Action against greenwashing is an enforcement priority of both the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC).

The ACCC and ASIC work closely together on the detection and investigation of misleading environment claims, including corporate sustainability claims and claims in connection with financial products and services.

“Greenwashing” is false or misleading information claiming that a company is better for or less harmful to the environment than it is.

“Bluewashing” is false or misleading information that portrays a company as having a greater positive impact on human rights than it does.

“Greenhushing” occurs when firms under-report or strategically withhold information about their actual environmental goals and achievements.

An environmental claim is any representation made by a business about its environmental impact, including claims that give the impression that your business, products or services:
a. have a neutral or positive impact on the environment; or
b. are less harmful to the environment than alternatives; or
c. have specific environmental benefits.

Some businesses intentionally make claims that create misleading impressions to capitalise on consumer preferences for environmentally sustainable products and services without making genuine investments in sustainable practices.

However, the ACCC has observed that sometimes businesses mislead consumers inadvertently. This happens for various reasons, including poor understanding of supply chains, a lack of due diligence before making claims, or poor reporting practices.

The ACCC has published a guide for businesses on making claims about the environmental impact of their business, products or services to assist them in complying with the Australian Consumer Law.

ASIC is monitoring sustainability-related representations made by companies including ‘net zero’, ‘carbon negative’ and other climate-related claims.

ASIC’s report 271 published in August 2024 listed its interventions over the previous year related to:

• underlying investments that are inconsistent with disclosed ESG investment screens and investment policies;
• sustainability-related claims made without reasonable grounds; 
• insufficient disclosure on the scope of ESG investment screens and investment methodologies; and
• sustainability-related claims made without sufficient detail.

You must consider whether representations are accurate, reasonably based, appropriately qualified and include all the relevant information.

ASIC Information Sheet 271 contains a series of questions to ask as well as examples.

The Australian Government is working with the Australian Sustainable Finance Institute to develop a sustainable finance taxonomy to provide common definitions for sustainable economic activities in Australia.

Climate financial reporting requirements will commence from 1 January 2025 for Australia’s largest listed and unlisted companies and financial institutions, and other large businesses will be phased in over time.

Companies must make their climate financial disclosures in a ‘sustainability report’. The sustainability report will form part of an entity’s annual reporting package.

ASIC says that it recognises that there will be a period of transition as industry continues to build capability and implements the organisational changes that will be required to comply with these mandatory climate reporting requirements.

It says that during this period, it is more likely to take enforcement action where it sees misconduct of a serious nature, such as where it detects misconduct causing harm to investors or other primary users of the information.

However, voluntary statements that entities wish to make about their sustainability profile or credentials and which are not required by the new reporting regime will still be assessed on the principles applicable to misleading and deceptive statements and the established enforcement principles that have been applied to date to greenwashing.

You can see my video on these issues and recent cases here.

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.