3. Future Trajectories in Australian Consumer Law and Green Claims

Successful action against greenwashing relies on proving that business marketing breached the general provisions in the ACL, such as those in Box 1. Such action can only be taken after the claims have been made and relies on evidence that they are false or misleading in some way. Given the prevalence of greenwashing and the resources required to take enforcement action against them, many potentially false or misleading claims may remain unaddressed.

An alternative approach is to seek to prevent greenwashing in the first place. We now discuss three main ways to prevent greenwashing.

3.1 Prohibiting Marketing by GHG-Intensive Industries

The first option to prevent greenwashing is to prohibit emissions-intensive industries from marketing their services and products at all. Some stakeholders, including the United Nations (UN), have called for such prohibitions.^[1] The argument in support of this option is that it is illogical and inherently greenwashing for industries such as fossil fuels producers and retailers to be allowed to promote themselves when Intergovernmental Panel on Climate Change evidence and global climate commitments make clear that these industries must radically reduce or transition to non–fossil fuel alternatives (such as renewable energy or electric vehicles). The only reason for such industries to advertise is to expand their market or to extend their social licence. Proponents of such bans draw an analogy with big tobacco and argue that industries that profit from actively destroying the climate necessary for life and health should not have any more licence to market themselves than tobacco has to market its products. Figure 1 at the top of this chapter is an example of a banner promoting the idea that fossil fuel marketing is inherently misleading and should be banned. Figure 4 below is a campaign poster seeking to promote the message that fossil fuel car advertising should be banned.

In response to pressure from civil society, several local government authorities have used their powers to determine what can be advertised on billboards and council property to implement such bans.^[2] Some art galleries, newspapers and sporting bodies have also agreed to not accept fossil fuel sponsorship.^[3] Any more encompassing ban would require an amendment to the ACL or the introduction of new legislation.^[4]

3.2 Proactive Regulatory Standards for Substantiating Climate Marketing Claims

A second option for preventing greenwashing would be for legislation and policy to define in advance precisely what environmental and climate claims can be made in what circumstances and with what substantiating evidence and auditing. Green marketing that did not comply with those standards would be prohibited. This approach is consistent with the UN’s recommendations for ensuring net-zero pledges from companies are credible and can be used to hold companies accountable.^[5] Developing such standards and mandating requirements around certain claims is similar to the more proactive approach taken by the ACCC when it developed and updated its guidance to businesses about avoiding misleading and deceptive claims (see section 2.2).

The European Union (EU) provides a good example of how Australia might do this. The EU has reformed its consumer law to make explicit that certain environmental and climate claims are prohibited. It also introduced laws regarding the kinds of evidence required to substantiate those environmental claims that are allowed. Box 4 provides a summary.

A strength of the EU approach is that it directly targets claims regarding climate change that are often misleading and requires companies be clear about what emissions they have reduced from their own operations and what emissions they are offsetting. This approach could reduce climate greenwashing and drive companies to achieve genuine progress towards decarbonisation of their operations.

The EU approach, however, still leaves scope for climate greenwashing. For instance, the public may not be aware of the limitations of offsetting and potentially trust marketing claims that rely on offsetting. Companies may also carefully select and manipulate evidence used to support claims. Moreover, the EU’s reliance on third-party certification schemes can also lead to climate greenwashing, given the weaknesses of the standards and accountability mechanisms in some schemes and the commercial interest in accrediting more products.^[6] The EU approach still allows climate neutral claims even though no product is climate neutral. Finally, the approach of developing higher standards for environmental claims, and prohibiting generic terms, does not address marketing as a key driver of consumption patterns associated with environmental challenges like climate change.

3.3 Looking Beyond Greenwashing to Reductions in Production and Consumption

A third way to respond to greenwashing is to address the underlying problem of marketing promoting unsustainable consumerism and delaying action to reduce GHG emissions from production. High-income countries need to significantly decrease GHG emissions, which means decreasing production and consumption of goods and services that are emission intensive like fossil fuel powered energy, meat, oil, petroleum-based plastics, synthetic fertilisers and petrol vehicles, and transitioning industry and individuals away from reliance on these products.^[7]

Climate claims on products and services sends the message to citizens that climate change is already being solved through voluntary market actions and individual consumption choices, as opposed to collective political, economic and legal change. When people are surrounded by messages about how companies are helping solve the climate crisis, it weakens the pressure on governments and companies to make the urgent and radical changes needed and creates flawed understandings about how to combat climate change. Enforcement and activism against marketing and greenwashing claims (as described in the previous two subsections) can be helpful. However, focusing attention on greenwashing enforcement may distract attention and resources away from consideration of the ways in which governments, communities and industries should transition to a low-GHG-emissions economy and reduce production and consumption overall. This will require transition plans for all industries to move away from reliance on fossil fuels and other emissions-intensive practices, realigning of tax incentives and subsidies to achieve a low-carbon society, caps on production of some goods and services and prohibitions of certain components as well as public campaigns.