The market for ‘green’ products has expanded drastically over recent years in response to increased consumer concerns about environmental issues. However, such expansion has been accompanied by unsavoury conduct by some producers and marketers of green products. A number of corporations, for example, have sought to exploit their environmental and corporate social responsibility credentials to confuse, mislead or even defraud customers or clients by marketing so-called ‘brown’ (or non-green) products as green products. This practice has been referred to as ‘greenwashing’. While Australia does not have specific legislation dealing with misleading environmental claims, it has developed a sophisticated approach to the regulation of misleading or deceptive conduct through the old s 52 of the Trade Practices Act 1974 (Cth), now s 18 of the Australian Consumer Law, and its many derivatives in other statutes. This article analyses the extent to which s 18 of the Australian Consumer Law and its federal statutory equivalents apply to the regulation of greenwashing.The authors state
Around the world, consumers and citizens are increasingly concerned about environmental problems. As a consequence, they are becoming more and more conscious of the impact their purchasing decisions may have on the environment. This has led to a considerable expansion of the ‘green’ market over the last few years. For instance, the Australian market for sustainable products and services surged from AU$12 billion in 2007 to AU$21.5 billion in 2010. It has been predicted that, by the end of 2012, this market will be valued at AU$27 billion.
In recent times green marketing has become popular as it may attract environmentally conscious consumers to buy green products at a premium price. Green marketing may be defined as the ‘marketers’ attempt to develop strategies targeting the “environmental consumer”. Such marketing campaigns have been used to sway public opinion and to endorse the green credentials of an organisation. For instance, a number of businesses have been promoting their green credentials for everything from carbon neutral wines to green cars, green clothing, and even green financial services.
With the expansion of the green market, it is crucial to ensure that green marketing is properly regulated and monitored. This is especially important as green marketing may be accompanied by ‘greenwashing’, where a manufacturer or retailer promotes the green credentials of a product but overstates the benefits to the environment, and thereby potentially misleads the consumer. To date, no legislation in Australia specifically regulates this particular area of concern. As a result, a review of the general laws regulating misleading or deceptive conduct is required to determine the extent to which these laws currently provide protection to environmentally conscious consumers.
A review of the law indicates that the last 40 years have seen the development of common law concepts such as negligence and misrepresentation. Further, legislative provisions dealing with misleading or deceptive conduct have been developed at both the Federal and State level. For example, the former Trade Practices Act 1974 (Cth) (TPA) introduced a balance between the civil action of misleading or deceptive conduct in s 52 and the criminal action of false or misleading representations in s 75AZC. Due to the limitations imposed on federal powers in the Australian Constitution, each State and Territory had to adopt its own fair trading legislation to reflect the federal law.
The introduction in 2011 of the Australian Consumer Law (ACL) brings all consumer protection law in Australia under the one umbrella. Today, s 18 ACL has replaced s 52 TPA. However, overlapping provisions regarding misleading or deceptive conduct in the financial services area also exist in the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act).
This article examines how s 18 ACL and its federal statutory equivalents deal with greenwashing. Part II of this article discusses the concept of greenwashing and the problems it raises. Part III focuses on s 18 ACL and its federal statutory equivalents to assess whether such provisions are able to regulate greenwashing and prevent it from occurring. Lastly, Part IV provides a brief overview of the civil and administrative enforcement powers of the Australian Competition and Consumer Commission (ACCC) in this area and discusses the strategies the ACCC may employ to regulate greenwashing.