Green is not always good

By Sharon Segal and Jasna Bratic.

Key Points:
Businesses must ensure the accuracy of any claims made about the environmental benefits of their products and services, whatever those claims might be.

Businesses claiming that their products or services have environmental benefits should carefully consider whether those claims are sustainable, as the Australian Competition and Consumer Commission ("ACCC") has now begun to pay very close attention to "green" claims. Just because a claim is "green" does not mean it can be any less accurate than any other marketing claim.

Background

GM Holden is the Australian supplier and marketer of Saab motor vehicles, trading as Saab Australia.

During July and August 2007, GM Holden promoted the green credentials of Saab vehicles in newspaper and magazine advertisements with statements including "Grrrrreen", "Every Saab is green", "Carbon emissions neutral across the entire Saab range" and "Switch to carbon neutral motoring". The advertisements also contained a statement that Saab would plant 17 native trees in the first year following a Saab vehicle purchase as a carbon offset.

In relation to the tree planting, a news item currently published on the Saab Australia website explains that GM Holden has partnered with Greenfleet Australia, a company which specialises in reducing the environmental impacts of transport. Under the arrangement, Greenfleet will plant 17 native trees for each new or demonstration Saab vehicle purchased, which, according to the news item, will absorb the greenhouse gas emissions produced by a car in one year.

ACCC proceedings

In January 2008, the ACCC instituted legal proceedings in the Federal Court against GM Holden alleging misleading and deceptive conduct and false representations concerning the green claims made by GM Holden in its advertising of Saab vehicles.

Although we make no comment regarding the strength of the ACCC's claims, it is noted that the consumer watchdog considers that GM Holden's advertisements represented to consumers that:

• the net amount of carbon dioxide released into the atmosphere by any Saab vehicle, over the life of the vehicle, would be zero
• Saab vehicles have some attribute or attributes which contribute to reduced carbon dioxide emissions by those vehicles compared with Saab vehicles supplied prior to the publication of the advertisements; and
• planting 17 native trees on behalf of the purchaser of a Saab vehicle would offset the carbon dioxide emissions for the life of the vehicle.

The ACCC is alleging that those advertisements were misleading because:

• there would in fact be a net release of carbon dioxide into the atmosphere by the operation of any motor vehicle in the Saab range
• Saab vehicles do not have any attribute or attributes which contribute to reduced carbon dioxide emissions by those vehicles compared with Saab vehicles supplied prior to the publication of the advertisement; and
• planting 17 native trees would not provide a carbon dioxide offset for any period other than a single year's operation of any motor vehicle in the Saab range.

Accordingly, the ACCC is alleging that GM Holden has breached sections 52 and 53(c) of the Trade Practices Act:

• Section 52 prohibits conduct that is misleading or deceptive, or likely to mislead or deceive.
• Section 53(c) prohibits businesses from making false representations that goods or services, among other things, have a particular performance characteristic or benefit.

The remedies which the ACCC is seeking include a declaration that GM Holden has breached the Trade Practices Act, an injunction restraining GM Holden from similar conduct in the future, corrective notices and a review of GM Holden's trade practices compliance program.

The case is currently before the Federal Court.

Lessons to be learnt

As consumer awareness about environmental issues increases, there is a growing trend for marketing claims to promote the environmental benefits of products and services. Green claims are not something new; in the past, however, they have been more focused on the environmental characteristics of a particular product or service. For example, "phosphate-free", "recyclable", "ozone friendly" and "environmentally friendly" are terms that consumers have in the past associated with green marketing. Today, popular green marketing claims include the ability to neutralise the carbon footprint of a product or service, whether a car, flight or household items.

Although the strength of the ACCC's claims is yet to be tested, the main lesson from the ACCC's decision to institute proceedings about Saab's advertising is that businesses must ensure that they will be able to verify any claims made about the environmental benefits of their products and services, whatever those claims might be. Just because a claim is "green" does not mean it can be any less accurate than any other marketing claim.

The difficulties faced by consumers in verifying, and indeed understanding, green claims makes green marketing a vulnerable area for misleading and deceptive claims. It is therefore not surprising that the ACCC has started paying particularly close attention to green claims.

One area of particular concern to the ACCC is the use of claims relating to carbon offsets. The ACCC has identified a need to provide guidance to consumers and businesses in relation to claims made about carbon offsets. The ACCC is proposing to release guidance to businesses and consumers which clarify the legal obligations under the Trade Practices Act for businesses making carbon offset claims and assist consumers in assessing such claims. To this end, the ACCC recently released an Issues Paper inviting interested parties to comment on certain preliminary issues identified by the ACCC.

For further information, please contact Chris McLeod and Sharon Segal.