Commerce Commission Releases Guidelines On Environmental Claims

The Commerce Commission has released guidelines to help traders understand their obligations when making environmental claims, including how to avoid breaching the Fair Trading Act.

The Commission recognises that consumers are increasingly considering the environment when buying goods and services. Consumers may be prepared to pay a price premium for a good or service that gives the impression that it is beneficial for the environment or has a lesser impact on the environment than an alternative good or service. Examples of environmental claims include statements made about recycling, biodegradability, and the use of recycled content or natural products.

Commission Chair Anna Rawlings said: “When making purchasing decisions based on environmental claims, consumers trust that these claims are reliable and accurate. Often consumers are unable to access the kind of technical information they would need to second-guess claims”.

“Environmental claims can be a powerful marketing tool and traders are using environmental claims as a point of difference from their competitors. All traders, large and small, need to make sure their environmental claims are substantiated, truthful, and not misleading to avoid breaching the Fair Trading Act,” says Ms Rawlings.

The Environmental Claims Guidelines cover general principles and include examples of cases taken by the Commission in the past. The guidelines remind traders to: 
• be truthful
• be accurate
• be specific
• substantiate claims
• use plain language
• not exaggerate
• take care when relying on tests or surveys.

The Environmental Claims Guidelines can be found on the Commission’s website.

In designing these guidelines, the Commission sought input from relevant industry bodies and other government agencies.

These guidelines will be updated periodically to provide further guidance as case law, legislation or business practices evolve.

Background
The Environmental Claims Guidelines replace the Guidelines for Green Marketing, published in 2008.

Environmental claims
An environmental claim is a representation about the environmental impact of a good or service. They are sometimes referred to as ‘green claims’.

Breaching the Fair Trading Act 
There are serious penalties for breaching the Fair Trading Act 1986 – companies can be fined up to $600,000 and individuals up to $200,000 per breach. A penalty can also damage the reputation of a business.

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