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Greenwashing: the latest “deadly sin”?

14 April 2008

You can tell that an issue is topical when the Vatican adds it to the list of deadly sins.  “Polluting the environment” now appears to sit alongside envy and lust.

But if polluting is reviled behaviour, what about falsely claiming that your product is “environmentally friendly”?   While the Vatican is unlikely to be concerned, “greenwashing” – making unfounded environmental claims – is causing competition agencies to draw up their own lists of deadly sins.

What this means is that businesses planning to appeal to green consumers need to be even more careful about statements like “sustainable”, “100% natural” or “recyclable”.

Rampant use of green claims by car manufacturers in Norway has prompted the Norwegian Consumer Ombudsman to effectively ban statements such as “green”, “clean” or “environmentally friendly”.

While such a drastic measure does not appear to be on the cards here, failure to be able to justify such claims could potentially expose businesses to significant penalties, adverse publicity and a backlash in public opinion that sees sales tumble.

The guidelines and cases covered in this article show that as consumers care more about the green credentials of products, consumer protection agencies will demand more from businesses seeking to benefit from these consumer preferences.  Businesses in this new world will need to tread carefully to reduce their carbon – and risk – profile. 

New moves in Australia

In response to the more frequent use of green claims, the Australian competition agency ACCC has recently released a guideline called “Green Marketing and the Trade Practices Act”.   This guideline provides a series of "principles to consider" when making environmental claims.  See table below. 

What about New Zealand?

Green claims are no less relevant in New Zealand.  Our prime minister has stated – as an aspirational goal – her desire to be the first “carbon neutral” country.  And much of the marketing of our country as a holiday destination is based on the “100% Pure New Zealand” campaign.

In 2006 this campaign was challenged by the Management School of Restorative Business in the following way:

New Zealand is probably one of the most toxic destinations for tourism in the world. The unsuspecting foreign visitors risk a litany of health hazards including exposure to excessive UV radiation, unknown volumes of lethal substances that have extensively contaminated the environment and toxic algae poisoning…
While no other country claims to be "pure", or "clean", New Zealand is promoting its toxic environment as "100% Pure" in a government-sponsored false advertising campaign.1

While sustainability is a new focus area for the Commerce Commission it does not have a current guideline on environmental claims equivalent to the ACCC’s recent publication.2 The Commission has recently investigated claims made about the benefits and performance of energy-saving light bulbs, the ratings and performance of heat pumps and the insulation properties of materials.3 These matters resulted in warnings being issued, but no prosecution.

The Advertising Standards Authority, or ASA (a voluntary "regulator") has published an Environmental Code of Practice.   The Code’s principles are summarised below.   There are common threads running through the ACCC and ASA guidelines. 

Some case studies

Complaints upheld

Saab is being prosecuted in Australia for various green claims including that across the entire Saab range its vehicles were carbon neutral and that planting 17 native trees for each new vehicle would offset any CO2 emissions for the life of the vehicle.

The same carbon-neutral type of claims were made by Saab in New Zealand ads as well.  The ASA has found them to be misleading.

Also in Australia, Origin Energy had to change its advertising after it claimed that using its GreenPower product – essentially electricity from renewable sources – would be equivalent to not driving your car for two years, when only one of its products would have had that effect.4

The ASA has upheld other complaints about environmental claims.  For example:

  • Honda’s claim that its Jazz was “environmentally friendly” was changed to being “environmentally friendlier” to avoid the complaint being upheld.
  • Toyota’s claim that its Prius produced “up to 89% fewer smog-forming emissions than the average new car” was found to be misleading after Toyota was unable to produce credible data to justify the statement.

The UK Advertising Standards Authority recently found a Boeing claim about carbon emissions misleading because it was based on a full plane load (while the UK government figure for emissions calculations is 79.7%).  But the same claim could still be made in aviation circles since using a 100% occupancy level in calculating carbon emissions was standard industry practice. 

Complaints dismissed

Meridian’s television ads involving a pohutukawa flower journeying down a river was held not to be misleading, as it related to the renewable source of the electricity – the water – rather than implying than hydro-electrical production has no environmental impact.

The ASA also recently had to consider a complaint by the Green Party that a brochure advertising shares in Pike River Coal Limited breached the ASA’s Code by the spurious use of environmental claims which mislead or confuse consumers.5 Complaints about the brochure were also made to the Securities and Commerce Commissions but neither body decided to take any further action.

The brochure included statements such as “low environmental impact”, “a very small footprint on the land”, “minimal environmental impact”.  The ASA did not uphold the complaint.  It found that potential investors in a coal mine would understand the phrase “low environmental impact” to have a comparative sense.

This decision shows the importance of the target audience in determining whether a claim will be misleading.   

What does Greenpeace have to say?

Greenpeace has gone a step beyond challenging advertising based on existing guidelines.  Since 2005 it has produced its own guide to the impact of electricity producers on climate change.  The guide ranks each company that feeds into the national grid according to its current supply and future commitment to clean, renewable energy. The 2007 edition of the guide also takes into account each company's energy efficiency programmes and whether they encourage households to generate their own renewable electricity. 

Eco-labels (and other accreditation schemes)

One way of addressing green claims is through an “eco-label” which provides information about environmental properties of a product vetted by an independent and impartial third party.

The official New Zealand label is Environmental Choice New Zealand which is operated by the Ecolabelling Trust under licence from the government.  So far the label covers about 20 product areas, 26 licensees and more than 800 products.  Use of the Environmental Choice label means the licensee has met the specifications set by the Ecolabelling Trust for the particular product.

