospects to be included in the financial report or Operating and Financial Review (OFR)” as one of its focus areas for 30 June reporting; while the ASX has long warned companies against overstating their green credentials to attract sustainability-savvy investors.
Who should be worried?
This issue is by no means restricted to small organisations or influencers. Organisations of all sizes can fall prey to the lure of greenwashing if they do not heed the warnings of the collective regulators. In fact, in August this year, the UK High Court ruled that the UK Government’s Net Zero Strategy lacked the required policy to deliver on the emissions cuts promised, while legal action for greenwashing has been taken against Santos by its own shareholder. Retail brands H&M and Decathlon have been required to remove sustainability labels from their clothing and website following an investigation by the Netherlands Authority for Consumers and Markets. These examples demonstrate that no organisation is immune to being called out if its claims appear to lack substance.
We’re seeing more small and mid-sized organisations interested in bolstering their sustainability knowledge and practices within their business. However, some are still reticent to make public statements for fear of greenwashing and the backlash that ensues. But fearmongering isn’t the point here; it’s the education and awareness of being able to substantiate any claims made of being ‘sustainable’, ‘environmentally friendly’ or ‘green’.
Avoiding greenwashing
With sustainability reporting requirements ramping up around the world, and Australia expected to follow suit, now might be the time to consider sustainability reporting.
A sustainability or ESG report can help to:
- Address any sustainability-related regulatory risks to be reported
- Provide a platform to establish baseline metrics for an organisation to measure progress against
- Transparently communicate activities with stakeholders and the public, or
- Create a starting point to develop a sustainability strategy, targets, or roadmap for the future.
While the scope of a sustainability report can be enormous and seem daunting, the crucial thing is to make a start. There’s no set checklist or singular format to adhere to (there is a myriad of reporting frameworks to choose from); a sustainability report must align with the company strategy and culture for congruence, and any data or claims must be verifiable.
Here to help
If you need help establishing your sustainability strategy or ESG report, reach out to one of BDO’s sustainability experts today.