Alex is Sprintlaw’s co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
Contents
Sustainability sells. Australian customers are increasingly choosing brands that promise greener products, cleaner supply chains and lower carbon footprints.
That creates a real opportunity for your business - and a real legal risk if the claims don’t stack up. That risk has a name: greenwashing.
If you want to promote your environmental credentials confidently and legally, it’s important to understand what greenwashing is, how Australian law treats environmental claims, and the practical steps you can take to avoid costly mistakes and protect your reputation.
In this guide, we unpack the meaning of greenwashing, why it matters, the key legal risks for Australian businesses, and a clear checklist to help you advertise your sustainability initiatives accurately and with evidence.
What Is Greenwashing?
Greenwashing is when a business makes statements - intentionally or not - that give consumers the impression a product, service or business is more environmentally friendly or sustainable than it really is.
In simple terms, it’s using words, labels or imagery that suggest “green” benefits without solid proof, or while leaving out important facts a customer would reasonably want to know.
- Definition: Greenwashing is the practice of making false, misleading or exaggerated claims about environmental benefits or sustainability performance.
- What it looks like: Vague phrases (like “eco-friendly” or “planet safe”) with no context, invented or unclear “green” logos, selective disclosure of a minor positive while ignoring a larger negative, or claims that can’t be substantiated.
- Why intent isn’t everything: Even well-meaning claims can mislead. Under Australian law, the impact on consumers - not just the business’s intention - is critical.
Common Examples
- Labelling a product “100% natural” or “biodegradable” without specifying conditions or timeframes and without evidence.
- Claiming “carbon neutral” without a credible basis (for example, no verifiable emissions calculations or offsets).
- Stating “made with recycled materials” when the percentage is very small and presented in a way that could mislead.
- Using leaves, green colour palettes and “earth” imagery to imply environmental benefits that don’t exist.
- Highlighting recyclable packaging while omitting that the main product contains non-recyclable or single‑use components.
For example, a local café promoting “compostable” takeaway cups may mislead if the cups only break down in industrial composting facilities that aren’t widely available in the area - unless the limitation is clearly disclosed.
Why It Matters: Consumer Trust And Australian Law
Today’s customers care about sustainability and expect honesty. They move quickly when they feel misled, and social media amplifies reputational damage.
Legally, environmental claims are treated like any other advertising claim in Australia. The Australian Consumer Law (ACL) prohibits misleading or deceptive conduct and false or misleading representations. That applies whether your claim appears on packaging, websites, social media, in-store signage or in sales scripts.
The Australian Competition and Consumer Commission (ACCC) investigates suspected greenwashing, issues guidance, accepts court‑enforceable undertakings and infringement notices, and can commence court proceedings. Ultimately, it’s the courts that decide if the law has been breached and impose penalties.
If your business communicates “green”, “sustainable”, “net zero”, “carbon neutral”, “recyclable” or similar claims, now is the time to check your compliance approach - and your evidence.
How Does Greenwashing Happen In Practice?
Most greenwashing isn’t an elaborate scheme. It often arises from loose language, enthusiasm getting ahead of evidence, or missing context. Watch out for these patterns:
- Vague or unqualified claims: Words like “eco”, “green”, “sustainable” or “better for the environment” without specifics, timeframes or proof.
- Selective disclosure: Emphasising a small positive (for example, recycled packaging) while omitting a larger negative (for example, energy‑intensive manufacturing).
- Unverifiable certifications or symbols: “Green” logos or badges that are not from a legitimate third party or that could be easily misinterpreted.
- Comparisons without context: “50% more recycled content” - compared to what? Your own past model? A competitor? The base material?
- Misleading visuals: Nature imagery or colour schemes that create a green impression without a factual basis in the product.
- Conditional claims without the condition: “Biodegradable” or “compostable” that only holds true under specific conditions (industrial facilities, certain temperatures) that aren’t disclosed.
It’s important to remember that if the overall impression created by your marketing is misleading - even if individual statements are technically accurate - you still risk breaching the ACL.
Legal Risks And Penalties Under The ACL
There isn’t a separate “greenwashing law” in Australia. Environmental and sustainability claims are assessed under the ACL like any other representation.
Misleading Or Deceptive Conduct (Section 18)
Section 18 of the ACL prohibits conduct in trade or commerce that is misleading or deceptive (or likely to mislead or deceive). This is a broad rule that captures the overall impression of your marketing, packaging and sales communications. You can read more about how section 18 works in our guide to section 18 of the Australian Consumer Law.
