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ACCC warning on carbon claims

ACCC warning on carbon claims

WITH “CARBON NEUTRAL” the marketing catchcry of the year, competition lawyers will have pounced on the much-anticipated “carbon claims” guide released by the Australian…

WITH “CARBON NEUTRAL” the marketing catchcry of the year, competition lawyers will have pounced on the much-anticipated “carbon claims” guide released by the Australian Competition and Consumer Commission (ACCC) last week.

The guide, Carbon Claims and the Trade Practices Act, has been developed to help businesses who make claims about “carbon neutrality” and “carbon offsetting” understand their obligations under the “misleading and deceptive conduct” provisions of Trade Practices Act 1974 (Cth).

Carbon claims are coming under increasing scrutiny from the ACCC, which has already investigated a number of claims by companies. Perhaps the best-known of these is the pending Federal Court action against car manufacturer GM Holden concerning “green” claims used in a marketing campaign for Saab vehicles.

With regard to claims concerning carbon offsetting, the guide emphasises the requirement that the offset be “additional” — meaning that the carbon reduction must not be one that would have occurred anyway.

The guide also specifically deals with forward-credited offsets; that is, offsets that are credited to the buyer immediately, even though the carbon reduction won’t occur until later. Offsets from tree plantations are a prime example of this.

Because of the risk that the carbon reduction from forward-credited offsets may never eventuate, the guide recommends that buyers seek a contractual commitment from the provider that replacement credits will be secured if the offset project falls through. Companies buying forward-credited offsets must also inform customers of the fact that the offsets won’t actually be realised until some time in the future.

No doubt there will be even greater scrutiny of carbon offset claims when the Federal Government releases its national carbon offset standard in December. According to the ACCC, this will set minimum standards for the generation, verification and retirement of offset credits.

In relation to claims of “carbon neutrality”, the guide acknowledges that there’s no standard definition of the term and no definite requirement that all three scopes of emissions must be accounted for. However, it cautions businesses to consider carefully the “overall impression” that use of the term will give consumers, and it directs business to be specific about exactly which scope of emissions and elements of the product lifecycle have been neutralised.

The ACCC is particularly critical of “low carbon” claims — which it describes as ambiguous, broad and meaningless without any context. Again, the guide warns businesses to be specific about the context of the claim, which may require providing a comparison.

It also specifically looks at claims about future performance, such as “going carbon neutral by 2030”. It warns businesses that, if challenged, they will need to be able to establish that they had reasonable grounds for making the claim.

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