The Federal Court of Australia has recently ordered Clorox Australia Pty Ltd (Clorox) to pay an A$8.25 million pecuniary penalty following a successful greenwashing enforcement action by the Australian Competition and Consumer Commission (ACCC) arising from ‘50% ocean plastic’ representations on a range of GLAD kitchen tidy bags and rubbish bag products.

The case against Clorox

The ACCC alleged that various representations made by Clorox about its kitchen tidy and rubbish bags being made with “50% Ocean Plastic” or “50% Ocean Bound Plastic” were false or misleading. Such representations included the products’ visual packaging, including an image of a wave overlaid on an image of a blue coloured waste disposal bag and the use of words “GLAD to be GREEN”. These products were marketed at a higher price than Clorox’s other comparable products.

The ACCC considered the fine print disclaimers on the back of the packaging which noted that the products were actually “made using 50% ocean bound plastic that is collected from communities with no formal waste management system within 50km of the shoreline” were insufficient to dispel the misleading impression created by the other information on the packaging.

Clorox admitted to breaching the Australian Consumer Law and accepted the A$8.25 million penalty. In addition to the financial penalty, the Court also ordered Clorox to establish and implement a compliance program for three years, publish a corrective notice on the GLAD Australia website and corresponding social media accounts and maintain the notice for at least 90 days, and contribute towards the ACCC’s legal costs. This significant penalty underscores the seriousness with which Australian courts and regulators view greenwashing.

Other Australian greenwashing cases

Regulatory scrutiny and enforcement action against greenwashing has increased over the last 12 months with Australia’s regulators taking proactive steps to seek civil penalties against companies engaging in greenwashing conduct.

The Australian Securities and Investment Commission (ASIC) dominated the headlines in this area last year with the landmark penalties it obtained in greenwashing cases against Mercer Superannuation (A$11.3 million), Vanguard (A$12.9 million) and Active Super (A$10.5 million). The ACCC has now joined the party with this action demonstrating its commitment to tackling greenwashing.

This decision also follows the earlier enforceable undertaking by Moo Premium Foods to the ACCC for similar ‘ocean plastic’ claims.  

Greenwashing cases in New Zealand

Greenwashing litigation continues to be a risk for New Zealand businesses, and we fully expect action to be taken in respect of any clear breach.

Despite greenwashing not currently being identified as a specific enforcement priority for the Commerce Commission or the Financial Markets Authority (FMA), this should by no means be interpreted as signalling a lack of focus in this area. On the contrary, the Commerce Commission has made it clear that it intends to over-commit its litigation fund this year, and breaches outside of its key priority areas can still expect action to follow. The FMA has also made its intentions known, censuring Pathfinder late last year in relation to misleading statements about the nature of its KiwiSaver funds’ ethical investments. We anticipate both regulators are watching carefully for a substantive greenwashing case to bring.

In addition to regulatory risk, key private actions against greenwashing continue in the High Court. We are awaiting the outcome of New Zealand’s first greenwashing case in which Lawyers for Climate Action NZ Inc, Consumer NZ, and the Environmental Law Initiative seek declarations that Z Energy breached the Fair Trading Act with misleading statements about its emissions reductions initiatives in a public advertising campaign. More recent is the claim by Greenpeace against Fonterra which claims that the words on Fonterra’s butter packaging “100% New Zealand grass-fed” is misleading when grass typically makes up only 80% of the cows’ diets.

These claims highlight the ongoing risk for corporates and the importance of accurate representations.