About the episode

A green tag. A leafy logo. A tagline promising  "eco-friendly," "recycled," or "low-impact." If you’re a conscious consumer, you’re adding that to your cart because you want to make better choices for the planet. 

But what if the product inside doesn't match the promise on the packaging? From fashion houses to investment funds, everyone is racing to go green. But when are these environmental buzzwords accurate?

UNSW Law and Justice academic Dr Riona Moodley says consumer watchdogs are cracking down on greenwashing. And some of Australia’s biggest brands are being caught out. 

So, what do brands need to know to be truly sustainable? And as a consumer, how do you spot the marketing spin?

Interested in hearing about how one entrepreneur turned her frustration with greenwashing into a movement for change? Listen to our episode with Lottie Dalziel, founder of Banish.

Want to know more? 

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Edited transcript

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-toned 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 to pick up that product and see what they mean by that, because if you can't, that is likely to be a form of greenwashing.

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.

Dr Juliet Bourke  01:08
This is The Business Of, a podcast by the UNSW 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 UNSW. She has the insights you need to build a truly sustainable brand.

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 misleads or falsely portrays its product, service, or operations as more environmentally friendly or sustainable than they really are. I suppose the most obvious example is when a company makes a false statement about what it's doing. So, for example, a company might say, "We're investing in renewable energy", but they're not doing that. So that would be a very overt example of greenwashing, but there's a whole spectrum of more nuanced forms, and that's really what we're seeing quite commonly across various industries. And so 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. We see in practice a lot of companies using terminology, such as "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 they result 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 green dog poo bags with a symbol on them, and I'm just assuming they are environmentally friendly, but 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, it's likely to be greenwashing. It's not greenwashing when a company can clearly explain what they mean by the term.

Dr Juliet Bourke  04:42
Well, I think there is a company that got itself into hot water, so to speak. I think there have been a few of them, but one that really stands out is this one with Clorox, which was fined $8 million for claiming that their Glad garbage bags were made with 50% ocean plastic. What happened there? Why is it such a landmark case?

Dr Riona Moodley  05:03
It's a landmark case because the ACCC successfully argued that, although the company may have had the best of intentions to make its garbage bag more environmentally friendly, the statement itself was found to be false. Rather than sourcing the product from recycled ocean plastic, the company knew the plastic was sourced from Indonesian shorelines. And some might ask, "Well, what's the difference?" Well, there is a difference because they're 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 Juliet Bourke  05:58
Is that splitting hairs?

Dr Riona Moodley  06:00
Look, I don't think it's splitting hairs, because at the end of the day, 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. 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, especially those with eco-labels, which aim 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, this is a case currently before the Federal Court, so no finding has been made, but the ACCC alleges that Edgeworth Personal Care, the manufacturer of these sunscreens, is responsible. The ACCC alleged that the product itself is misleading because, while it does not contain certain chemicals harmful to the marine environment, including the reef specifically, it does contain other chemicals that remain potentially harmful to marine life. And so that's the disconnect between the messaging and, I suppose, what is being alleged or what might be the reality. But again, Edgeworth denies 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 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 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 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.

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 on the business of getting it wrong?

Dr Riona Moodley  09:21
Well, of course, it harms their consumer confidence in the brand, and we know that businesses spend significant sums building their brand, so greenwashing litigation can take a big toll. And I think we've seen this with a number of brands, including Clorox and Glad; 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 run by regulators, because they're reshaping corporate behaviour in a positive way, allowing consumers to be a little bit more confident that they're getting accurate information.

Dr Juliet Bourke  10:05
Can you see on the share price if there is 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 there have been financial impacts on many companies. This is particularly so in the financial services industry, and we've seen superannuation companies and investment firms targeted. Of course, that has had financial impacts on companies, their share prices, and the penalties 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 invested? 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 successful Mercer Superannuation litigation. That was commenced by ASIC. Mercer had indicated to members and investors that they would not invest in particular industries, including the fossil fuel, gambling, and 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. As a result, the federal court found against them, and ASIC successfully obtained a high civil penalty. So, I think it was about $11 million, a clear financial impact, but it 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're looking at its marketing objectively, and some of the statements you're making about it are vague or too simple, they 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 when a business downplays its green credentials or fails to provide relevant information to consumers about its products in order to avoid 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 relevant to consumers, it is important that you put it out there so they can 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 looking at whether or not the claims are, in fact, true and correct. I think it misunderstands the purpose of ASIC and 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 whether the statements you are making are true and, if so, whether you have information to back them up. It's as simple as that. So I think businesses sometimes overcomplicate 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 created a shift in how businesses are thinking about their governance structures and how they're being implemented. 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, has done quite a lot to educate businesses and get them on the front foot when it comes to how they market and represent 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 the basis is for that particular statement. Third, avoid broad, vague claims; the ACCC has generally advised against using terms such as "green", "eco-friendly", or "carbon-neutral" unless you are prepared to explain to the consumer what you mean by them. So, just going back to the previous example, "green" could mean compostable, or "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 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. 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, and 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 it needs to ask about sustainability in general, given that we know textiles are filling landfill right now. But we are seeing more conscious brands making a concerted effort to completely restyle how they produce and manufacture clothing, for example, using biodegradable fibres. Other brands are trying to engage in polyester recycling. I think we had Shein and Zara among them, as well as H&M, which has also been involved. And much will depend on how they market that information to the public. 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 microplastics and ending up in landfill. And so there are questions that need to be raised about how sustainable this particular process is.

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

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 consumers care about the environment, and I'm sure some do. 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, research, including a recent Monash University study, has demonstrated that consumers are becoming more environmentally conscious in their purchasing decisions. And so, notwithstanding the cost-of-living crisis, their research showed that consumers are prepared to spend more on environmentally friendly and sustainable products. So yes, while I think there are still consumers who are not considering it as a factor when purchasing products, we are seeing it as a trend, which is why businesses are engaging in greenwashing. It's because there is a financial incentive, and they're aware that consumers are willing 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 businesses to account for the statements they make. So, I would generally invite friends to do it as well. I say, well, 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?

Dr Juliet Bourke  24:37
So, Riona, you've talked about the need for consumers to be more savvy and 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 businesses to account, while also being 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 businesses and consumers play that role, wanting to improve how we use products and services, businesses providing products that are more environmentally friendly and sustainable in practice, and consumers demanding that from those businesses as well. 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 result from 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 regulators will continue to issue infringement notices. 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 targeting carbon offsets, net-zero projections, and plans, and that's just, I think, by virtue of the additional reporting 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 UNSW 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 I went to change was: I was going to have a smoothie at home and 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 for the best sustainable straw. Eventually, I figured out that a stainless steel straw was 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 and connects them with Australian brands and businesses that are doing the right thing when it comes to sustainability?

Dr Juliet Bourke  28:28
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