On 22 June 2023, the AICD made a submission to the Senate Environment and Communications Reference Committee on its inquiry into Greenwashing.
The AICD supports the making of high quality and comparable climate disclosures which are free from the market-distorting impacts of greenwashing. To facilitate this policy goal, we support proactive regulatory action to address intentional and egregious ‘greenwashing’ practices. The key points of our submission included:
- There is no legislative gap with respect to greenwashing, and, as far as we are aware, no other jurisdiction has implemented a greenwashing specific provision or offence. Australia has a particularly strict set of liability settings, having neither a safeharbour for forward looking statements where cautionary language is applied (as in the US), nor a requirement to establish intention or recklessness for private misleading or deceptive conduct claims (as in the UK). As such, Australian organisations already have a higher liability exposure for greenwashing than key international counterparts.
- To assist organisations to understand what is required of them when making sustainability representations as to future matters (such as ‘net zero’ targets), we strongly support the legislative clarification of how the ‘reasonable grounds” test applies in a climate or sustainability context.
- The AICD supports strong enforcement action against intentional and egregious greenwashing practices. A positive policy outcome is one in which responsible market participants which disclose on a best endeavours basis are not subject to undue litigation risk, while those that fail to take their obligations seriously face legal and reputational costs.
- The introduction of a sustainable finance taxonomy, proposed by the Government, which would define the use of key terms such as ‘carbon neutral,’ ‘net zero’ or ‘carbon positive,’ would be an important step in curbing greenwashing in financial markets.
Our full submission can be found here.
*We note that the Senate Committee has authorised the publication of our submission.
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