91É«ÇéƬ

Dr Juliet Bourke  00:04

You're in the supermarket, choosing between two bottles of washing liquid. One has a simple label listing what it does, the other has a leafy logo, earth tone packaging, and the words "eco-friendly" splashed across the front. Naturally, you grab the eco-friendly one. It feels like the responsible choice, but what if that label means nothing at all? 

Dr Riona Moodley  00:29

You will see that a number of products are labelling themselves as green or environmentally friendly, and it's useful then to pick up that product and see, can you work out what they mean by that, because if you can't, then that is likely to be a form of greenwashing.Ìý

Dr Juliet Bourke  00:49

From the products in your pantry, to your energy providers, and even your investment portfolio. Everyone is going green. But when a brand that claims to be sustainable can't back it up with hard evidence, it's called greenwashing, and lately it's landing some of Australia's biggest brands in hot water.Ìý

Dr Juliet Bourke  01:08

This is The Business Of, a podcast by the 91É«ÇéƬ Business School, and I'm Dr Juliet Bourke, Adjunct Professor in the School of Management and Governance. Dr Riona Moodley is a lawyer and lecturer in the Faculty of Law and Justice at 91É«ÇéƬ. She has the insights you need to build a truly sustainable brand.Ìý

Dr Juliet Bourke  01:41

Riona, what are the most common ways that brands greenwash?

Dr Riona Moodley  01:46

Put very simply, greenwashing occurs when a business or a company misleads or falsely portrays their product, service, or even their business operation, as being more environmentally friendly or sustainable than it really is. I suppose the most obvious example of that is where a company makes a false statement about what they're doing. So, for example, a company might say, "we're investing in renewable energy", but they're actually not doing that. So that would be a very overt example of greenwashing, but there's a whole spectrum of other more nuanced forms of greenwashing, and that's really what we're seeing quite commonly across various industries. And so that includes making statements that are essentially half-truths, so it can include labelling your product as being green or environmentally friendly or carbon neutral, but not really explaining to consumers what is meant by that, and that can result in consumers misinterpreting what that signage or labelling means. We see in practice a lot of companies using terminology, so terms like "green", "carbon neutral", "environmentally friendly", and to give you an example. So you might have a garbage bag that is branded as "green", it might even be literally green, and a consumer who picks up that particular product in a supermarket will look at it, and they might interpret the green signage to mean that it's biodegradable or that it's environmentally friendly, but what the manufacturer might actually mean is that it's made from recycled plastic. Now those are two completely different interpretations, and it results from a lack of information being provided to the consumer.

Dr Juliet Bourke  03:54

I think I've done that. I think I've picked up dog poo bags that are green and they've got a symbol on them, and I'm just assuming that they are environmentally friendly, and now you're making me rethink that.

Dr Riona Moodley  04:07

Yeah, and I would invite anyone to just go down a supermarket aisle and have a look at the signage and the labelling of products, and you will see that a number of products are labelling themselves as "green" or "environmentally friendly", and it's useful then to pick up that product and say, can you work out what they mean by that? Because if you can't, then that is likely to be a form of greenwashing. It's not greenwashing when a company is able to clearly explain what they mean by the term.

Dr Juliet Bourke  04:42

Well, I think there is a company that got themselves into hot water, so to speak. I think there's been a few of them, but one of them really stands out is this one with Clorox, and they were fined $8 million for claiming that their Glad garbage bags were made using 50% ocean plastic. What happened there? Why is it such a landmark case?

Dr Riona Moodley  05:03

It's a landmark case because what the ACCC were able to successfully argue was that, although the company may have had great intentions of trying to make their garbage bag more environmentally friendly, the statement itself was found to be false. Rather than the product having been sourced from recycled ocean plastic, the company knew that the plastic was actually sourced from the shorelines of Indonesia. And some might ask, "well, what's the difference?" Well, there is a difference, because there is specific messaging that they're providing to consumers to entice them to buy their product by saying, look, we're helping our marine life by removing plastic from the ocean, when in actual fact that's not the true story.

