The Commerce Commission's Guidelines for Green Marketing (the “Guidelines”) recognise consumers’ increased awareness of environmental impact associated with modern goods and the corresponding need for consumers to be provided with accurate environmental claims.
The Guidelines aim to inform businesses of this legal requirement by outlining their obligations under the Fair Trading Act 1986 (the “Act”) regarding environmental claims and the consequences of not complying with the Act.
The Guidelines are divided into three parts:
- Examination of the Act;
- Broad principles to consider when making environmental claims; and
- Avoiding a breach of the law.
The Fair Trading Act 1986
The Act contains various general prohibitions on misleading and deceptive conduct. These provisions are contravened if conduct is capable of misleading or deceiving and it is irrelevant whether anyone is actually misled or deceived.
The Act also prohibits false and misleading representations about specific characteristics of goods and services. Of particular relevance to environmental claims, it is a breach of the Act to make a false or misleading representation that goods are of a particular kind, standard, quality, grade, quantity, composition, style, or model, or have had a particular history or particular previous use. Essentially, any description advertised in association with a product must be accurate and the product must comply with that description.
The Act also requires that a business must not represent that goods or services have any sponsorship, approval, endorsement, or affiliation they do not have.
Principles to consider when making environmental claims The Guidelines state that if a business wishes to make environmental claims about its business or products, the claims should be clearly and accurately explained. In particular, generally a claim should:
- Be accurate;
- Be able to be substantiated (with evidence);
- Be specific (rather than general or vague) and qualified;
- Be in plain language – to avoid confusion;
- Be made for a real benefit;
- Not overstate a benefit;
- Not manipulate or distort the results of any test or survey to suit the claim;
- Refer to the specific part of a product or its production process that the claim is made about;
- Consider the whole product life cycle;
- Be used with caution when using endorsement or certification of others; and
- Not overstate the level of scientific acceptance.
The Guidelines also refer to specific examples of general claims that raise concerns such as:
- “green”;
- “environmentally friendly” or “environmentally safe”;
- “energy efficient”;
- “recyclable” and “recycled”;
- “carbon neutral”; and
- “renewable” or “green” energy/electricity.
Any claims made in relation to the above should be factually based, transparent, specific, and relevant to New Zealand and should be quantified by comparison to existing ratings if relevant.
Penalties
Penalties for breaching the Act range from an interim injunction (to stop or prevent unlawful activity during the course of investigation) or a permanent injunction, up to fines of $60,000 per offence for individuals and up to $200,000 per offence for a company.
The Court may also order a business to disclose information to the public or to publish corrective statements at the cost of the business.
Avoiding a breach of the law The Guidelines recommend implementing an in-house checking system to ensure that businesses and its staff do not breach the Act (an example of a checklist is provided in the Guidelines). This is important because a business is responsible for the action of its staff and agents and liability is not excused for accidental or non-deliberate conduct. Having a checking system in place will help to minimise potential breaches of the Act.
Summary
While it is hoped that the Guidelines will help businesses avoid making misleading and deceptive claims (thereby avoiding breach of the Act) it is recognised in the Guidelines that the Guidelines themselves and the checklist provided should not be completely substituted for legal advice.