The ACCC and ASIC have both made greenwashing an enforcement priority, and the cases coming through the courts are sending a direct message to business leaders: the gap between what you promise and what you can prove is now a liability.

And regulators are taking action. Between April 2023 and June 2024 alone, ASIC made 47 regulatory interventions to address greenwashing misconduct, including Federal Court proceedings and more than $123,000 in infringement notice payments. A separate ACCC internet sweep of 247 businesses conducted in late 2022 found that 57 per cent had made concerning claims about their environmental credentials, prompting the regulator to launch active investigations across packaging, consumer goods and food manufacturing.

No business is immune to regulatory or court action. When the ACCC announced a record $12.9 million penalty against Vanguard Investments Australia for misleading ESG claims, ASIC Deputy Chair Sarah Court stated: "Greenwashing is a serious threat to the integrity of the Australian financial system, and remains an enforcement priority for ASIC,” she said. “It is essential that companies do not misrepresent that their products or investment strategies are environmentally friendly, sustainable, or ethical.”

Dr Riona Moodley, a lecturer in the Faculty of Law and Justice at UNSW Sydney, explains how businesses can understand this regulatory landscape. Her analysis of where companies are getting it wrong (and what it takes to get it right) was the subject of an interview with Dr Juliet Bourke, Adjunct Professor in the School of Management and Governance at UNSW Business School for The Business Of, a UNSW Business School podcast.

What greenwashing actually looks like

Greenwashing occurs when a business misleads consumers by presenting its products, services or operations as more environmentally friendly than they actually are. The most obvious form is an outright false statement.

But the more prevalent and legally consequential forms are more nuanced, according to Dr Moodley: "There's a whole spectrum of more nuanced forms, and that's really what we're seeing quite commonly across various industries," she said. "That includes making statements that are essentially half-truths, such as labelling your product as green, environmentally friendly, or carbon neutral, without really explaining to consumers what that means, which can result in consumers misinterpreting the signage or labelling."

Learn more: Walking the net zero talk: Easy to claim, hard to verify

She gave the example of a garbage bag. A bag that is literally green and marketed as such may lead a shopper to assume it is biodegradable. The manufacturer, however, may simply mean it is made from recycled plastic. Both uses of the word "green" are technically defensible; neither communicates what the consumer needs to know.

But Dr Moodley's recommendation was to pick up the product, read the label, and ask whether you can actually work out what the environmental claim means. "If you can't, it is likely to be greenwashing. It's not greenwashing when a company can clearly explain what they mean by the term,” she said.

The cases putting brands on notice

Australia's regulatory landscape has produced multiple landmark greenwashing cases that serve as useful signposts for businesses. When Clorox was fined $8.25 million, for example, the Australian Competition and Consumer Commission (ACCC) successfully argued that the company's claim that its bags contained "50% ocean plastic" was false. The plastic was not sourced from the ocean but from Indonesian shorelines.

"They were providing specific messaging to consumers to entice them to buy their product, saying, 'Look, we're helping our marine life by removing plastic from the ocean,' when in fact that's not the true story," Dr Moodley said. "Under our consumer protection laws, companies are prohibited from making false statements or statements that could mislead consumers. And that's important to preserve market integrity."

"I definitely think there have been financial impacts on many companies, particularly in the financial services industry"

RIONA MOODLEY

The fine handed down in that case was notable, but the reputational damage was arguably more lasting. Clorox and Glad subsequently changed their branding and marketing, a shift Dr Moodley sees as evidence that strategic regulatory action can reshape corporate behaviour for the better.

In the financial services sector, the consequences have been equally significant. ASIC's successful action against Mercer Superannuation found that the fund had told members it would not invest in fossil fuels, gambling or alcohol, when in fact it was still doing so. The Federal Court imposed a civil penalty of approximately $11 million.

"That did create a reset for the company," Dr Moodley observed. "I definitely think there have been financial impacts on many companies, particularly in the financial services industry. We've seen superannuation companies and investment firms targeted, and of course, that has had financial impacts on companies, their share prices, and the penalties imposed in those successful greenwashing cases."

Navigating the line between marketing and misleading

For many businesses, the difficulty lies in the gap between marketing simplicity and legal accuracy. A tagline like "reef-friendly" or "50% ocean plastic" is memorable and appealing. It may even capture something real about the product. But if it omits material information, or if the full picture tells a more complicated story, the legal exposure can be significant.

"It can appear 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," Dr Moodley said.

"This is where I think companies and businesses need to understand that there's still accountability for what they provide to consumers, and we should also be mindful that withholding information can constitute 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."