Dr Juliet Bourke  05:58

Is that splitting hairs?

Dr Riona Moodley  06:00

Look, I think it's not splitting hairs, because at the end of the day, under our consumer protection laws, companies are prohibited from making false statements, and also from making statements that could potentially mislead consumers. And that's really important to preserve market integrity. And so if a company is going to say something quite specific, like "we've derived our plastics from the ocean", and that's untrue, that is a false statement to a consumer who might rely on that in choosing them over another product.

Dr Juliet Bourke  06:36

I think there are other products that seem to be doing something similar, when we look at products that have eco-labels, because they want to help the environment. We've seen brands like Banana Boat and Hawaiian Tropic with their "reef-friendly" claims, and what was it about the "reef-friendly" that didn't quite work in those cases?

Dr Riona Moodley  06:56

Yeah, so this is a case that's currently before the Federal Court, so no finding has been made, but the ACCC alleges that, and it's Edgeworth Personal Care, who are the manufacturers of these sunscreens. The ACCC alleged that, the product itself is misleading, because, while it does not contain certain chemicals that are harmful to the marine environment, and to reef specifically, it contains other chemicals that still are potentially harmful to marine life. And so that's that disconnect between the messaging and I suppose what is being alleged, or what might be the reality, but again, Edgeworth deny those allegations, and it's still before the court. So we'll see what comes out of that, but I think, yeah, that case is quite an interesting example, because it demonstrates the litigation risk that can sometimes arise if there's not clear messaging around a product.

Dr Juliet Bourke  07:58

This sounds like a minefield. On the one hand, you can see that an organisation has put their marketing campaign through to marketing, and they've come up with something really simple and catchy, like "50% ocean plastic" or "reef-friendly", and to a degree that's true. But to a degree it's not, and it's on the not side that they're getting into legal trouble. How do you navigate that line?

Dr Riona Moodley  08:23

It can appear to be challenging for businesses, because in many ways they're trying to do the right thing, but there's a half-truth attached to what they're putting out to consumers, and they are reaping financial benefits from those half-truths. And so this is where I think companies and businesses do need to understand that there's still accountability that needs to be had, as to what is actually provided to consumers, and we should also be mindful that withholding information can also be a form of misleading and deceptive conduct. So the long and the short of it for businesses is, be truthful, be accurate, and have evidence to support the claims you're making.

Dr Juliet Bourke  09:12

Let's just say they're on the wrong side of that, and they are subject to one of these claims. What's the impact for the business on getting it wrong?

Dr Riona Moodley  09:21

Well it, of course, it harms their consumer confidence in the brand, and we know that businesses spend significant amounts of money building up their brand, and so greenwashing litigation can take a big toll. And I think we've seen this with a number of brands, including Clorox and the Glad brand, they've changed their branding and marketing following that piece of litigation. And so, I think there's been a positive impact from some of the greenwashing cases that have been run by the regulators, because it's reshaping corporate behaviour in a positive way, where consumers can now be a little bit more confident that they're getting correct information and accurate information.

Dr Juliet Bourke  10:05

Can you see on share price, is there a sort of one-to-one? You're in the public eye in litigation, you've been found to have greenwashed, and you can feel it in your hip pocket immediately.

Dr Riona Moodley  10:17

Oh, I definitely think they've been financial impacts to a number of companies. This is particularly so in the financial services industry, and so we've seen superannuation companies, as well as investment firms, targeted, and of course that has had financial impacts on the company, the share price, but also the penalties that have been imposed in those successful greenwashing cases.

Dr Juliet Bourke  10:44

So, what have they been doing? Is it about where the superannuation fund has placed the fund? They've said that the money's going to a green account, we're not doing fossil fuels, for example. Is that what it's about?

