‘Green’ credentials are good but take care
The Sustainable Business Council ‘Better Futures 2022’ report surveyed New Zealanders and identified that more than 43% of Kiwis are committed to living a sustainable lifestyle; this is a continuation of an upward trend over the last three years. Given the public’s motivation to be more sustainable than ever, businesses are honing their marketing strategies towards environmental sustainability.
Making any form of environmental claim in marketing is known as ‘green marketing.’ Making an environmental claim that is misleading, false or unsubstantiated is usually referred to as ‘greenwashing.’ It is not a new concept but, given the increasing number of Kiwis wanting to make environmentally sustainable decisions, the desire to market products and services in a green way continues to increase. However, if any such claims are not substantiated, an advertiser may inadvertently cross the line between green marketing and greenwashing.
Responsibility for preventing greenwashing falls to a number of different regulatory bodies in New Zealand. These include:
- Commerce Commission that, amongst its many roles, takes action to enforce the Fair Trading Act 1986 by taking breaches of the legislation to court
- Advertising Standards Authority for breaches of the Advertising Standards Code, and
- Financial Markets Authority through its enforcement of the fair dealing provisions of the Financial Markets Conduct Act 2013 and its support of New Zealand’s transition to an ‘integrated financial system.’ This not only takes into account financial returns but also non-financial factors such natural, social and human capital impacts.
Greenwashing with words
Expressly making environmental claims, or using words to imply a certain environmental attribute, that do not exist is a mistake a business could easily make. Regardless of whether this is unintentional, using words such as ‘eco’, ‘organic’, ‘natural’, ‘green’, ‘plant powered’, ‘non-toxic’, ‘plant based’, ‘zero waste’, ‘recycled content’, ‘compostable’ and many more can all be examples of greenwashing unless the words are completely truthful, substantiated and not misleading in any way.
For example, if packaging says a product is ‘recyclable’, but can only be recycled at recycling centres in a limited area, or by returning the packaging to the manufacturer, this may be considered greenwashing. Similarly, if packaging says ‘compostable’ and does not specify under what kind of composting environment it will break down; it may amount to greenwashing and a misleading environmental claim.
Even if a business avoids using any ‘green’ terms but uses imagery that implies some environmentally friendly attributes, that could be considered greenwashing. The most common examples of using images for greenwashing are the use of the three green arrow recycling logo, an image of the earth or a green tick. These may be easy enough to justify, but a business could still be found to be greenwashing for using images of flowers and trees if those images lead a consumer to believe the product has environmentally friendly qualities that it does not have.
Deliberately misleading statements
Any false environmental related statements are obvious greenwashing, for example, if a product is labelled ‘organic’ or ‘plant based’ if it is not made with organic material or plants. What is trickier though, is making statements that aren’t technically false, but the unique combination of marketing features could lead a consumer to an incorrect conclusion about a product.
A recent example is a case of a smallgoods producer that used the phrase ‘100% NZ owned’, along with imagery of farms and a rural address for the business. This company was found liable for greenwashing because its pork products comprised 87% imported meat, but the marketing led consumers to reasonably believe the pork was New Zealand-reared. The company was fined $180,000 for this breach despite each marketing element being truthful; the company was 100% New Zealand owned and the rural farm address was a genuine address for the business. Businesses, however, cannot ‘hide’ behind each statement being truthful if the combined elements together lead a consumer to a misleading conclusion.
Tips to avoid greenwashing
Avoiding greenwashing is a case of stepping into the shoes of a consumer to assess whether any of the marketing elements could potentially be interpreted to give the product more environmentally friendly attributes than it truly has. Before finalising packaging or marketing, business owners should ask themselves if the marketing is:
- In plain English
- Not exaggerated, and
- Not misleading in its overall impression.
It is also important there are frequent branding and marketing checks, particularly if there is a comparative claim. A good example is making a claim that a product is ‘recyclable’; that may be considered greenwashing if the ability to recycle that product is not commonly available through local council recycling services.
Keeping business honest
Anyone who identifies greenwashing, or wants a greenwashing claim investigated, can report suspected cases to the Commerce Commission, Advertising Standards Authority, Financial Markets Authority or another relevant regulator or industry body.
In the case of a complaint made to the Commerce Commission, depending on the severity of the alleged greenwashing, the Commission can either choose to disregard the report, investigate further, or issue a warning or a ‘compliance advice’ letter. In significant cases it can take the company or individual responsible for the alleged greenwashing to court for a breach of the Fair Trading Act 1986. The penalty for failing to ensure environmental claims are truthful and substantiated can be up to $600,000 for a company and $200,000 for an individual.
Even if the Commerce Commission or other regulatory body decides not to pursue a company for greenwashing, a competitor may choose to sue privately for misleading statements that may amount to greenwashing.
A private claim has been filed by United States-based carpet making giant Godfrey Hirst against New Zealand-owned carpet company Bremworth. In 2020, Bremworth announced that it was moving to 100% wool fibre production. In its marketing campaign, Bremworth made a number of claims about the benefits of wool over synthetic carpets. One such claim was that the weight of a nylon carpet in an average size home was similar to 20,000 plastic bags. Godfrey Hirst, that manufactures nylon carpets (amongst other types of carpet), claims this is misleading as the consumer is led to believe its nylon carpet has the same environmental impact as 20,000 plastic bags. Bremworth stands behind its statements as being factually correct; the two companies remain in costly ongoing litigation.
Care is needed
We can reasonably expect that, given the focus on environmentally conscious decision-making by the New Zealand public, green marketing will continue to rise and, along with it, instances of greenwashing. Business owners keeping a careful and critical eye on marketing will help both the consumer make a considered and informed choice, and ensure the business does not succumb to greenwashing.
The Commerce Commission has guidelines on greenwashing: go to www.comcom.govt.nz and search for ‘greenwashing.’
If you would like help with reviewing marketing claims for your business or would like more information on greenwashing, please contact us.
 Commerce Commission v Farmland Foods Ltd  NZDC 14839
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Copyright, NZ LAW Limited, 2022. Editor: Adrienne Olsen. E-mail: [email protected]. Ph: 029 286 3650