an action plan for FMCG businesses to avoid the ACCC’s campaign against greenwashing

The ACCC did an internet sweep to assess whether it should be concerned about businesses making potentially misleading claims about sustainability. The sweep happened in October 2022, and the ACCC published its findings on 2 March 2023 in Greenwashing by businesses in Australia.

The sweep included 129 FMCG businesses, and the ACCC found that 61% of those FMCG businesses made “concerning claims”. The concerning claims fell into seven key areas:

1. Vague and unqualified claims

2. Lack of substantiating information

3. Use of absolute claims

4. Use of comparisons

5. Exaggerating benefits or omitting relevant information

6. Use of aspirational claims

7. Use of third-party certifications

8. Use of images that appear to be trustmarks

Below, we’ve summarised the ACCC’s concerns and suggested actions that everyone in FMCG should take before the ACCC moves to the next phase, which it says will be enforcement, compliance and education.

We aren’t lawyers. This is general advice based on our reading of the report. What follows isn’t specific to your business, so you should definitely read the report yourself and take legal advice specific to your business.

The recommendations below are for every aspect of your presentation. While the ACCC’s report is based on an internet sweep, future action could take a business’ packaging, point-of-sale or other material into consideration, not just its website.

1. Vague and unqualified claims

The ACCC found vague and unqualified claims to be the most common issue of concern.

1. Vague claims: Claims like “kind to the planet” and “responsible”

2. Unqualified claims: Claims where it wasn’t clear what the term meant or to what part of the business or product it referred.

Essentially, the ACCC found terms that are:

• Confusing because they’re not explained
• Misleading because the consumer wouldn’t know that terms like “compostable” or “biodegradable” have technical meanings that might be different from what the consumer thinks they mean
• Meaningless because the consumer doesn’t have any information about how the company is making the calculation of, say, carbon neutrality

Action steps

1. Review the claims on your packaging and marketing material, including your website. Will every claim be correctly understood by the average consumer?

2. Take legal advice on whether it will be enough to provide a link, QR code or similar that the consumer can follow for more detailed information than you can provide on a package or other material.

2. Lack of substantiating information

The ACCC expects businesses to back up environmental and sustainability claims with up-to-date evidence “sufficient to validate the claims”. The ACCC also wants the evidence to be “near to the claim” and presented in a way that is easy to understand.

Action steps

1. Check that every claim made on your packaging, website and other marketing material is supported by real evidence. (The ACCC pointed out some businesses linked to evidence that “consisted of further unqualified claims” or didn’t provide any detail.)

2. Ensure the evidence is current and presented in a way the average consumer would understand

3. Where you link to evidence, check the link is working. (The ACCC noted some businesses claimed to have further evidence but the links were broken.)

3. Use of absolute claims

The ACCC found a range of businesses making claims like “100% plastic free” or “zero emissions”. Absolute claims concern the ACCC because they “give a very strong impression to the consumer” and have “the potential to be false”.

The report indicates the ACCC intends to pay particular attention to claims that products are made from 100% recycled materials.

Action steps

1. When patrolling your packaging, website and other marketing material, pay particular attention to absolute claims. As the ACCC says in the report, when the marketing says the product is 100% plastic free then a small amount of plastic in the product is enough to make the claim false or misleading.

2. Ensure those claims are “clear and backed by robust evidence”.

4. Use of comparisons

The ACCC wants any comparison to be “useful for consumers”.  Comparisons the ACCC thought were not useful for consumers included claims that a product used “fewer raw materials” or “less water”. The ACCC says such comparisons aren’t enough on their own to help consumers make an informed decision.

Action steps

1. Look through your packaging, website and other marketing materials for words like “less” and “fewer”

2. Ensure you’re saying how much fewer or less, or to what you’re comparing

3. Be sure to say how the figures are calculated

4. Source information if you’re making claims, for example, about a material having a lower environmental impact than alternatives

5. Be cautious about whether the total effect of the claim might be seen by the ACCC as giving an “inflated impression of a particular product, even if there are only minor benefits”

5. Exaggerating benefits or omitting relevant information

The problem with exaggerating benefits is clear, but of particular note in this section is the ACCC’s view that:

• What you omit can be as important as what you say when it comes to being false or misleading
• It’s a problem to claim a product is recyclable or compostable when there’s no system in place to collect it
• You shouldn’t market yourself as particularly green when you’re doing only what’s required by law
• A claim of sustainability needs to be specific to the features of your product, not based on “broad scientific opinion”
• The ACCC expects you to count all emissions in any claims, including emissions from production, transport and disposal.

Action steps

1. Review the environmental and sustainability claims made for your products to ensure they’re defensible

2. Consider being transparent about your supply chain and the emissions generated at different points in the product lifecycle. The ACCC had a positive view of businesses doing this, especially those  “transparent about the negative aspects of their operations and the steps being taken to address them”.

6. Use of aspirational claims

The ACCC takes a dim view of businesses making vaporous claims about their goals. If businesses want to share their goals for reducing waste, reaching net zero and so on, the ACCC wants to see:

1. Defined goals

2. Details of the plans in place to achieve them

3. Up-to-date information about how progress was being monitored

Action steps

1. Review your packaging, website and other marketing material for claims about how you’re making progress towards more sustainable operations

2. Ensure your goals are not too general to be measured

3. Share your plans for getting to the goal

4. Keep your progress up to date, including listing what goals you’ve already achieved

7. Use of third-party certifications

The sweep found many businesses using external certification appropriately. Others, however, didn’t explain the certifications to consumers, including how the certifications applied to their businesses. This, the ACCC found, could be misleading.

The ACCC is also concerned about the proliferation of certification schemes, including businesses having their own schemes to certify their own products. The report flags the possibility that certifications could become meaningless. If that happens, it’s an open question as to how the ACCC will treat businesses that continue to cite certifications to influence consumers.

Action steps

1. If you’re certified, be clear about the scheme, what it means and where it applies — to your whole business or to only certain aspects or products. If it applies only in certain areas, spell them out.

2. Avoid broad language like “certified” unless the certification applies to the whole business and every product

8. Use of images that appear to be trustmarks

The ACCC found businesses using logos or symbols that consumers might think indicated external certification when they were made-up by the company. These symbols often involve leaves, images of the planet and and the colour green.

Action steps

If your packaging or marketing involves a symbol created by your designer and intended to convey environmental or sustainability credentials, stop using it.

Ensuring compliance and effective communication of benefits

It’s complicated and expensive to invest in more sustainable processes and materials. The effort required is a reason for the ACCC’s campaign against greenwashing. The ACCC wants to ensure businesses that make the investment in sustainability are able to stand out to consumers.

If you want to stand out on the basis of your environmental or sustainability credentials and be compliant, it’s squarely in the PLAYhouse for us to test:

• If consumers pick up on your sustainability credentials from your messaging
• How motivating they find those credentials

To paraphrase the ACCC, if you’ve put in the effort and the investment, you should be capitalising on that in your marketing. That means making sure consumers understand what you’ve done and what you’re doing.

When it comes to how claims are understood and how motivating they are, there are plenty of things that must be considered by researchers.

And as you’d expect, we consider them all.

If you’d like to talk about testing your environmental and sustainability messages on consumers, please talk to our team.