Dr Riona Moodley  10:55

Yes, exactly. Take, for example, the Mercer Superannuation litigation that was successful. That was commenced by ASIC. Mercer had indicated to members and investors that they were going to not invest in particular industries, which included the fossil fuel industry, gambling, as well as the alcohol industries. They put out statements to that effect, and that was found to be false, so they were in fact, and that particular fund was still investing in those industries. And as a result, the federal court found against them, and ASIC was successful in obtaining quite a high civil penalty. So I think it was in the order of about $11 million dollars, so a clear financial impact, but did create a reset for the company.

Dr Juliet Bourke  11:54

So we see terms like "eco-friendly", "biodegradable", "conscious packaging" on lots of marketing campaigns, and I'm wondering, what kind of evidence does the company need to demonstrate that's legitimate? 

Dr Riona Moodley  12:07

The best way, and where companies have been successful in defending these claims, is to show and to demonstrate to the court that they had a reasonable basis for making that claim, and that they have evidence to support their presentation of that particular claim or representation. And so long as they're able to demonstrate that to the court, they can potentially defend the claim successfully.

Dr Juliet Bourke  12:34

And do you think there are any grey areas when brands are thinking about marketing their sustainability but it's not quite clear?

Dr Riona Moodley  12:43

My advice to companies is, if you do have a product and you find that you're looking at the marketing of that product objectively, and some of the statements that you're making about those, or that particular product is: vague, or too simple, could be open to misinterpretation. You should then have a bit of a rethink about how you're presenting that information to a consumer. And of course, you know, if you're walking through the supermarket, you want to have easy signage to decide whether you're going to invest in that product. This is where I think it's useful for companies to also, of course, they can't put all the information on the product, but they can say, "if you would like to find out more information about this, please go to our website", and there are consumers who will want to check the website.

Dr Juliet Bourke  13:40

And I've heard about this term "greenhushing". What's that about?

Dr Riona Moodley  13:44

So greenhushing is the opposite of greenwashing, but it lands in the same place. Greenhushing occurs where a business downplays their green credentials, or fails to provide relevant information to consumers about their products in order to avoid scrutiny or greenwashing scrutiny. And ultimately that is not good for business, and silence can also constitute misleading and deceptive conduct under our Australian Consumer Law. So, if you've got information that is relevant to consumers, it is important that you put that information out there for them to make an informed choice about that particular product.

Dr Juliet Bourke  14:36

Is greenhushing then this idea that you don't want to fly your flag too high? You've got something going on, but you don't want to be on the front foot.

Dr Riona Moodley  14:45

Yeah, or you don't want to perhaps alert regulators so that they can start taking a look at whether or not the claims are in fact true and correct. I think it misunderstands the purpose behind ASIC, as well as the ACCC, making greenwashing a key enforcement priority. If you have a product that is in fact doing what it says it's doing, there is very little risk that you are going to be fined for engaging in greenwashing. It simply comes down to, are the statements you are making true, and if they're true, do you have information to back it up? It's as simple as that. So I think businesses sometimes over complicate the risk around greenwashing, but if you keep it simple; accuracy, transparency, and evidence, you're going to be fine.

Dr Juliet Bourke  15:49

So, thinking about now, there's this higher level of scrutiny, presumably following these cases around greenwashing. Has it changed the way that businesses now talk about their environmental goals?

Dr Riona Moodley  16:01

I believe it really has. I think it's, it's created a shift in how businesses are thinking about their governance structures and putting in place. I think there's a little bit more thought behind that, and in many ways, I think the regulators have played a really important role in that shift. As much as there's been a rise in greenwashing litigation, the cases that have been run have been strategic. And for the most part, ASIC, as well as the ACCC, have done quite a lot to educate businesses, and to get them to get on the front foot when it comes to how they're marketing and representing their products or services. So, I think that's been really useful for businesses.

Dr Juliet Bourke  16:47

And I think the ACCC has some guidelines around that, some principles?

