As greenwashing becomes more and more prevalent, Australian regulators are taking notice. Greenwashing is the act of misleading consumers about a product or service’s environmental benefits.
With the increasing focus on sustainability, many companies are trying to green their image. However, not all of them are truthful about it. In some cases, companies engage in greenwashing in order to make a quick profit.
Australian regulators are now cracking down on greenwashing. The Australian Competition and Consumer Commission (ACCC) has launched an investigation into greenwashing claims made by companies. This is a positive step towards protecting consumers from being misled about the environmental benefits of products and services.
The ACCC’s investigation will hopefully lead to more companies being truthful about the environmental benefits of their products and services. This will create a level playing field for companies that are actually doing something to reduce their impact on the environment.
What is greenwashing?
Greenwashing is when a company tries to make itself look more environmentally friendly than they actually are. It’s sort of like when somebody says they “aren’t really a morning person”. What they’re actually saying is “I despise mornings and would rather stay in bed all day”. Or when your friend claims they’re “on a bit of a health kick”. What they mean is “I’m trying green smoothies for the first time”.
We’ve all been there. You think you’re doing your bit for the environment, but it turns out it is greenwashing.
It is important to back up stainability statements, whether they are included in a disclosure document like a prospectus, notice of meeting, annual report, or press release.
When making a statement about the future, such as a net-zero target, the underlying data, and assumptions that support the statement, disclosure is also necessary.
ASIC warned mining and energy companies that any statements they make about achieving net-zero emissions must be based on reasonable grounds, to avoid misleading consumers.
The ASX and Greenwashing
The ASX (Australian Securities Exchange) has issued a notice informing the public that it is on the lookout for greenwashing. If companies make climate or emission reduction statements that are misleading or exaggerated, they could face consequences. This would cause people to think the company is more environmentally friendly than it really is.
Many times, these statements are generated to fool ethical investors into thinking the company is putting more effort into ESG than it actually might be.
On the day that Santos made news headlines worldwide as the first company to be sued by one of its own investors for greenwashing, the Australian Institute of Company Directors published an essay entitled “Beware the Risk of Greenwashing.”
Surprisingly, the European Union passed a law classifying natural gas and nuclear power as ‘green investments.’ This further complicates the greenwashing landscape and investors’ ability to discern real green companies from those greenwashing.
For example, under the new EU law, natural gas would be eligible for subsidies that are meant to encourage investments in renewable energy. This is despite the fact that natural gas is a fossil fuel and emits greenhouse gases when burned.
All companies should back up their claims with evidence, especially if they’re making statements about being sustainable or having net-zero targets. This means that before any disclosure is made, the company needs to ask whether the information is accurate and can be supported by reliable data.
It’s essential that there is infrastructure in place to manage and monitor constantly changing ESG data.
There are both financial and reputational risks associated with not going green; you could lose customers. More companies are looking to support the eco-friendly economy by investing in sustainable alternatives.
What is Comms declare?
Comms Declare is a climate advocacy group within the professional areas of advertising, marketing, Public Relations, and media in Australia. The group highlights we have a climate emergency requiring action on a professional level to address the climate crisis. The organisation was co-founded by former news journalist Belinda Noble and communications professional Cally Jackson in early 2020.
The group is calling on all communications professionals to make a public declaration. They will not work with companies or organisations whose values are at odds with addressing the climate crisis. “Fossil fuels are the new tobacco. Agencies that align their values with companies that are profiting from environmental damage will lose their best staff as well as clients that want a climate-friendly supply,” Ms. Jackson said. The group has also started a petition calling on the industry to stop greenwashing.
The group symbolises the power of the communications industry to change corporate behavior and be a force for good in the world.
Why is this important?
The group is important because it represents a growing trend of people within the communication industry who are uncomfortable with greenwashing. This group wants to do something about it. As the group grows, it will put pressure on companies and organisations to be more transparent about their values and their actions in relation to the climate crisis.
What can you do?
If you are a communication professional, you can join Comms Declare and add your name to the petition. You can also pledge to only work with companies and organisations whose values align with addressing the climate crisis.
Greenwashing is a serious issue that Australian regulators are taking steps to address. Businesses should be aware of the risks of greenwashing. Taking care to avoid making false or misleading claims about their environmental credentials is essential.
Consumers also have a role to play in combating greenwashing. If the consumers are informed about what to look for and refuse to support companies that engage in this deceptive practice, there is a chance. Together, we can make sure that businesses are held accountable for their greenwashing. Follow our blog for more greenwashing updates and tips on how to avoid it. Thanks for reading!