Examining the findings of the Law Council's report on Greenwashing
In the wake of growing environmental awareness, the Law Council of Australia has presented a detailed submission to the Senate Environment and Communications References Committee, shedding light on the pervasive issue of greenwashing. Greenwashing, a deceptive practice wherein products, services, investments, or initiatives are misrepresented as environmentally friendly, sustainable, or ethical, has become a significant concern for consumers and genuine sustainability efforts alike. The Law Council's submission clearly outlines the need to address the growing issue of greenwashing and comments on the lack of clear definitions and standards to assist companies looking to manage their greenwashing risks. (see the submission here: Inquiry into Greenwashing)
The Law Council succinctly defines greenwashing as the misrepresentation of a product's environmental or ethical attributes. This misrepresentation, it asserts, confuses consumers and undermines genuine sustainability efforts.
A prominent concern highlighted by the Law Council is the lack of uniformity in language, meaning, and purpose across regulatory frameworks. Achieving consistency in definitions and standards is crucial to combating greenwashing effectively.
The Law Council points to the recently launched joint initiative of the government and industry, the Taxonomy Project. This project aims to establish an Australian sustainable finance taxonomy, aligning with international schemes. The Law Council recommends a thorough evaluation of this taxonomy to ensure it aligns with commonly used sustainability terms and prevents misrepresentation.
Clear and consistent guidance materials are identified as a cornerstone in the fight against greenwashing. The Law Council stresses the need for guidelines outlining acceptable usage of terms such as ‘sustainable’ and ‘carbon neutral’. We strongly concur, as this will enable legal, risk and compliance teams to better manage the usage of such terms. Additionally, it advocates for standards for offset usage, transparency in certifications, and substantiation of claims.
The Law Council underscores the significance of monitoring recent enforcement actions by regulators and international developments. By analysing these actions, areas necessitating future law reforms can be identified.
The Law Council of Australia's submission provides a roadmap for tackling the complex issue of greenwashing. In particular, the Council’s submission makes it clear that as enforcement action and attention ramps up, businesses need to take a proactive approach to vetting their claims and actively avoid making the types of high risk claims which have been flagged as inappropriate. By doing so, we can move towards a future where genuine sustainability claims prevail, fostering a truly environmentally conscious and ethically responsible society.