ACCC Guidance on Carbon Claims

The ACCC has released a paper that provides guidance for companies wishing to make claims about the carbon credentials of their product and avoid contravening the Trade Practices Act 1974 (Cth) (Act).  The paper, entitled “Carbon Claims and the Trade Practices Act” provides guidelines for companies making claims about:

  1. Carbon Offsets;
  2. Carbon Neutrality;
  3. Low carbon Emissions; and
  4. Footprint Calculators.

The view of the ACCC that claims in relation to each of these factors are prone to ambiguity and therefore the possibility of leading consumers into error.  In order to avoid any misunderstanding and potential prosecution for contravention of the Act the ACCC recommends that businesses should disclose all relevant facts and explain exactly what is meant by the claim being made.  This is particularly the case with claims of carbon neutrality.  The ACCC points out that there is no universally accepted definition of this term.  Many consumers are likely to interpret a claim of carbon neutrality as meaning that the net climate impact of the business or product is zero.  Companies should clearly explain what is covered by their claim of carbon neutrality and exactly what is covered by any offset, including whether it is a forward offset (i.e. offsets that are not already realised or will take a long time to be realised, such as tree planting). 

With respect to footprint calculators that allow consumers to calculate the effect of them using a particular product or service, all assumptions or qualifying information should be given.  For example, calculations of emissions from a motor vehicle.  To avoid potential misrepresentation, such a calculator should disclose assumptions such as weight of the vehicle, speed and type of driving (i.e. city or country).

Claims of low carbon emissions should be clarified.  Such claims could be interpreted as meaning low emissions in relation to similar products, so low as to be almost negligible or low for the life of the product.  Companies making such claims need to be specific and explain exactly what is meant by the low emissions claim.

The ACCC also advises companies purchasing carbon offsets to be careful.  Purchasers need to be sure that the offsets being offered by an offset provider will cover the emissions that the offset is purchased to counter.  Purchasers should obtain contractual commitments from the offset provider to provide replacement offsets if the project doesn’t deliver anticipated carbon reductions or is destroyed, for instance if a tree plantation is destroyed by fire.

The potential pitfalls from carbon offset and neutrality claims has been revealed by the ACCC’s prosecution of GM Holden over advertisements for SAAB motor vehicles (covered in our February edition of the Automotive Industry Update).  So far this is the only such prosecution but it serves as a warning that the automotive industry needs to be careful in the way that it advertises its carbon credentials.