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Cosmetic, Clothing, Food Sectors Have Highest Rate of Greenwashing: Australian Corporate Watchdog

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The cosmetic, clothing, footwear, and food and drink industries have the highest levels of misleading claims around greenwashing, says Australia’s consumer watchdog.

The Australian Competition and Consumer Commission (ACCC) on March 2 revealed that of the 247 businesses investigated, over half (57 percent) were “vague or unclear” about their environmental credentials.

This practice is called “greenwashing,” which has become increasingly popular as companies and organisations hope to win over the public by demonstrating their supposed net-zero or environmental credentials.

The finding was part of the ACCC’s sweep in 2022 to identify misleading environmental marketing claims in sectors such as energy, vehicles, household products and appliances, food and drink packaging, cosmetics, clothing and footwear. 

“Consumers are now, more than ever, making purchasing decisions on environmental grounds,” said ACCC Deputy Chair Catriona Lowe.

“Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false or misleading claims.”

Past Greenwashing Examples

L’Oréal, P&G and L’Occitane are among the beauty brands accused of greenwashing.

A high-profile example in Australia took place in May 2022, when beauty company Bondi Sands was sued for falsely advertising its sunscreens as “reef-friendly” despite their sunscreens containing harmful ingredients such as avobenzone, homosalate, and octisalate.

Swedish fast fashion giant H&M was also hit with a lawsuit in 2019 for misleading claims that its clothing line, Conscious Choice, was environmentally friendly. 

The brand said the clothes were made “with a little extra consideration for the planet” and contained at least “50 percent more sustainable materials, such as organic cotton or recycled polyester” when in fact this was not the case.

It was later discovered that several products in the Conscious Choice line contained 100 percent polyester, which is not biodegradable and pollutes the environment with plastic microfibers and hazardous chemicals.

While in October 2022, the ACCC fined solar and gas firm Tlou Energy $53,280 (US$34,625) for “greenwashing” and claiming its electricity production was carbon neutral.

Businesses Encouraged to Back Up Their ‘Green’ Credentials

Lowe warned that false “green” marketing not only harms consumers but also businesses that are doing genuine work to improve the sustainability of their products.

Companies are required to provide evidence such as reliable scientific reports, transparent supply chain information, reputable third-party certification if they are using broad claims like “environmentally friendly,” “green,” or “sustainable,” Lowe added. 

“Where we have concerns, we will be asking businesses to substantiate their claims.”

The consumer watchdog also has similar probes underway across the packaging, consumer goods, good manufacturing, and medical devices sectors. 

Lowe encouraged businesses to take steps to ensure that environmental credentials made are accurate and meaningful, and importantly, “come forward” if they become aware they have made misleading marketing claims. 

“Our sweep has shown that claims are most useful when they are relevant, clear, reliable and transparent,” she noted.  

“Businesses who cooperate and advise of any issues with their operations, will be considered more favourably than those who wait for the ACCC to unearth these problems.” 

Environmental Concerns Among Consumers’ Top Consideration

Recent surveys reveal concerns around the environmental impact of products was among the top concerns for consumers. 

A survey by Deloitte in 2020 revealed the biggest lifestyle change by consumers was cutting down on single-use plastics, followed by shopping for brands with environmentally sustainable values. 

In 2019, Accenture conducted a survey of 6,000 consumers in 11 countries across North America, Europe and Asia. It found 83 percent of respondents believed it was important for companies to design products that can be reused or recycled. 

Nearly three-quarters said they’re currently buying more environmentally friendly products than they were five years ago, and an overwhelming 81 percent believe they would buy more over the next five years.  

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