Does your business make “green” or environmental claims? Are these credentials important to your business? As an increasing number of businesses seek to address growing consumer concern about global warming, the Australian Competition and Consumer Commission is focusing its attention on misleading and deceptive green claims.
In February 2008, the Australian competition and consumer commission (Accc) published a guide to educate businesses about their obligations regarding environmental claims under the Trade Practices Act 1974 (TPA). This guide Green Marketing and the Trade Practices Act is designed to help manufacturers, suppliers, advertisers and others to assess the strength of their environmental claims and improve the accuracy and usefulness of their labelling, packaging and advertising for consumers.
As environmental and green issues become increasingly mainstream, these sorts of claims can be used as a powerful marketing tool. However, because consumers will often rely on these claims, businesses must ensure that they are both sound and substantiated. The Accc guide is split up into four parts.
- Part 1 explains the scope of the TPA and the obligations that it imposes on all forms of marketing.
- Part 2 looks specifically at the various types of environmental claims that a business might make and the careful, cautious approach that should be taken. It notes that the overall impression given to the consumer is important. It draws attention to certain common, broad and often uncertain claims that are made, highlighting the problems that can occur when using terms such as green, environmentally friendly/safe, energy efficient, recyclable, carbon neutral, and renewable or green energy.
- Part 3 outlines two key, environmental efficiency schemes that are administered by the government. It briefly details the equipment energy efficiency Program and the water efficiency Labelling and standards scheme and highlights that businesses must not only comply with the rules and regulations of these schemes, but also the TPA's misleading and deceptive conduct provisions.
- Part 4 provides a short checklist for marketers to refer to when making environmental claims.
Businesses should look very closely at their current green claims to ensure that they adhere with the TPA and are in line with the Accc's guide. under the TPA, corporations are prohibited, in trade or commerce, from engaging in conduct that is misleading or deceptive, or is likely to mislead or deceive. specific types of prohibited conduct are set out in TPA s53. These include falsely representing that: - goods or services are of a particular standard, quality, value or grade - goods or services have sponsorship, approval, performance characteristics, uses or benefits they do not have - the place of origin of goods.
In assessing whether a false representation has been made, that representation does not need to have been made with the intent to deceive; it simply needs to be incorrect or misleading in the circumstances. Furthermore, when determining whether a corporation has engaged in misleading or deceptive conduct; it is not necessary to prove that the conduct actually misled or deceived anyone, rather whether there was a real, or not remote, possibility that someone may be misled or deceived. The Accc guide gives examples as to how businesses should consider and formulate their green claims.
The courts may fine corporations up to Aud1.1 million, and individuals at those corporations up to Aud220,000, for breaching this part of the TPA. Fines imposed on individuals cannot be paid by the corporation. It is important, therefore, to get it right and give careful thought to the messages conveyed to consumers. Whilst this guide is by no means a substitute for proper legal advice, it is a useful starting point for raising awareness as to the trade practices issues that arise in this area.
For more information contact Michael Sutton, Senior Associate, Dibbs Abbott Stillman. Email email@example.com.