Dr Riona Moodley  16:51

Yeah, so they've actually got eight guiding principles, which anyone can have a look at online, and ASIC also has their own guiding principles in relation to financial products. I've distilled those into, I suppose, five that I would say are the key principles. I mean, the first takeaway for business is; keep it simple, accurate, and make truthful claims about your products. Secondly, have evidence, reliable, credible evidence to support those statements that you're putting out to the public. Of course, scientific reports are most credible, but you need to think about what is the basis for that particular statement. Third, avoid broad vague claims, so the general guidance from the ACCC has been do not use terms such as "green", "eco-friendly", "carbon-neutral", unless you are prepared to explain to the consumer what it is you mean by that. So, just going back to the previous example, "green" could mean compostable, "green" could mean recycled plastic. Consumers will make different choices based on what that actually means in context. And the fourth is, I think transparency is really key. It might seem tempting to businesses to downplay their ESG credentials to avoid scrutiny, but going back to Australian Consumer Law, it's very important that consumers have all relevant information available to them to make an informed choice. Silence or omitting information or giving half-truths can also amount to greenwashing. So, finally, if businesses are going to make representations about future matters, and I think this is particularly relevant when we're looking at achieving net zero by 2030, businesses need to have a reasonable basis for those targets or future goals and aspirations. And that can include consulting with experts, engaging in financial modelling, and just building the case for any aspirations or targets that they seek to meet in the future.

Dr Juliet Bourke  19:27

So I'm just standing back here and thinking, as a small business owner, I've got a fashion label, I want to promote that it has a low impact. What are the three bits of evidence I need to present back to the customer to say, and I'm justified in saying, "low impact"?

Dr Riona Moodley  19:46

The fashion industry is an interesting one, because I think there are broader questions the industry needs to ask about sustainability in general, given that we know textiles are filling up landfill at the moment. But we are seeing more conscious brands making a concerted effort to completely restyle how they're producing clothing and manufacturing clothing and using biodegradable fibres, for example. There are other brands that are trying to engage in recycling of polyesters, I think we had Shein as one of them, as well as Zara, H&M has also been involved in that. And much will depend on how they market that information to the public. Because when it comes to recycled polyesters, yes, on the one hand, the company is doing something positive in terms of recycling, but at the same time those recycled polyesters are also leaching a lot of micro plastics, and they're also landing up in landfall. And so there's there are questions that need to be raised about how sustainable is this particular process.

Dr Juliet Bourke  21:09

So, I accept that fashion has a lot to address, but if I am that fashion business owner and I want to say "low impact", where do I start? What do I say?

Dr Riona Moodley  21:22

I think it would be starting from getting down to basics. I think looking at what is your brand, and what do you want to communicate to customers. Do you want to have a sustainable clothing line, and what does that mean? And so, if we're thinking about an environmentally friendly clothing brand, then I think the business has to now think about what are innovative ways that I can now produce clothing that will be in reality sustainable and environmentally friendly. And then lead from there.Ìý

Dr Juliet Bourke  21:57

And so how do I prove that? 

Dr Riona Moodley  21:59

Well, it will involve some costs, but it will involve research and approaching experts to find out, well, how can I develop this clothing line in a way that is going to be, in fact, sustainable? So it's not simply enough to hope that your product is, you have to do the research. Because, of course, if it is sustainable, in fact, and you have research and evidence to support it, you will likely reap the benefits of it, because we know consumers are prepared to spend more on environmentally friendly products.

Dr Juliet Bourke  22:36

So, you seem to think that consumers care about the environment, and I'm sure some do care about the environment. But I think I see a lot of people also buying from Shein and Temu, and I'm not sure that that's what they're putting out there.

