Australian market regulators cracking down on greenwashing

The entity in question, ASX listed Tlou Energy Limited (Tlou), was said to have made false and misleading statements to the market in relation to the ecological impact of its energy producing activities. Tlou was issued four infringement notices and paid $53,280 in fines.

This enforcement action follows a suite of public announcements made by ASIC and the Australian Competition and Consumer Commission (ACCC) regarding the regulatory bodies’ intent to crack down on misleading claims regarding greenwashing.

As a reminder, greenwashing involves the misrepresenting of the extent to which a company, product, service or investment strategy is environmentally friendly, sustainable or ethical.

ASIC and the ACCC have the power to commence action against entities that:

• engage in conduct that is misleading, deceptive or is likely to mislead or deceive; or
• make false or misleading representations,

with respect to greenwashing under the and the ASIC Act ^[1] (for the supply of financial services or financial products) and the Australian Consumer Law ^[2] (ACL) (for the supply of goods and services), respectively.

Importantly, these consumer protection laws operate extraterritorially and apply to entities that carry on business in Australia, irrespective of their place of incorporation. ^[3]

For all overseas and domestic entities that do business in Australia, now is the time to review your marketing and consumer-facing material to ensure that any representations contained therein are free from greenwashing.

Greenwashing practices that breach these consumer protection laws expose businesses to civil liability and severe maximum penalties as set out in the following table.

On top of these penalties, ASIC and the ACCC may name and shame entities that have engaged in greenwashing as a means to deter future conduct. Such action places contravening entities at serious risk of reputational harm.

To avoid breaches of these consumer protection laws, businesses should ensure that any environmental or sustainability claims they make are able to be supported by fact. Should your business require advice on how to mitigate these risks and to ensure compliance with such consumer protection laws, please reach out to your usual Bird & Bird contacts.