Mandatory Climate Reporting is here, as the ACCC starts its crackdown on questionable climate and sustainability claims from businesses and brands. Here Natalie Dean-Weymark, co-founder and co-director of B Corp certified PR and Impact Comms agency Compass Studio, as well as reigning Sustainability Champion at B&T’s Women in Media Awards, explains what you should be doing next.
Shots have been fired, and both The Australian Competition and Consumer Commission (ACCC) and The Australian Securities and Investments Commission (ASIC) recently issued a firm warning to all – there will be more.
Coupled with changes this week in Australian Mandatory Climate Reporting, the theme for the next 12 months ahead has been clearly set: be clear in your environmental and sustainability claims, or be prepared to be called out – by regulators, consumers, or your competition.
Over the last two years, there has been a steady stream of notable greenwashing cases in Federal Court, including ASIC’s case against superannuation fund Mercer that prompted a $11.3 million penalty fee for misleading statements about “Sustainable Plus” investments. Then came the ACCC’s case against the GLAD kitchen and garbage bag manufacturer, Clorox Australia, for their ‘partly made of recycled ocean-plastics’ claim being allegedly false (and containing land plastics, not ocean plastics).
These are some big penalties for the wrong choice of words, right? But were these companies intending to deceive their customers and shareholders? In these cases, I’d say absolutely – but I’m not a Federal Court Judge. What I do know for sure is that greenwashing litigation is just the beginning, and this new government-mandated climate reporting is set to transform every industry across Australia – including yours.
In case you missed it; this week, the Australian Parliament passed a landmark climate reporting legislation that introduced mandatory climate-related financial disclosure requirements, commencing with large businesses and emitters from 1 January 2025.
This means that for the first time, “large businesses” will be required by law to make annual climate reports, which include prescribed content, and it ultimately will be audited – setting a very public platform for any environmental claims or goals to be scrutinised.
And this legislation isn’t expected to stop at big business, with a mandate for these changes to roll out to two more ‘Groups’ (categorised by company size and earnings) by July of next year.
The writing is on the wall
We anticipate that many smaller businesses will follow suit, in the knowledge that they’ll be made to do it in the future. And sustainability reporting will move over from the voluntary arena, to business as usual.
So if these changes are to become the norm, and we are operating in an environment of higher greenwashing scrutiny than ever before – as a brand or business, where do you start unpicking what’s right, and if you’ve potentially done anything wrong here?
One word: the mouthpiece. Start at your messaging, your claims, your marketing. Don’t make claims you can’t substantiate or that are vague by intention – i.e. “partly made of xxx”, “better for the environment”, or “safer for the planet”. As a general rule, if the claim requires an explanation or disclaimer, consider it a red flag and have it reviewed.
The ACCC refers to ‘accuracy and specificity’ as the golden rules when it comes to environmental or sustainability claims, so this means that we should all be making a hard steer away from broad or vague language (“green”, “sustainable”, “eco-friendly”), and moving into evidence, examples and third-party certifications..
Not only will a big ol’ red-flag brand review potentially save you from landing in hot water, or worst-case with a multi-million dollar fine – it will make your messaging stronger. By answering the “how” in the equation, you are safeguarding your organisation, whilst addressing what any discerning consumers, stakeholders, investors or regulators will be asking, regardless.
For example, ‘this product is made of 50 per cent recycled microplastics from the Pacific Ocean” – not only is this specific, but it also grounds the consumer in a very localised problem that they feel part of the solution via purchasing.
All of this means that it’s crucial to get your teams – whether internal or external – climate literate sooner rather than later. They need to understand the specifications and the importance of compliance with ACCC guidelines, and the new reporting frameworks. In this new business landscape, it’s crucial that everyone understands the power of words, even a single word. And there are many filters to assess this.
It’s also important to note that this greenwashing crackdown by regulators impacts businesses of all sizes. Australian Consumer Law prohibits content – including marketing and advertising content – that is misleading, deceptive or contains false representations, and applies to all businesses – including even sole traders. So if you’re talking the talk – it’s time to be certain that you’re walking the walk. And being crystal clear about it.
So if you take anything out of this article, what should it be? This push towards tackling greenwashing is part of a broader theme that spans the globe. And it’s not going away.
The world is changing, both locally and globally, and it’s a big deal to the bottom line – so if it’s not already a priority for focus, take this article as your sign.
