Principle 1: Make accurate and truthful claims

• do not overstate the level of scientific acceptance.
• do not exaggerate environmental benefits or understate an environmental harm.
• only make meaningful claims.
• make sure comparisons are transparent and fair.
• have reasonable grounds for making representations about the future

As governments increasingly prescribe minimum environmental standards for businesses to comply with, claims should be meaningful, they should not simply refer to an environmentally beneficial feature which is required by law.

The ACCC’s position largely reflects its Draft Guidance but has provided further information to assist businesses in deciding what steps are ‘reasonable’ in ensuring environmental claims are accurate.

What is reasonable will always depend on the circumstances, but the ACCC recognises that the size of a business is important. Larger businesses are expected to have access to greater resources and undertake wider verification steps.

With businesses often relying on third-party studies to support environmental claims, the ACCC has provided updated guidance on assessing these, including:

• the number and quality of studies (including whether the studies were in laboratory conditions or testing real-world impacts);
• the age of the studies;
• whether the findings have been replicated, or if they are in dispute; and
• whether the studies may have been influenced by any biases.

If businesses have gone above and beyond the legal requirement, it is good practice to be explicit about the additional benefits achieved.

Principle 2: Have evidence to back up your claims

• have a reasonable basis for making an environmental claim.
• it is good practice to not rely solely on claims made by suppliers or third parties but to instead take reasonable steps to verify any information.
• if relying on scientific studies, use widely accepted studies, and consider whether laboratory results reflect real-world conditions.
• using third-party certification as evidence can be a reputable way to substantiate claims. However, in some cases third-party certifications will not adequately substantiate claims or the schemes themselves may lack integrity.

Principle 2 is largely consistent with the Draft Guidance about selecting evidence to support claims. The ACCC’s guidance is that the amount and type of information needed to support a claim should be proportionate to the claim made, adding that businesses are not required to disclose any commercially sensitive information.

The ACCC has also provided more specific guidance about relying on internal data, industry standards and third-party certifications. For:

• internal data, eg. testing results and purchase records, the ACCC recommends businesses retain these – the ACCC has broad powers to issue substantiation notices and request documents, having these readily available is important.
• industry standards, the ACCC recognises these can assist businesses to ensure they have a reasonable basis for any claims.  However, compliance with an industry standard does not automatically mean compliance with the ACL. It is important to consider the claim’s overall impression as an ordinary and reasonable consumer would see it. The ACCC warns that a false impression could arise where a claim is based on an industry standard which adopts technical definitions which differ from the ordinary meaning consumers would understand.
• third-party certifications, noting businesses may choose to go down this path, the ACCC has called for particular care where industry schemes relate to offsets and emissions. The regulator will release further guidance about offsets, emissions claims and trust marks in early 2024. For now, the guiding principle is the overall impression conveyed to ordinary consumers.  

Claims should also clearly reflect what the business has been certified for, particularly where the certification relates to inputs.

Principle 3: Don’t hide important information

• small print shouldn’t hide the truth.
• consider the full lifecycle of your product or service.

The ACCC has changed the name of this principle to “Do not hide or omit important information”, warning against burying important information in fine print or away from the headline claim.

Information relevant to understanding a claim should be available directly on the product or at point of sale.  Additional information can be provided (eg. through a website or QR Code) but this should not contradict or qualify the impression created by the actual claim. 

Principle 4: Explain any conditions or qualifications on your claims

• some environmental claims may only be true under certain conditions. Such claims may be misleading.
• provide enough information about what is required for the claim to be true.

The ACCC’s Final Guidance reflects its Draft – businesses should clearly explain any actions or resources needed for the environmental benefit to be realised.  If this information cannot be incorporated as part of the claim, the ACCC suggests making it clear in the claim that conditions apply and using digital means to provide extra and up-to-date information, such as through QR Codes and smart labels.

Principle 5: Avoid broad and unqualified claims

• avoid using overly broad, vague terms (eg ‘green’, ‘eco-friendly’, ‘sustainable’).
• some terms may need to be qualified or further explained (eg recyclable, recycled, renewable energy, ‘free’).
• emissions intensive businesses should be particularly careful not to understate the overall environmental impact of their business.

The ACCC has largely maintained its guidance about broad and unqualified claims but added further information to assist businesses to avoid vague language.

For example, the ACCC has added ‘clean’ to the list of terms which hard to substantiate and do not help consumers understand a product’s environmental benefits.

The Guidance has also added helpful information about ‘recyclable’ claims:

• ensure products can be recycled through household/council or container deposit program means; and
• where special instructions are required to recycle a product, make this readily available. 

Lastly, the ACCC has clarified that businesses in high polluting industries should be particularly careful about making environmental claims, stating “businesses in these industries should not feel discouraged from making any environmental claims if they have put genuine and meaningful measures in place to reduce their environmental impact”.

Principle 6: Use clear and easy-to-understand language

• avoid technical or scientific language; and
• use words to convey their common meaning.

The ACCC has repeated its Draft Guidance about using clear language but added that this does not mean oversimplifying or using ambiguous terms. 

While scientific language may be appropriate in some situations, businesses should provide explanatory material and define terms if they may cause confusion. Where a scientific term has a non-technical meaning, it is unlikely that using scientific language is the clearest way of presenting the claim.

Principle 7: Visual elements should not give the wrong impression

• images of plants, animals, the earth, or certain endangered animals may suggest environmental benefits.
• avoid symbols which look like trust marks or represent certification by a third-party when that is not the case.
• colours such as green and blue often carry environmental connotations. These can contribute to an overall impression that a product has an environmental benefit.

The ACCC has confirmed the importance of visual elements to consumers, adding that the most important question for businesses is the overall impression given by a claim and any visuals.  

This means that not all images of plants, for example, will represent an environmental claim. They may relate to product composition or flavour. For example, the ACCC clarified that a business selling fruit juice may use the colour green or images of fruit trees in a way which does not convey an environmental claim.

Principle 8: Be direct and open about your sustainability transition

• only make claims about your sustainability transition that genuinely reflect goals and once there is a clear and actionable plan for how they will be achieved.

The ACCC has clarified this principle to refer to the business’s ‘environmental sustainability transition’.  This may reflect that businesses are encouraged to be sustainable in several ways, including socially and economically, while the ACCC here only covers environmental issues, not broader ESG ones.

The Final Guidance also encourages businesses to clarify what environmental plans really mean and provide progress updates. The ACCC provides a best practice example of how to explain a new initiative to introduce electric vehicles. To avoid creating a misleading impression about the overall environmental impact of this measure, the ACCC recommends that the business explain the proportion of its emissions that will be reduced and that there are other areas of the business that still have a significant impact on climate change and are hard to abate.