In addition to Environmental Choice New Zealand, there are other environmental rating systems including:

  • ENERGY STAR which promotes the most energy-efficient products (from home appliances to office equipment) and is promoted by the Energy Efficiency and Conservation Authority, EECA
  • Green Star New Zealand which is the environmental rating system run by the New Zealand Green Building Council, an NGO formed in 2005 to assess the environmental impact of commercial buildings6
  • CarboNZero which provides certification that a product is carbon-neutral (carbon emissions are measured, reduced and offset).  It is run by Landcare Research, a Crown Research Institute.  Grove Mill winery and Meridian Energy are two prominent holders of carbon-neutral status.

As well as eco-labels and private accreditation systems, there are also mandatory energy-performance labelling requirements maintained and enforced by EECA.  Earlier this year a Christchurch company became the first business to be convicted for not meeting the minimum energy performance standards on its heat pumps.  It was fined $15,000 and costs. 

Advertising Standards Authority Code of Practice

ACCC Guideline

No advertising should be misleading or deceptive.

Claims must be accurate and must not mislead consumers in any way.

All claims must be able to be substantiated.

You should be able to substantiate any environmental claim you make, whether on your packaging, in your advertising or through your representatives.

Explain clearly the nature of the benefit (e.g. "our product X is kinder to Mother Nature" is unclear and thus unacceptable but "our CFC-free product X is kinder to the ozone layer" would be acceptable.7

Claims should be specific, not unqualified or general statements – such statements are risky because they can have multiple meanings depending on the context and the audience, e.g. “environmentally friendly”. It is also advisable to refer to the part of a product or production process that claims the environmental benefit if the benefit is limited to that part of the product, e.g. non-recycled product packaged in recyclable material.

Generalised claims for environmental benefit must be assessed on the complete life-cycle of the product and its packaging taking into account any effects on the environment of its manufacture, distribution, use, disposal, etc. So absolute claims for environmental benefit (either stated or implied), are not appropriate (e.g. "environmentally friendly/safe"; "product X has no effect on the environment").

Claims should consider the whole product life-cycle.  A fuel-efficient car that is advertised as “green” or “eco-friendly” omits the environmental impact of the car’s production and eventual disposal.  Saying “fuel-efficient” would avoid misleading consumers.

Scientific terminology is acceptable provided it is relevant and used in a way that can be readily understood by consumers without specialist knowledge.

Claims should be in plain language – use of scientific language and jargon can confuse consumers not familiar with scientific concepts.

Claims based on the absence of a harmful chemical or damaging effect are not acceptable when other products in the category do not include the chemical or cause the effect.

Environmental claims should only be made where there is a genuine benefit or advantage. You should not advertise environmental benefits where they are irrelevant, insignificant or simply advertise the observance of existing law.  For example, ‘CFC free’ is potentially misleading as a claim since CFC use in aerosols is generally prohibited.

Qualified claims such as "environmentally friendlier/safer/kinder" may be acceptable where the advertised product, service or company can demonstrate a significant environmental advantage over its competitors or a significant improvement on its previous formulation, components, packaging, method of manufacture or operation.

Claims must not overstate an environmental benefit, i.e. avoid implications of significant environmental benefits if the benefit is negligible.

All claims must meet relevant local or international standards as appropriate if a particular benefit is claimed (e.g. "biodegradable", "organic" etc).

Pictures can also be representations – the use of environmental images may be capable of making a sweeping claim of environmental benefit that may be misleading.  For example, a picture of a dolphin on a tuna tin may suggest no dolphins were harmed in the process – is this true for this product?
Advertisements must not falsely suggest or imply official approval for a product, whether by words, symbols or any other means.

Claims using endorsement or certification should be used with caution.  Consumers may be unfamiliar with local or international environmental endorsement schemes and the certification on your product, so offering consumers further details or information is encouraged.

Where the scientific basis for your claim is under dispute or not conclusive, you should be especially careful not to present your claim as being universally accepted.

Carbon offsetting schemes

Use of carbon credits to achieve carbon neutrality is increasingly common.  (One company in South Australia is even offering carbon neutral cremations or burials.)8

This raises the question of whether the carbon credits purchased to achieve this neutrality are from a credible scheme. 

A recent study found that 20% of carbon credits lacked environmental credibility because the emissions reductions were not additional to “business as usual”.9 Concern about less-than-reputable schemes has led to scepticism about carbon credits in general but has created a niche for schemes which can establish their credentials.

For businesses intending to market themselves as “carbon neutral” there are clearly risks if the quality of offsetting carbon credits is in doubt.  Obtaining advice from a recognised assessor of these issues is an important factor in reducing risk.10

More information

  1. http://www.scoop.co.nz/stories/PO0611/S00286.htm November 16, 2006 press release. 
  2. A guideline called “Environmental Claims and the Fair Trading Act” was published in 1999 but is not available on the Commission’s website. 
  3. Commerce Commission’s 2006/07 Annual Report, pages 82 and 85-86. 
  4. http://www.accc.gov.au/content/index.phtml/itemId/806645/fromItemId/2332  
  5. The complaint also suggested that the mention of the Department of Conservation in the brochure falsely suggested official approval for the mine and that the brochure failed to warn investors of the financial risks in a private South Island coal mine: see http://www.scoop.co.nz/stories/PA0707/S00004.htm 2 July 2007, Press Release: Green Party.
  6. http://www.nzgbc.org.nz/index.php?option=com_frontpage&Itemid=1  
  7. It is interesting that the ASA views this statement as acceptable as use of CFCs has been illegal for some years.  
  8. http://www.businessspectator.com.au/bs.nsf/Article/Cemetery-offers-carbon-neutral-funerals-CM98U?OpenDocument 
  9. http://www.oeko.de/oekodoc/622/2007-162-en.pdf (referred to on the Landcare Research website: http://www.carbonzero.co.nz/newsletters/issue2.asp)
  10. A well-established player is Landcare Research through its CarboNZero scheme.