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"Greenwashing": An International Perspective ➲ How are California, Australia & NZ dealing with this concerning business practice?
This blog article aims to increase awareness about California's new Voluntary Carbon Market Disclosures Act (AB1305) which targets the increasingly concerning business practice of "greenwashing" as well as Australian & NZ efforts in the same space. The new California law requires companies or other business entities making climate-related claims in California, as well as participants in carbon emission offset markets in California to post an annual disclosure on their websites. Failure to post the required disclosure, or posting inaccurate information may invoke a civil penalty of up to $2,500 per day per violation, up to a $500,000 maximum penalty.
Greenwashing, also called green sheen, is a form of advertising or marketing spin in which green public relations (PR) & green marketing are deceptively used to persuade the public that an organization's products, aims, and policies are environmentally friendly. Wikipedia
What is California doing about "Greenwashing"?
California's new Voluntary Carbon Market Disclosures Act (AB1305) targets the increasingly problematic & unsavory business practice of "Greenwashing".
The new law requires companies or other business entities making climate-related claims in California, as well as participants in Carbon Emission Offset Markets in California to post an annual disclosure on their websites. Failure to post the required disclosure, or posting inaccurate information may invoke a civil penalty of up to $2,500 per day per violation, up to a $500,000 maximum penalty.
Who MUST post the Annual Disclosure on their website?
A company or other business entity MUST post the annual disclosure [required by new Voluntary Carbon Market Disclosures Act (AB1305)] on their website, if they:
✅ Operate within California and market, sell, purchase, and/or use Voluntary Carbon Offsets, or make any of thefollowing claims in California
✅ The Achievement of Net Zero Emissions;
✅ Claims that the company or a product is “carbon neutral”; or
✅ Other claims implying the company or a product does not add net carbon dioxide or greenhouse gases to the climate; or
✅ Claims that the company has made significant reductions to its carbon dioxide or greenhouse gas emissions.
What about claims of "Environmental Friendliness"?
Because we use award-winning Co-working spaces for meetings, work-from home + paperless office.
Whilst the new laws have no yet been judicially interpreted, our initial assessment is that our above claim does not go far enough to trigger a requirement that we provide an annual disclosure.
What is the deadline for the 1st Annual Disclosure?
The new Voluntary Carbon Market Disclosures Act (AB1305) commenced on January 1, 2024.
There is no need to panic yet, as the regulator has clarified that they expect the 1st Annual Disclosure to be posted by January 1, 2025.
What needs to be included in the Annual Disclosure?
The Annual Disclosure MUST include the following:
🔎 Information about the applicable carbon offset project, documenting the support and accuracy of the claims being made including location, timeline, relevant standards, durability, independent third-party verification, and emissions reduced or removed.
🔎 AB 1305 also requires disclosure of the accountability measures that will apply if the carbon offset project is not completed or does not meet projected emission reduction or removal goals.
What are the Civil Penalties for Non-Compliance?
Failure to comply may result in a civil penalty of not more than $2,500 per day for each day the information is not available or accurate on the company website, not to exceed $500,000.
How is Australia dealing with "Greenwashing"?
ACCC "Greenwash" Claim Findings
The following 8 issues of concern were raised by the Australian Competition & Consumer Commission (ACCC) based on the findings of its extensive study of "Greenwashing" claims made by Australian Businesses, which was published in March 2023.
1️⃣ Vague and unqualified claims;
2️⃣ A lack of substantiating information;
3️⃣ Use of absolute claims;
4️⃣ Use of comparisons;
5️⃣ Exaggerating benefits or omitting relevant information;
6️⃣ The use of aspirational claims, with little information on how these goals will be achieved;
ACCC Guide for Australian Business ➲ 8 Principles for Trustworthy Environmental Claims
In December 2023, following the findings of its extensive study (refer above) the ACCC published its Guide for Australian Business which outlines the following 8 Principles for Trustworthy Environmental Claims:
1️⃣ Make accurate and truthful claims;
2️⃣ Have evidence to back up your claims;
3️⃣ Do not hide or omit important information;
4️⃣ Explain any conditions or qualifications on your claims;
5️⃣ Avoid broad and unqualified claims;
6️⃣ Use clear and easy to understand language;
7️⃣ Visual elements should not give the wrong impression; &
8️⃣ Be direct and open about your environmental sustainability transition.
ACCC Civil & Criminal Penalties
"The ACCC can take court action against a person for making false or misleading representations and for engaging in misleading or deceptive conduct.
It is for the court to determine liability and an appropriate penalty, which will depend on the circumstances of each individual case.
The maximum penalty for each contravention of the relevant penalty provisions of the Australian Consumer Law (ACL) by a corporation is the greater of:
⚖️ 50 Million;
⚖️ If the Court can determine the benefit obtained that is “reasonably attributable” to the contravention, 3 times the value of that benefit
⚖️ If the Court cannot determine the value of the benefit, 30% of the corporation’s adjusted turnover during the relevant period.
Individuals can also be responsible for contravening the ACL.
The maximum penalty for each contravention by an individual is $2.5 million.
Criminal liability for corporations and individuals for offences under the Australian Consumer Law (ACL) may apply in respect of some claims."
All traders, large and small, must make sure their environmental claims are substantiated, truthful, and not misleading to avoid breaching the Fair Trading Act 1986 (NZ).
There are serious penalties for breaching the Fair Trading Act:
⚖️ Companies can be fined up to $600,000 and individuals up to $200,000 per breach.
⚖️ A penalty can also damage your business’ reputation.
Making a "Greenwashing" complaint to the NZCC
You can make a complaint through our complaint form at www.comcom.govt.nz or by calling us on 0800 943 600.
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