Update – Court approves $8.25 million penalty and orders costs against Clorox for greenwashing marketing practices
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Earlier this year, we highlighted the ACCC’s agreement with Clorox Australia (Clorox) to recommend a $8.25 million penalty against Clorox over its greenwashing practices which breached the Australian Consumer Law (ACL) (see here).
The Federal Court has now approved this penalty, ordering Clorox to:
1. pay the $8.25 million penalty;
2. within 90 days and at its own expense, establish and implement an ACL compliance program for a period of 3 years requiring, amongst other things:
- updates to Clorox’s existing compliance policies to ensure a commitment to compliance with the ACL;
- Clorox to issue an internal policy statement confirming its commitment to compliance with the ACL;
- Clorox to take certain steps to realise its commitment to compliance; and
- Clorox Australia to require all local personnel to report any ACL non-compliance issues or concerns of which they become aware to the Compliance Officer (Clorox Australia’s Company Secretary);
3. publish a corrective notice within 14 days in relation to its contraventions of the ACL; and
4. pay $200,000 towards the ACCC’s costs.
In determining the quantum of the penalty, the Court observed that notwithstanding agreement between the parties, it is ultimately a matter for the Court to determine whether the penalty proposed is an appropriate penalty in the circumstances. Having applied the French factors (discussed here), the Court was satisfied a $8.25 million penalty was appropriate to achieve the objectives of specific and general deterrence.
The Clorox penalty serves as an important reminder to businesses that greenwashing practices can carry severe financial consequences.
To mitigate this risk, 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 greenwashing regulation, please reach out our experts listed in this article.