The quiet risk of greenhushing

Greenwashing attracts most regulatory attention, but its shady cousin carries its own legal risks. “Greenhushing” occurs when a business downplays or withholds information about its environmental performance, often to avoid scrutiny from regulators or competitors.

"Silence can also constitute misleading and deceptive conduct under our Australian Consumer Law," Dr Moodley explained to Dr Bourke. "So, if you've got information relevant to consumers, it is important that you put it out there so they can make an informed choice about that particular product."

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Some businesses may believe that staying quiet about their sustainability credentials reduces the risk of being challenged. Dr Moodley argued this reflects a misunderstanding of what the ACCC and ASIC are actually trying to achieve.

"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,” she said. “It simply comes down to whether the statements you are making are true and, if so, whether you have information to back them up."

What the regulators expect

Both the ACCC and ASIC have published guidance to help businesses understand their obligations. Dr Moodley distils these into five practical principles.

The first is accuracy: make truthful, specific claims and avoid vague or generalised language. The second is evidence: back every claim with reliable, credible research, including scientific reports where applicable. The third is specificity: the ACCC explicitly advises against using broad terms such as "green", "eco-friendly" or "carbon neutral" unless the business is prepared to explain exactly what it means. As Dr Moodley pointed out, to one consumer, "green" may mean compostable; to another, it may mean recycled plastic. Consumers will make different choices depending on which interpretation they hold.

"It simply comes down to whether the statements you are making are true and, if so, whether you have information to back them up"

RIONA MOODLEY

The fourth principle is transparency. "It might seem tempting for businesses to downplay their ESG credentials to avoid scrutiny, but under Australian Consumer Law, it's very important that consumers have all relevant information available to them to make an informed choice. Silence, omitting information, or giving half-truths can also amount to greenwashing."

The fifth applies specifically to future commitments: businesses making net-zero or sustainability targets must have a documented, evidence-based foundation, including expert consultation and financial modelling. "Businesses sometimes overcomplicate the risk around greenwashing, but if you keep it simple, accuracy, transparency, and evidence, you're going to be fine,” she said.

The role of the consumer

Regulatory action is reshaping business behaviour, but it cannot substitute for informed consumer engagement. Research from Monash University has found that, despite ongoing cost-of-living pressures, consumers are increasingly prepared to pay more for genuinely sustainable products. That preference is itself part of what incentivises greenwashing, but it also gives consumers real leverage.

Dr Moodley's advice is to treat green labels as prompts to ask questions, not as reasons to stop asking them. "Next time you're going into the shopping centre, picking up a product, and actually purchasing it because you think it is environmentally friendly: have you looked at the packaging to see if there's any further information explaining why it's environmentally friendly?" she asked.

For businesses, that same consumer vigilance raises the stakes for every environmental claim they make. Dr Moodley is observing the emergence of a more constructive dynamic, in which strategic enforcement by the ACCC and ASIC is gradually building a market where accurate environmental claims become a genuine competitive advantage. "I believe it really has created a shift in how businesses are thinking about their governance structures and how they're being implemented,” she said. “And in many ways, I think the regulators have played a really important role in that shift."

Looking ahead, she expects greenwashing litigation to continue, with increasing focus on carbon offset claims and net-zero projections as mandatory climate reporting obligations expand across the Australian economy.

5 key takeaways for business professionals

Marketing and communications leaders: Review all environmental claims in current campaigns against the ACCC's eight principles before the next reporting cycle. Any claim using terms such as "green", "eco-friendly", "carbon neutral" or "sustainable" must include a specific, documented explanation of what they mean in context, supported by evidence.

General counsel and legal teams: Conduct an audit of environmental representations across all consumer-facing channels, including packaging, websites, social media and financial product disclosures. Assess whether each claim is accurate, specific and backed by evidence that could withstand regulatory scrutiny or Federal Court proceedings.

Chief sustainability officers and ESG teams: Ensure that net-zero targets, carbon offset claims, and sustainability transition statements are grounded in documented modelling and expert advice. Aspirational language without a credible evidential foundation now carries material regulatory and reputational risk under both ACCC and ASIC frameworks.

Board directors and executives: Boards should seek assurance that internal governance structures include formal sign-off processes for environmental claims before publication. The Federal Court has made clear that greenwashing contraventions are serious and that penalties are intended to deter market-wide.

Superannuation trustees and investment managers: ASIC's enforcement record demonstrates that ESG investment screens and fund descriptions must precisely reflect underlying asset holdings. Any mismatch between disclosed investment policy and actual portfolio composition carries the risk of civil penalty proceedings and mandatory corrective disclosure.