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Brief Counsel

Rules for when you want to say you're green

06 March 2009

Proud of your company’s environmental credentials and wanting to brand yourselves as “green”?  You will need to be aware of the standards of behaviour the Commerce Commission expects in this area – and has set down in two sets of guidelines.

The guidelines

The Commerce Commission (the Commission) is concerned that environmental claims can be a powerful marketing tool but often rely on complex and uncertain terms and methodologies, requiring extra care to avoid misleading consumers. 

To address this risk, the Commission issued green marketing guidelines in December last year and has this week published for consultation proposed guidelines governing carbon neutrality or offset claims.  

The guidelines warn that there does not have to be an intention to mislead.  The focus of the Fair Trading Act is on the overall impression your conduct (particularly advertising) creates in the audience’s mind.  And the Commission advises that “you should consider the more susceptible members of your audience when putting together your campaign.”

Remember, pictures create impressions too and can mislead.

Environmental claims: what you need to know

  • Full and accurate information is key – Both sets of guidelines emphasise that businesses making environmental claims need to provide full and accurate information to consumers to explain and/or substantiate their claims, or at minimum provide consumers the opportunity easily to find further information in relation to the claim.
  • Be specific – Broad statements are likely to mislead consumers.  Be specific about what part of a product or its production process is covered by the claim.
  • Avoid jargon – Use language with which the average consumer will be familiar. The Commission suggests that consumers will make assumptions where they are unfamiliar with technical terms and may be misled as a result. This caution also applies to references to certification or endorsement schemes. Is the average consumer likely to be familiar with the relevant scheme and what the certification or endorsement represents?  
  • Is there a genuine environmental benefit? – You will need to substantiate your environmental claims while being careful not to overstate any benefits, and you must identify which part of a product or its production process can claim the benefit or advantage.

Some trouble spots – The Commission has identified certain descriptors as particularly problematic:

  • “Green” is very vague and gives rise to a wide range of meanings among consumers, which risks misleading them.
  • “Environmentally safe/friendly” may suggest that no harm is caused to the environment, which is unlikely to be true when considering the life cycle of a product.
  • “Energy efficient” should be quantified by comparison to existing benchmarks or at least explained in more detail.
  • Only use “recyclable” if the product can actually be collected and recycled across most of New Zealand and facilities are reasonably available to the public.
  • “Recycled” may be interpreted by consumers as meaning that the product has been through a previous life cycle.  If it has not – for example, it has simply been recovered from the waste stream during manufacture and reused – you must say so.

Carbon claims: what you need to know

  • Full and accurate information is key – The key message of the Commission’s carbon claims guidelines is clear: “providing consumers with the full picture is essential to ensure they are not misled”.  The Commission recognises that although there are no mandated standards regarding carbon offsets and carbon neutrality in New Zealand, there are various recognised standards and an emerging consensus of best practice that may help consumers and businesses assess claims.
  • Offset quality – You should buy offsets of an appropriate quality to substantiate any carbon offset claim you make.
  • Additionality – You should look for additionality when purchasing offsets: “additionality is a basic requirement for a legitimate carbon offset.”
  • Guaranteeing offsets – You should ensure that you obtain some kind of guarantee to secure replacement offsets in case those you purchased are destroyed or damaged or, in the case of forward crediting, do not eventuate.  Otherwise you run the risk of making an unsubstantiated carbon claim.
  • Standard or scheme compliance – If you make claims about being compliant with a certain standard or scheme, make sure you comply with it and make information about the standard or scheme available to consumers.
  • “Carbon neutral” – The carbon claim guidelines identify particular concerns around the term “carbon neutral”.  These include that consumers may read “carbon neutral” as an absolute term – so that, in relation to a business, all carbon dioxide emissions have been reduced and offset, or, in relation to a product, that the complete lifecycle of the product has been taken into account.  Where that is not the case, you need to specify what is covered by the claim.
  • Scopes – You should state whether your carbon claim covers the three emission source scopes (direct emissions, indirect energy emissions, and other indirect emissions) or only some of them.
  • Footprint calculators – When using footprint calculators, explain how the calculator works and what assumptions it makes.
  • Future statements – You need reasonable grounds for making claims about a future matter, such as “going carbon neutral by 2030.”
  • “Low carbon” claims – Don’t make them.

The guidelines can be accessed at the links below.

Commerce Commission’s Green Marketing guidelines:

http://www.comcom.govt.nz//FairTrading/GuidelinesforGreenMarketing/ContentFiles/Documents/The%20Fair%20Trading%20Act%20-%20Guidelines%20for%20Green%20Marketing.pdf

Commerce Commission’s Carbon Claims consultation draft guidelines:

http://www.comcom.govt.nz//FairTrading/DraftGuidelinesonCarbonClaims/ContentFiles/Documents/Draft%20guidelines%20on%20carbon%20claims.pdf

This Brief Counsel is intended to assist you to interpret them.  If more specific advice is needed, please contact the lawyers featured.