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As ASIC and the ACCC enforce stricter guidelines around greenwashing, many businesses are backtracking on sustainability claims.
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For some, greenhushing means it’s all quiet on the climate front
06 April 2023
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10 minute read
A crackdown on businesses fraudulently promoting sustainability measures has seen many organisations scale down or completely remove their climate-related commitments.
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The term greenhushing has been coined for businesses seemingly backtracking on previously bold sustainability claims as regulators such as ASIC and the ACCC make greenwashing an enforcement priority.
Early this year, ASIC sent a message with its first court action, against Mercer Superannuation, for allegedly making misleading statements about the sustainable nature of some investment options.
That came after ASIC issued over $140,000 in infringement notices over greenwashing concerns, including against Tlou Energy Limited, Vanguard Investments Australia, Diversa Trustees Limited, and Black Mountain Energy.
At the time, ASIC deputy chair Sarah Court said the action reflected ASIC’s increased efforts to ensure sustainability-related claims were accurate.
“There is an increased demand for sustainability-related financial products, and with that comes the growing risk of misleading marketing and greenwashing,” said Ms Court.
“If financial products make sustainable investment claims to investors and potential investors, they need to reflect the true position.”
Greenhushing gained currency after the World Economic Forum learned last November that nearly a quarter of the 1,200 firms surveyed had not planned to publicise their science-based emissions targets out of fear of retaliation, according to a report by consultancy firm South Pole.
Since then the AFR has reported several examples of businesses backtracking on their climate-related commitments — greenhushing — including:
- BHP - Stated greater advocacy on climate change could carry a legal risk in unnecessarily exposing the organisation to the additional risk of greenwashing in the face of increased regulatory action
- AustralianSuper - Removed its “net zero by 2050” fact sheet from its website in March 2023, which included a commitment to active ownership to drive climate action
- Active Super - Removed its entire 70-page 2022 Responsible Investment Report from its website in early March having only published it in late December, the report demonstrated how the portfolio of Active Super was assessed for ESG risk
- UniSuper - Recently removed a reference to its commitments to improve its disclosure of its carbon footprint. It also published a revised 2023 edition of its 2022 Climate Risk Report, with references to how the fund calculates carbon footprint removed
Greenhushing actions became more commonplace in Australia after the ACCC began investigating businesses for possible greenwashing and discovered more than one in two were culpable.
ACCC deputy chair Catriona Lowe said of the firms investigated, 57 per cent made vague or unclear environmental claims.
“Consumers are now more than ever, making purchasing decisions on environmental grounds,” said Ms Lowe.
“Unfortunately, it appears that rather than making legitimate changes to their practices and procedures, some businesses are relying on false and misleading claims.
“This conduct harms not only consumers, but also those businesses taking genuine steps to implement more sustainable practices.”
The ACCC said those that make sustainability or ‘green’ claims would be required to back them up with evidence to avoid the regulator from taking further action.
“Businesses using broad claims like ‘environmentally friendly’, ‘green’, or ‘sustainable’ are obliged to back up these claims through reliable scientific reports, transparent supply chain information, reputable third-party certification or other forms of evidence,” said Ms Lowe.
“Where we have concerns, we will be asking businesses to substantiate their claims.
“We want to see businesses taking steps to ensure that environmental claims are accurate as well as meaningful for consumers.”
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