False Or Misleading Representations (Section 29)
Section 29 specifically prohibits false or misleading representations about goods or services, which can include claims about performance, quality, composition or benefits - all of which commonly appear in “green” claims. For a deeper dive into how these claims are assessed, see the key elements of misleading or deceptive conduct.
Who Enforces The Law?
- ACCC: Investigates suspected greenwashing, issues public guidance, can issue infringement notices, accept undertakings and start court proceedings.
- Courts: Determine whether conduct breaches the ACL and impose penalties, corrective advertising orders and compensation where appropriate.
- Other regulators: In some sectors (for example, financial products), the Australian Securities and Investments Commission (ASIC) also scrutinises sustainability claims.
Penalties And Remedies
For corporations, the maximum civil penalty under the ACL is the greater of:
- $50 million; or
- three times the value of the benefit obtained; or
- 30% of adjusted turnover during the period of the breach (minimum 12 months).
For individuals, the maximum civil penalty is $2.5 million.
Courts can also order corrective advertising, compensation, and other remedies. Beyond the legal consequences, public investigations and media coverage can cause serious reputational harm, loss of customer trust and lost sales.
How To Avoid Greenwashing (Practical Steps)
The best way to avoid greenwashing is to be precise, transparent and evidence‑based. Here’s a practical checklist you can apply to every environmental claim before it goes public.
1) Substantiate Every Claim
- Keep a claims file for each product or campaign containing your evidence (for example, test reports, lifecycle assessments, certifications, offset evidence).
- Use current data and credible methodologies. If figures change (new suppliers, updated formulations), update your claim and your internal proof.
- Be ready to provide the evidence to customers or regulators if asked.
2) Be Specific And Add Context
- Avoid blanket terms like “green” or “eco-friendly”. Say exactly what is greener and by how much.
- Quantify claims (for example, “70% recycled content in the outer packaging”). State the relevant scope (packaging, product, manufacturing, delivery).
- Explain comparisons, including the baseline. If you say “now with 50% less plastic”, clarify what you’re comparing against (for example, your 2023 model).
3) Disclose Limitations And Conditions
- If a claim depends on specific conditions (for example, industrial composting), say so clearly and prominently.
- If a benefit is limited (for example, recycled content only in certain components), say which components. Avoid small print that changes the overall impression.
4) Use Legitimate Certifications And Logos
- Only use third‑party certification marks where you’re authorised and your product actually meets the criteria.
- Make it easy for customers to verify - link to certification registries or provide accessible proof.
5) Review Your Visuals
- Check images, colours and design elements. Ask: would a reasonable customer take away a stronger “green” impression than is justified by the facts?
- Avoid imagery that implies benefits you can’t substantiate.
6) Train Your Team
- Provide practical training and a simple sign‑off process so marketing, sales and customer service teams know how to check claims and escalate questions.
- Include a quick reference guide with do’s and don’ts, and examples tailored to your products.
7) Build Compliance Into Your Operations
- Map your claims to your supply chain. Obtain written assurances and data from suppliers and keep it updated.
- Schedule periodic audits of “evergreen” content on packaging, websites and product listings to ensure it remains accurate.
- Have a process for quickly correcting claims if circumstances change.
If your claim is high‑profile or complex, consider a short review with a consumer law specialist before you publish. Many businesses also run a brief ACL “sense check” on campaign concepts using a structured checklist.
Key Takeaways
- Greenwashing means making false, misleading or exaggerated environmental claims - including through vague language, visuals or omissions.
- In Australia, environmental claims are regulated under the Australian Consumer Law. The ACCC investigates and brings cases, and the courts decide breaches and penalties.
- Penalties for corporations can be the greater of $50 million, three times the benefit, or 30% of adjusted turnover; individuals can face penalties up to $2.5 million.
- To avoid greenwashing: substantiate every claim, be specific and contextual, disclose limitations, use legitimate certifications, review visuals and train your team.
- Stronger governance reduces risk - align supplier contracts, marketing approvals and customer‑facing terms so your claims stay accurate and verifiable.
- If you’re unsure about a claim, a quick ACL review can save significant legal and reputational costs later.
If you would like a consultation on minimising greenwashing risks or reviewing your environmental claims and compliance, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
