Advertising the environmental features of a company’s consumer or financial product or service can create a greenwashing risk, where the advertising amounts to misleading or deceptive conduct under the Australian Consumer Law or the Corporations Act and the Australian Securities and Investments Commission Act. But the greenwashing risk is not limited to environmental claims in relation to products and services. A company’s emissions reduction targets, net-zero pledges and transitions plans can also be the subject of greenwashing claims. So to can a company’s advertisements of its environmentally friendly corporate image (whether or not connected with a specific product or service).
An environmental corporate image that is misleadingly advertised may distort the market, inflate company profits and, erode consumer confidence. These widespread impacts will encourage regulatory and public interest actors to pursue such conduct.
Some examples of corporate image greenwashing:
In 2019, the UK environmental charity, ClientEarth, filed a complaint with the OECD against BP’s advertising campaign that focused on BP’s low carbon energy products. ClientEarth alleged this was misleading because more than 96% of BP’s annual spend was in oil and gas. BP ultimately withdrew the advertisement.
In 2021, the non-profit environmental group, Earth Island Institute, commenced a greenwashing proceeding against Coca-Cola in the District of Columbia Superior Court. Coca-Cola’s advertised that it was committed to creating a “World Without Waste” and that it would by 2030 help to collect and recycle one bottle or can for each one it sold globally. In dismissing the case, the Court ruled that the advertisement was “aspirational…and not promises to consumers and [is] without measurable datapoints that would render the statements true of false”. Further, the Court ruled that the statements were not tied to a specific product or service and therefore not misleading under DC’s statute.
In 2022, the UK Advertising Standards Authority banned a series of misleading HSBC’s advertisements that highlighted how the bank had invested $1 trillion in climate-friendly initiatives (e.g. tree planting, encouraging clients to achieve climate targets). The Authority ruled the advertisements were misleading because HSBC did not acknowledge its own contribution to emissions through the financing of businesses that emitted “notable levels” of CO2e.
A more recent example of corporate image greenwashing is the case brought by Consumer NZ against Z Energy Limited under the misleading or deceptive conduct provisions of the Fair Trading Act 1986 (NZ). Z Energy is the largest retailer of petroleum products and the second largest CO2e in Aotearoa New Zealand. In 2022, Z Energy commenced an advertising campaign promoting that it was “in the business of getting out of the petrol business” and transitioning to a “transport energy company”.
Consumer NZ alleges the advertising campaign has improved Z Energy’s reputation leading to it being rated as NZ’s preferred fuel brand, and increased sales of Z Energy’s petroleum products. The problem with this outcome is that Consumer NZ alleges the advertising campaign is misleading or deceptive because:
(a) the advertised 42% emissions reduction target excluded certain Scope 3 emissions that were not disclosed. The excluded Scope 3 emissions were just under 300 times greater than the “Operational Emissions” that constituted the 42% emissions reduction target;
(b) despite the representation that Z Energy was “getting out of the petrol business”, Z Energy took no meaningful steps to achieve this objective and its market share continued to increase;
(c) Z Energy’s advertised target of installing electric vehicle charging stations in 20% of its retail sites by the end of 2023 and 40% by the end of 2025 would not materially reduce emissions;
(d) the biofuel production plant featured in the advertisement was closed shortly after the commencement of the advertising campaign.
Consumer NZ seeks declaratory relief and corrective advertising. Damages are not claimed. But this case and the findings made in this case (and others) may provide essentially building blocks from which damages cases could be pursued in subsequent litigation.
