AANA’s new environmental claims code: An overview and practical tips

This article was co-authored with Kate Hawkins.

Across the globe, businesses are keen to appeal to increasingly ethical consumers by promoting ambitious ESG initiatives. This has led to a flood of “green” claims – such as “sustainable”, “environmentally friendly” and “net carbon zero” – in almost all sectors. While businesses may have a story to tell, regulators are concerned about the use of false, exaggerated or unsubstantiated claims.

The Australian Competition and Consumer Commission (ACCC) recognises the direct impact that environmental claims have on consumers. According to the ACCC, consumers can find it difficult to verify whether the claims are true or not and are susceptible to believing inaccurate or exaggerated environmental claims. Plus, businesses that have invested in developing and implementing legitimate sustainability efforts may be disadvantaged by competitors who make false or exaggerated claims.

Following an internet sweep between 4 and 14 October 2022, which identified that 57 per cent of 247 businesses were making concerning environmental and sustainability claims, the ACCC published its much-anticipated guidance on environmental claims (Greenwashing Guidance) in December 2023.

Now, the Australian Association of National Advertisers (AANA) has followed suit, publishing its Environmental Claims Code (Code) on 22 October 2024. The new Code is aligned with the Australian Consumer Law (ACL) and is intended to reinforce the Greenwashing Guidance. It will take effect on 1 March 2025.

In particular, the Code largely mirrors the definition of an environmental claim that appears in the ACCC’s guidance, being any representation that gives the impression that a business, product or service:

• Has a neutral or positive impact on the environment.
• Is less harmful for the environment than alternatives.
• Has specific environmental benefits.

It also sets out the Code rules with an accompanying practice note, which provides some guidance on how to comply with the Code rule. Importantly, businesses need to remember the Code applies to any materials deemed advertising. Essentially, any materials a business puts out on its website, through social media channels, or in other materials (such as a business’ sustainability, community and social responsibility statements) will be caught by that definition. The Code does not only apply to traditional, formal print or digital paid advertisements.

We strongly urge our clients to familiarise themselves with these materials. Breaching the Greenwashing Guidance or the Code will likely result in a breach of the ACL.

The ACCC – the regulator responsible for enforcement of the ACL and, accordingly the Greenwashing Guidance – has made it clear that environmental claims continue to be a top priority. It has also reported a spike in complaints made by competing traders. It has therefore been seeking to upskill its own team to assess these claims. In addition to the ACCC, competitors are watching businesses, as are community activist groups. The ACCC has already taken action against businesses making claims about the use of ocean plastic and we suspect it will not hesitate to set a clear precedent where it is likely to have the most impact on consumers and healthy competition.

Similarly, complaints that green claims do not comply with the Code can be made to Ad Standards where it may be assessed by the Community Panel. This is often a first channel for complaint used by community activist groups. If a complaint is upheld, a case report is made available to the general public, and although the AANA codes are voluntary, its reach and the negative PR associated with any breaches invariably results in the advertiser changing or removing the non-compliant advertisement. In addition to the negative PR, this causes sunk time and costs for a business.

We would be very happy to help your business ensure its environmental claims are compliant. Please reach out to a member of our team if you would like to discuss how you can frame your business’ green credentials or if you would like tailored training on this topic.

In the meantime, here are some practical tips to keep in mind when preparing claims:

• Do follow published guidance and avail yourself of the AANA’s free industry-wide training.
• Do ensure claims are accurate, true and factually correct.
• Do consider the overall impression created by the claim, including the use of copy, imagery and audio elements.
• Do not make absolute or broad claims that your business, products or services have an overall positive effect on the environment if that is not the case.
• Do be specific.
• Do take care to make comparative claims that are fair, meaningful and verifiable.
• Do not make future claims unless you have reasonable grounds to do so and you have a plan setting out your goals and how progress will be measured against milestones.
• Do ensure supporting evidence is independent, transparent, reputable and robust and do not make claims that go beyond this evidence.
• Do consider the whole lifecycle of a business, product or service. If your claim only pertains to a particular part of that lifecycle, do make that clear in the claim itself.
• Do not omit key details that could contribute to an incorrect impression of your business, product or service.
• Do not rely on small print to correct impressions given by misleading environmental claims – small print can clarify claims, but it cannot contradict claims.
• Do take particular care when making claims about emissions or recycling.
• Do not cherry-pick environmental benefits which are insignificant when the business, product or service is considered holistically or simply advertise the observance of existing law (unless this is made clear).
• Do seek advice.