Greenwashing Claims: Why Sustainability Marketing Is Under Scrutiny

People want to support sustainable businesses - and many shoppers actively factor sustainability into what they buy, with plenty willing to pay a little more for the “greener” option. That demand creates a real opportunity.

But sustainability isn’t just a market trend or a clever marketing angle. When businesses overstate, exaggerate, or loosely describe their environmental credentials, it can quickly cross the line into greenwashing - and that’s exactly why regulators, consumers, and competitors are paying closer attention than ever.

Greenwashing isn’t just a PR issue - it can be a legal one. In Australia, environmental and sustainability claims are expected to be clear, accurate, and supportable. The risk usually isn’t one big lie. It’s the impression created by broad language, missing context, or claims that can’t be backed up.

If you’re making sustainability claims (or planning a campaign), the goal isn’t to stop talking about sustainability - it’s to say what you can prove, in a way customers won’t misread.

How greenwashing happens (and why it’s rarely one big lie)

Most greenwashing doesn’t start with a meeting where someone says, “Let’s mislead customers.” It often starts with good intentions.

A team is trying to communicate something real - less waste, a better ingredient, a new supplier standard - and the wording drifts into the kind of phrases that feel safe because they’re everywhere: green, eco, sustainable, planet-friendly. The problem is those words don’t read like values to customers. They read like facts.

Sometimes it’s scope creep. A product has one improved feature, and the claim quietly expands to cover the whole thing. “Recyclable” starts as “the outer box is recyclable” and turns into a headline that sounds like the entire product can go in the recycling bin. “Plastic-free” applies to one layer of packaging - while another layer still uses plastic. “Australian made” is used because the final step happens locally, even though most manufacturing happens offshore.

“Compostable” might only be accurate in industrial conditions. “Sustainably sourced” might mean a supplier has a policy, not that the materials are certified or independently verified. “Carbon neutral” might rely heavily on offsets without explaining what was reduced, what was offset, and how.

Then there are visual cues that can be just as misleading as the words: leaf icons, earthy colours, “natural” language, badge-style labels that look official. Even if each element seems harmless on its own, together they can create a story the business can’t support.

Why this is a legal risk in Australia (and why scrutiny is rising)

In Australia, greenwashing risk usually comes back to a simple idea: you can’t mislead consumers.

Under the Australian Consumer Law, businesses must not engage in misleading or deceptive conduct. That’s why greenwashing disputes often come down to what the claim communicates overall - not whether a single sentence can be defended in isolation.

The ACL also prohibits false or misleading representations about goods and services. This matters when sustainability marketing implies a product has a particular standard, quality, benefit or characteristic - like being “fully recyclable”, “sustainably sourced”, or “carbon neutral” - but the business can’t support that implication.

Scrutiny is rising because regulators are actively looking. In March 2023, the ACCC reported that an internet sweep found more than half of the businesses reviewed had environmental claims that raised concerns (often described as 57% of the businesses reviewed). That’s a strong signal that regulators see this as a widespread issue - not a niche one.

It’s not only the ACCC, either. Advertising is also shaped by industry self-regulation. The AANA Environmental Claims Code (effective 1 March 2025) forms part of the advertising self-regulatory system - meaning complaints can be made through the Ad Standards process - and it reflects the same expectation: environmental claims should be truthful, accurate, and able to be substantiated.

The claims most likely to cause trouble (and how they go wrong)

When greenwashing becomes a problem, it usually falls into a few patterns - and they’re worth calling out because they’re so common.

Vague, feel-good claims like “eco-friendly” or “green” can mislead if they don’t explain what’s actually better, by how much, and compared to what. Without specifics, the claim can turn into a broad promise consumers read as a guarantee.

Absolute claims like “100% recyclable”, “plastic free” and “zero emissions” are high-risk because they leave no room for nuance. If there’s an exception, a hidden condition, or a part of the product that doesn’t match the headline, the claim can fall apart quickly.

Comparative claims (“greener than X”, “50% less carbon”) raise immediate questions: compared to what baseline, measured how, and across which parts of the product lifecycle? A comparison without a clear reference point can create certainty the business can’t justify.

