The greenwashing space is continuing to develop globally, and Australian developments are only stoking the fire. Below we detail some key recent updates from closer to home.

Key takeaways

• Industry self-regulation is emerging as a means to address greenwashing, in addition to the regulatory efforts of the ACCC and ASIC. An example is the Australian Association of National Advertisers’ Environmental Claims Code, which is a voluntary industry code enforced by Ad Standards that regulates environmental claims made in advertisements by AANA members. This code is currently in the process of being updated.
• The use of carbon credits to offset emissions and meet emissions reductions targets has been the focus of recent greenwashing litigation. Greenpeace is suing Woodside over claims that it misrepresented the true extent of its emissions generation given that it had relied on carbon credits to offset its emissions. The ACCC has flagged that it will release guidance for businesses and consumers specifically on emission and offset claims.
• Companies should carefully consider how they communicate and qualify their net zero or carbon neutral targets, particularly with respect to whether those targets take into account the company’s downstream scope 3 emissions. The Greenpeace / Woodside case may provide some clarification on a company’s obligations in communicating emissions reductions targets.

A rise in industry self-regulation

While the ACCC and ASIC have been leading the charge on regulatory greenwashing efforts (see our summary of the ACCC’s environmental guidance and ASIC’s Mercer proceeding), there has also been movement on industry self-regulation as a form of managing environmental and sustainability-related advertising risks. The Australian Association of National Advertisers (AANA) – the peak body for advertisers and marketers in Australia – is currently in the process of revamping its Environmental Claims Code (ECC).

The ECC is a voluntary industry code that applies to all AANA members, including many non-advertiser corporate members. It seeks to develop and maintain standards for advertisements making environmental claims. As a voluntary industry code, the AANA’s independent Ad Standards Community Panel adjudicates complaints received by the community on its members’ ads.

The Panel is able to request that the advertiser modify or discontinue its advertisement, however there is no explicit enforcement mechanism.

The exposure draft of the new ECC was released for consultation on 18 January 2024, and largely simplifies the existing language. At a high level, the ECC requires that environmental claims in advertising:

• must not be likely to mislead or deceive;
• must be truthful and factual;
• must be supported by evidence;
• must be clear and unambiguous, avoiding broad and unqualified environmental claims; and
• be about a genuine benefit to the environment.

Any community member can lodge a complaint under the AANA.  Organisations such as Greenpeace have increasingly used it to challenge environmental claims made by member corporations. A full list of determinations from the Ad Standards Community Panel is published on their website.

Carbon credits in the spotlight

Many Australian companies use carbon credits to offset their emissions and reach emissions reductions targets. Carbon credits are an important feature of Australia’s overall climate strategy, as recently re-emphasised in the Climate Change Authority’s December 2023 review of the Australian Carbon Credit Unit scheme.

Despite the recognised importance of carbon offset schemes, recent climate-related litigation has raised questions around how transparent companies need to be in respect of their reliance on carbon credits.

On 14 December 2023, Greenpeace sued Woodside in the Federal Court for claims relating to emissions reductions achieved through the use of carbon offsets. While Woodside represented that it reduced its oil and gas extraction-related emissions by 11% in 2022, Greenpeace is alleging that such claims are misleading due to this reduction being attributable solely to the use of carbon offsets, in circumstances where Woodside’s actual emissions increased by 3%. Similar claims are being made by Australian Parents for Climate Action (AP4CA) in an ongoing action against EnergyAustralia.

The ACCC has flagged it will release guidance for businesses and consumers specifically on emission and offset claims. For now, companies can look to ACCC guidance on greenwashing and take advice to ensure any sustainability-related representations are not at risk of constituting greenwashing.

Treatment of scope 3 emissions in net zero or carbon neutral targets

‘Net zero’ and ‘carbon neutral’ claims continue to be a focus of greenwashing litigation, particularly in circumstances where the claims do not account for a company’s downstream ‘scope 3’ emissions. Greenpeace’s recent action against Woodside also alleges that the oil & gas producer was misleading for not qualifying its 2050 net zero target by explicitly stating that this excluded all scope 3 emissions generated from the consumption of its oil & gas. For oil & gas producers, emissions generated from their products’ consumption often represent a significant majority of the emissions throughout those products’ supply chain.

While many Australian companies may not account for their scope 3 emissions in emissions reductions targets, companies should carefully consider how they communicate and qualify their net zero or carbon neutral targets. The Greenpeace / Woodside litigation will provide an important clarification on a company’s obligations around communicating emissions reductions targets.