GALA Gazette: Are all Saabs green? : ACCC takes action against GM Holden and guide to green marketing claims released

ASIA PACIFIC: AUSTRALIA

Are all Saabs green? : ACCC takes action against GM Holden and guide to green marketing claims released
Authors: Peter LeGuay & Kieran Gamble, Thomson Playford

On 11 February 2008, the Australian Competition and Consumer Commission (“ACCC”) released its ‘Green Marketing and the Trade Practices Act’ guidelines (“guidelines”).

Noting the growing importance that consumers place on the environmental credibility of a product, the introduction to the guidelines states “Environmental claims can be a powerful marketing tool. Companies are increasingly using environmental claims in an attempt to differentiate themselves and their products from the competition. These claims come in a wide range of forms, including statements about environmental sustainability, recycling, energy and water efficiency or impact on animals and the natural environment”.

By way of background, the ACCC is the body responsible in Australia for the enforcement of the Trade Practices Act 1974 (Cth) (“Act”). The Act applies to, among other things, all aspects of advertising, marketing, packaging and labelling of goods/services. The main and relevant provisions of the Trade Practices Act insofar as green marketing is concerned are set out in Part V of the Act. In particular, Section 52 of the Act prohibits a corporation from engaging in conduct that is misleading or deceptive or which is likely to mislead or deceive. Sections 53(a)-(g) prohibit, among other things, making false representations about goods or services with respect to their standard, quality, value or grade, or in respect of their characteristics or any approval that they may have. Contravention of Section 53 by a corporation can result in, amongst other things, fines of up to AUD$1.1million.

Accordingly, to best ensure that any green claims made do not contravene the Act, the guidelines state that anyone who makes a green claim “should ensure that their claims are scientifically sound and appropriately substantiated. Consumers are entitled to rely on any environmental claims you make and to expect these claims to be truthful”.

While the guidelines do not have legal force or add anything to the Act, they do provide guidance as to what, up until now, has been relatively unchartered waters for advertisers. The guidelines set out the way which the ACCC will approach any complaints made in respect of green claims, the standard it will apply in determining what constitutes an appropriate claim in respect of a product and what is appropriate substantiation for such a claim.

The guidelines reinforce that green claims (like any other claims) must be accurate and substantiated. The guidelines make recommendations such as:

claims should be specific (in light of the substantiation) and not general or unqualified,
claims should only be made for a real benefit and not made where the ‘benefit’ is essentially trivial or insignificant or simply advertises the compliance with an existing law (i.e. that a product is ‘CFC’ free when, because CFC’s are a prohibited ingredient in aerosols, no competitor product will contain CFCs),
claims must not overstate a benefit,
care must be taken when using images as they too can convey a green claim,
claims should be clear as to whether they relate to the product’s packaging or contents,
claims should consider the whole life cycle of the product (the guidelines give the example of a car which may be advertised as ‘fuel efficient’ as opposed to ‘green’),
caution must be taken when using endorsement certification; and
care must be exercised in evaluating substantiation of claims (particularly if there is significant credible debate on the issue).

The guidelines also set out the ACCC’s view with respect to its interpretation of common green claims such as “green”, “environmentally friendly”, “environmentally safe”, “energy efficient”, “recyclable”, “carbon neutral” and “renewable energy” or “green energy”.

As set out earlier, while the guidelines have no legal effect, they do set out the way in which the regulator will approach green marketing and may in turn be indicative of the way in which the courts view such claims.

The ACCC has recently taken action against GM Holden Ltd in respect of a number of claims made in advertisements for Saab motor vehicles in late 2007. The advertisements included claims such as “Grrrrrreeeen”, “every Saab is green”, “carbon emissions neutral across the entire Saab range” and “switch to carbon neutral motoring”. The advertisements also stated that Saab would plant 17 native trees in the first year following a Saab vehicle purchase as a carbon offset.

The ACCC took the view that, among other things, the representations implied that the net amount of carbon dioxide released into the atmosphere by any Saab vehicle, over the life of that vehicle, would be zero and that the planting of 17 native trees on behalf of the Saab purchaser would offset the carbon dioxide emissions of the vehicle for the life of the vehicle when in fact the ACCC believes those representations are not true. The matter is presently before the courts with the next directions hearing listed on 22 April 2008.