Submission on the ACCC’s draft guidance for business on Environmental and Sustainability Claims

The AICD reiterated that it is critical that the market is free from the distorting effects of greenwashing, and that it supports regulators providing guidance to businesses of their expectations regarding the making of environmental and sustainability claims.

However, we noted that there needs to be greater recognition of the complexities involved in the making of sustainability and environmental claims, given the significant uncertainties and fast-paced scientific, technological and regulatory changes associated with this subject matter. In light of this, the AICD recommended that Australian regulators should take a consistent, balanced and proportionate enforcement approach targeting intentional and egregious greenwashing.

On the Draft Guidance specifically, we stated that:

• We agree that the use of broad and unqualified claims such as carbon neutral,’ ‘net zero’ or ‘carbon positive’ can create greenwashing risk. Until such time as the Sustainable Finance taxonomy is finalised, the emphasis should be on ensuring that businesses transparently explain what is meant by such claims, including setting out any inherent limitations, dependencies or uncertainties.
• There should be greater recognition of the complexities of demonstrating that a product or service claim is “evidence-based”, and that a forward-looking representation is made on “reasonable grounds.” It is often challenging to obtain comprehensive and/or high-quality data or evidence to demonstrate a specific climate or sustainability benefit, particularly in relation to a new or emerging technology. Further, there are often competing expert views on the environmental benefit or harm of such technologies. Examples include carbon offsets, hydrogen and carbon capture and storage. For similar reasons, there are often practical challenges in demonstrating that forward-looking statements are made on objectively reasonable grounds, particularly where they are reliant on uncertain future events, outcomes or technologies.
• We are concerned about the prescriptive and definitive nature of the Draft Guidance on “Emissions-related claims,” given this subject is complex, unsettled and lacks definitive or binding best practice guidelines. This is particularly the case for topics such as transition plans.
• Guidance on key sustainability and environmental topics (such as transition plans), should be issued on an economy-wide basis, together with relevant regulators such as ASIC, rather than being issued on a fragmented basis. Similarly, approaches to the enforcement of greenwashing should be consistent and broadly aligned across the various enforcement and regulatory entities. Other quasi-regulatory industry or sectoral bodies, such as the Ad Standards Board, should also be consulted to ensure consistency.