The recent announcement that the self-regulated Australian Association of National Advertisers’ (AANA) will be undertaking a review of the AANA Environmental Claims Code (Environmental Code) follows the growing community concern about the environment, increased sustainability claims and climate change. The review will focus on making certain that the Environmental Code is meeting its objectives in ensuring that advertisers maintain rigorous standards when making environmental claims and representations, in hopes of increasing consumer confidence to the benefit of the environment and sustainability.
The Environmental Code is managed by a complaints handling system, Ad Standards, which provides independent determinations regarding breaches of the Code. Whilst complaints under the Environmental Code make up a small proportion of the advertising complaints received by Ad Standards, the numbers are increasing each year. In 2021, complaints under the Environmental Code made up 1.42% of the total complaints received by Ad Standards, representing roughly a 50% increase from 2020.
To run the risk, or to not run the risk?
The growing concern surrounding ‘green’ marketing and the increase in advertising complaints serves as a timely reminder to ensure that each business’ advertisements align with the Environmental Code, and do not mislead or deceive consumers. The Environmental Code’s three sections focus on the following to ensure responsible, innovative and respected marketing pertaining to the environment:
- The representation must be truthful and factual;
- There must be a genuine benefit to the environment; and
- The environmental claim must be substantiated.
In review of the recent Ad Standards cases, Australian companies should be wary that using particular language and statements may bring rise to environmental complaints. For example, vague and non-specific statements such as ‘clean hydrogen’, ‘renewable gas’ and ‘advancing everyday life’, may risk receiving an Ad Standards complaint for breach of the Environmental Code. Such a complaint may be due to the claim being non-specific, non-factual, or misleading due to a lack of scientific evidence and substantiation.
Taking it to Court
The Australia Competition and Consumer Commission (ACCC) is no stranger to environmental claims, with consumer issues relating to environmental claims and sustainability leading their 2022/2023 compliance and enforcement priorities. The decision against Volkswagen AG in 2019 for false representations about diesel emissions standard compliance serves as a reminder of the ACCC’s commitment to their priority.
Looking to the future
The fact that the Environmental Code is administered by the self-regulated AANA should not diminish its importance to businesses for several reasons, including:
- The fact that all consumer complaints are published and therefore can be reviewed by the general public and can create significant negative PR;
- The time and resources required for a business to respond to a complaint under the Environmental Code can be significant, and a failure to respond (or a poor response) can increase the potential negative PR impacts;
- Environmental activist groups are using the Environmental Code as a way to test businesses claims as complaints a cheap and easy to file; and
- An adverse decision under the Environmental Code (or the mere filing of a complaint) could bring your claims to the attention of the ACCC if they are thought to be unsubstantiated.
Given the rising number of complaints to Ad Standards under the Environmental Code rising, businesses should ensure that they are compliant, and that any environmental claims made are factual, clear and substantiated.
Each case should of course be considered in isolation, and legal advice should be sought before any changes are implemented. If you would like to discuss the Environmental Code’s requirements further, or would like any advice or assistance, please do not hesitate to contact our Intellectual Property team.