Future-focused claims (“net zero by 2030”) can be legitimate - but the risk is presenting a goal like a guarantee, without a credible pathway: what’s in scope, what will change, and how progress will be tracked.

Disposal and lifecycle claims (“biodegradable”, “compostable”) often depend on conditions - industrial facilities, timeframes, local processing availability - that don’t match how consumers will realistically dispose of the product.

Even certifications and trust marks can cause trouble. Logos, badge-style labels, and words like “certified” can imply independent verification. If the certification doesn’t mean what a customer would reasonably think it means - or if it’s partial, outdated, or used without proper permission - it can become misleading.

Carbon claims: why they get their own warning label

If there’s one category that attracts outsized attention, it’s carbon.

Terms like “carbon neutral”, “net zero”, “zero emissions”, and “powered by renewables” sound clear but they can mean very different things depending on scope, boundaries, and whether offsets are doing the heavy lifting.

A common risk is presenting offsets as if they erase impact. Offsetting can be part of a strategy, but it’s not the same as reducing emissions - and consumers may assume it is unless the claim explains what’s actually happened.

Carbon claims also tend to involve technical assumptions: which emissions are included, what timeframe is being measured, which parts of the supply chain are counted, and what evidence supports the calculation. If those boundaries aren’t clear, a short marketing line can unintentionally promise more than the business can prove.

If you choose to reference frameworks, Climate Active is one example used in Australia for carbon neutral certification - but even then, the claim still needs to be accurate, current, and described in a way that doesn’t overstate what certification covers.

The substantiation rule (the evidence test)

Here’s the simplest way to think about substantiation: if someone asked you tomorrow, “How do you know that’s true?”, could you answer confidently - with documents, not just a story?

The safest approach is to have the proof before you publish the claim, and to keep it organised. That proof might be testing results, supplier documentation, certifications, calculations, or lifecycle analysis - but it needs to exist and it needs to match what you’re actually saying.

This is where a lot of businesses trip up. Evidence has to line up with the exact words you’re using. “Recyclable” isn’t the same as “made with recycled materials.” “Plastic free” isn’t the same as “no plastic in this outer box.” “Carbon neutral” is not the same as “we bought offsets once.”

Disclaimers can help - but only if they’re clear, prominent, and consistent with the headline. If the main claim is strong and the qualifier is buried, the message people take away may still be misleading.

Where greenwashing risk hides

A lot of businesses focus on the website copy and forget the other places claims show up - where they’re often less controlled and more vulnerable to exaggeration.

It can be a product label with a badge-style icon. A social post written quickly. An influencer brief that “fills in the blanks” with broader language than you intended. A sales deck that turns a limited feature into a brand-wide promise. A tender response where sustainability claims are made too confidently because everyone feels pressure to be competitive.

The risk isn’t just one statement. It’s inconsistency - and the way repeated messaging across channels reinforces an impression that isn’t fully supported.

What happens if you get it wrong

Sometimes the consequences start commercially: customers feel misled, complaints rise, and trust drops. Sometimes it becomes competitive: a rival challenges the claim publicly or in procurement.

But it can also become legal. In April 2025, the Federal Court ordered Clorox Australia to pay $8.25 million in penalties for misleading “ocean plastic” representations about certain GLAD bags, following ACCC action. Alongside penalties, outcomes like corrective notices and compliance programs can also be ordered.

The takeaway isn’t that every mistake ends in court - it’s that regulators are willing to treat environmental claims as serious consumer claims, with real consequences when they’re misleading.

How to stay out of trouble

The best greenwashing prevention isn’t a perfect wording formula. It’s a system.

That usually starts with visibility - knowing exactly what environmental claims you’re making, where they appear, and what evidence supports them. When claims are scattered across websites, ads and supplier conversations, risk increases.

A simple internal process helps. Higher-impact claims should be checked before they go live. Supplier representations should be documented, not assumed. And marketing language should stay aligned with what can genuinely be substantiated under Australian Consumer Law.

None of this needs to be heavy. But it does need to be deliberate.

Greenwashing prevention, in practice, looks like fewer sweeping statements, clearer evidence, and a structure that makes it easy to stand behind what you say.

If you’re unsure whether your current claims would hold up, an expert consumer law review can give you clarity - before someone else tests them for you.If you would like a consultation on greenwashing, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.