Dr Riona Moodley  22:55

Look, I think there is a mixed bag there, however, I would say that research, and there was a recent study undertaken by Monash University last year, has demonstrated that consumers are becoming more environmentally conscious in the context of their purchasing power. And so, notwithstanding the cost-of-living crisis, their research was able to show that consumers are prepared to spend more on environmentally friendly and sustainable products. So yes, while I think there are still consumers that are not considering that as a factor when purchasing products, we are seeing it as a trend, and this is why businesses are engaging in greenwashing. It's because there is a financial incentive there, and they're aware that consumers are prepared to pay more for environmentally friendly products.

Dr Juliet Bourke  23:52

And then, as consumers, are we getting better at spotting when we're being misled about sustainability?

Dr Riona Moodley  23:59

I'd like to think that we're becoming a bit better at it. Consumers do have a role to play here. I think we have the capacity to hold business to account for the statements they make. So, I would, I generally invite, I invite friends to do it as well. I say, well, next time you're going into the shopping centre and you're picking up a product, and you're actually purchasing it because you think that it is environmentally friendly. Have you looked at the packaging to see if there's further information to explain why it's environmentally friendly?

Dr Juliet Bourke  24:37

So, Riona, you've talked about the need for consumers to be more savvy, and you've also talked about the importance of businesses being accountable. Where does the balance lie?

Dr Riona Moodley  24:48

Well, I think there's scope for both business and consumers to do better in terms of, so for businesses, of course, to be more transparent about the products and services that they're providing, and if they say that they're sustainable, to establish that that is true and correct. And at the same time, it's important for consumers themselves to play a role in holding business to account, but also to be accountable themselves. When we make informed choices that are better for the environment, that is better for everyone as well. So, I think there's a balance that could be struck when both business and consumers are both playing that role, wanting to improve how we use products and services, businesses providing products that are more environmentally friendly and sustainable in reality, and consumers demanding that as well from those businesses. And saying, well, actually, if you don't do this, because we care about the environment, and we're mindful of the major impacts that are happening as a result of our consumption of goods and services, we want to take a proactive approach. Where do you see the future going? I think we're going to continue to see greenwashing litigation come through the courts and the regulators continuing to issue infringement notices, and I think in relation to some of the more egregious instances of greenwashing, yes, they will commence litigation. I do think that going forward we will see more litigation tackling carbon offsets and net zero projections and plans, and that's just I think by virtue of a lot of the additional reporting that we now have in the space.

Dr Juliet Bourke  26:47

And a greater role for the consumer? 

Dr Riona Moodley  26:49

And a greater role for the consumer, hopefully, I mean, I think part of the reason why the ACCC, as well as ASIC, commence litigation, it's not just to educate business about what they should be doing, but to educate the broader public about accountability in this area, and being a little bit more discerning and discriminating when assessing if they want to, for example, invest in a particular financial product that is making certain representations about their green credentials, or a product that claims to be sustainable or environmentally friendly.

Dr Juliet Bourke  27:30

That's Dr Riona Moodley from 91É«ÇéƬ Faculty of Law and Justice. She's also a researcher at the Institute of Climate Risk and Response. If you want to hear how one entrepreneur turned her frustration with greenwashing into a movement for change. Listen to our episode with Lottie Dalziel, the founder of Banish.

Lottie Dalziel  27:49

I was trying to live more sustainably, and the first thing that I went to change was, I was going to have a smoothie, and in that smoothie at home, I was going to put it in a single-use plastic straw. So you can put two and two together, and go, well, this I know isn't great for the planet. So I just did a simple Google search, which was best sustainable straw. Eventually I figured out that a stainless steel straw was going to be the right one for me. And then they arrived a couple of days later, individually wrapped in plastic. So I thought, why not create a platform that teaches people how to live more sustainably, but also connects them with brands and businesses in Australia that are doing the right thing when it comes to sustainability.Ìý

Dr Juliet Bourke  28:28

You'll find the link in the episode description. The Business Of is brought to you by the University of New South Wales Business School, produced with Deadset Studios.