Commercial

On May 19th, Australian Parents for Climate Action (AP4CA) settled a landmark greenwashing case against EnergyAustralia, where the Go Neutral product amounted to a breach of the Australian Consumer Law (ACL).

EnergyAustralia, an electricity company, is the third-largest greenhouse gas emitter in Australia and launched a Go Neutral product in 2016. Over 400,000 customers purchased energy sourced from fossil fuels but were promised that their emissions would be “cancelled out” through purchased offset projects, such as forest regeneration. Offsetting means that carbon dioxide would be removed from the atmosphere, providing a “carbon-neutral” and environmentally sustainable energy option to consumers.

However, EnergyAustralia’s recent public statement acknowledged that their offsets were in fact, not carbon neutral, did not “prevent or undo the harms caused by burning fossil fuels for a customer’s energy use” and, therefore, contributed to climate change. EnergyAustralia acknowledged that the carbon in planted trees is stored for a “substantially shorter time” than emissions in the atmosphere, meaning that their offsets could not replace avoiding the burning of fossil fuels in the first place.

What is greenwashing?

Greenwashing is a common business practice where companies use environmental and sustainability claims, despite having false, misleading or a lack of reasonable bases. With the increased focus on climate change in recent years, these claims are often relied upon by consumers who are interested in engaging in more environmentally conscious practices, such as purchasing sustainable goods. However, under section 18 of the ACL, greenwashing may constitute “misleading or deceptive conduct”, which the Australian Competition and Consumer Commission (ACCC) prohibits.  

What can greenwashing look like?

In October 2022, ACCC conducted an internet sweep that examined 247 businesses and brands across various sectors, including energy, motor vehicles, cosmetics, takeaway packaging, and more. The results of the sweep identified 8 key characteristics of greenwashing:

1. Vague, unqualified claims

Vague and unqualified claims were the most prevalent issue found in the sweep. These claims can be ambiguous, interpreted in many ways, or provide little explanation about what included technical terms mean. For example, packaging can use the terms “recycled plastic” without specifying the proportion of post-consumer recycled plastic used.

2. Insufficient evidence

Although claims were made, many businesses either provided insufficient evidence to validate their claims, or omitted providing evidence entirely. Rather, businesses should substantiate their claims through accessible links, and presented their evidence in an easily understandable format for consumers.

3. Absolute claims

Absolute claims deliver strong messages and promises to consumers, however, are often not lived up to by the business. For example, common absolute claims include “100% recyclable”, “zero emissions” or “100% plastic-free”. If used, businesses must ensure that clear, robust evidence is made accessible to consumers.

4. Comparisons

Businesses may highlight the benefits of their products by comparing it to other businesses’ products, products made from different materials, or their own products. For example, they may state that products have a “lower environmental impact” or was produced with “less water”. However, they often failed to specify what their product was being compared to, how figures were calculated, or what the specific environmental impacts analysed were.

5. Exaggerated benefits

The benefits of a business’s product could be exaggerated, such as by excluding its negative aspects or important information. For example, “zero emissions” claims may only refer to the product’s use, but not production, transport or disposal. A business may also draw attention to its environmental protection measures, which were only introduced due to legal requirements. Rather, businesses should ensure consumers are able to access information on their full supply chains, emissions, downsides of operations and the steps taken to address them.

6. Aspirational claims

Businesses often expressed aspirational environmental and sustainability goals, such as reaching Net Zero targets, reducing packaging or using renewable energy sources. However, plans and measures were implemented to reach the goals, and progress updates were often omitted. Businesses should also ensure that the goals are specific and measurable.

7. Certification Trade Marks

Businesses occasionally claimed third-party Certification Trade Marks (CTMs) in misleading ways. For example, they might not include the nature of the certification scheme, or only use it in relation to a specific component instead of the entire product. This means that consumers are unable to properly assess what CTMs mean for the product.

8. Misleading images

Finally, businesses may include symbols or images that resemble CTMs, despite not being associated with any schemes. This could include use of green images, leaves, or the planet, misleading consumers.

What does this case mean for the future?

EnergyAustralia’s Go Neutral electricity plan had been certified by Climate Active, a government-led “carbon neutral” certification scheme. In 2023, after action was initiated against EnergyAustralia, the Australian Government released a Climate Active Program Direction Consultation, aiming to reform the program in line with changes to the climate action landscape. The consultation received over 100 submissions, including from AP4CA. The scheme is currently under review, with possible changes including the removal of the “carbon neutral” term altogether. Multiple businesses, including Telstra, Allens, and Jetstar, have also withdrawn from the scheme. This suggests that Australia will follow in the footsteps of the European Parliament, which recently banned greenwashing, aiming to improve consumer information visibility.

In the meantime, the EnergyAustralia case certainly sets a precedent for other power companies. EnergyAustralia has since worked towards rebuilding their reputation by committing to direct decarbonisation initiatives in their Climate Action Transition Plan. AP4CA’s campaign has also garnered nearly 2500 signatures, hoping to hold all power companies accountable for greenwashing.