13 recommendations to mitigate risk in sustainability statements and greenwashing

By Carolyn Oddie, Simon Sherwood, Andrew Maher, Emily Turnbull, Julia Clemente, Andrew Robertson
ACCC ASIC Boards & NEDS Environment, Social, Governance General Counsel Risk & Compliance

Emerging trends and specific recommendations 12 min read

In the last few weeks, there has been significant regulatory action in Australia around greenwashing.

  • ASIC announced it has commenced its first civil penalty proceedings for alleged greenwashing. This follows a number of greenwashing-related infringement notices issued by ASIC since October 2022; and
  • the ACCC released its findings from its internet sweep of environmental claims. After reviewing 247 businesses, the ACCC found that 57% had made vague and unclear environmental claims.

In relation to this enforcement priority, ASIC Deputy Chair Sarah Court has stated:

ASIC is… acutely aware of the rise of sustainable finance, with $128 billion net flows into ETFs with an ESG focus and a 157% increase in advisers who claim to provide ESG advice since 2016. ASIC will closely monitor for misleading conduct and claims of greenwashing that cannot be sustained, and take enforcement action where necessary.1

The ACCC and ASIC are working closely on greenwashing issues, and the recent action by ASIC reflects the enforcement priorities for both regulators. This Insight considers some key emerging trends in ASIC's and the ACCC's enforcement activities around greenwashing and sustainability that will be major themes in 2023. It also provides 13 specific recommendations for avoiding making representations that could give rise to greenwashing risk.

Key takeaways

  • ASIC's approach to greenwashing enforcement initially involved the issuance of infringement notices to obtain some 'quick and early' wins. This has been followed by recent court-based enforcement action, demonstrating that ASIC is prepared to use the 'sharper tools' in its enforcement toolkit.
  • On 2 March 2023, the ACCC released its findings from an internet sweep for misleading 'green' claims, which found that concerning claims were most prevalent in the food and drink, cosmetic and clothing sectors.
  • In summary, there are key actions organisations should take (discussed in greater detail below):
    • Review your existing representations about your organisation's green credentials, products, services, targets and goals, and (if relevant) ESG-focused investment screens.
    • Consider whether these representations are accurate, reasonably based, appropriately qualified and include all the relevant information. For ASIC-specific guidance, see ASIC Information Sheet 271 on How to avoid greenwashing when offering or promoting sustainability related products. This is addressed in our Insight: New ASIC guidance on how superannuation and managed funds can avoid 'greenwashing' and, more generally, RG 234 on Advertising financial products and services (including credit): Good practice guidance.
    • As this is an evolving space, keep up to date with developments from regulators, in particular ASIC and the ACCC.

Who in your organisation needs to know about this?

General counsel, legal teams, compliance officers, compliance teams, ESG officers and teams, responsible investment and stewardship-focused officers and teams.

ASIC—quick wins, followed by court-based enforcement action

On 3 November 2022, ASIC announced its 'Enforcement Priorities' for 2023. One of those priorities was 'misleading conduct in relation to sustainable finance including greenwashing'. ASIC has already conducted a wide-scale 'greenwashing' review of sample superannuation and investment products in the market and issued Information Sheet 271 to help its regulated entities avoid greenwashing. This was the first time ASIC identified particular areas of enforcement focus, providing a clear signal to the market that it intended to enforce legal compliance in this space.

Backing up this statement, in a flurry of activity in late 2022, ASIC issued 11 infringement notices to four separate entities concerning alleged greenwashing. The infringement notices focused on compliance with the 'false and misleading conduct' provisions contained in ss 12DB(1)(a) and 12DF of the ASIC Act 2001 (Cth).

ASIC has stated it is more likely to issue infringement notices where the alleged misconduct is relatively minor and does not indicate a broader pattern of misconduct by the entity or within an industry. In cases where ASIC issues infringement notices, costly and drawn-out court proceedings may be avoided. This is because ASIC is not required to establish liability before it issues the notices. When ASIC issues an infringement notice, a recipient entity must decide whether to accept it by paying the fine or to apply to ASIC (within 28 days) to have it withdrawn. Importantly, payment of a fine under an infringement notice is not an admission of guilt or liability. However, if payment is not made and the infringement notice is not withdrawn, ASIC may bring proceedings against the entity in respect of the alleged contraventions that are the subject of the notice.

While ASIC has, for many years, demonstrated a track record of issuing infringement notices for lower-level alleged market misconduct, the issuance of these notices in relatively short succession in this priority enforcement area reinforces ASIC's confidence in the use of this enforcement tool. This confidence is, perhaps, in stark contrast to the relatively dim view of infringement notices expressed by Commissioner Hayne in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry in February 2019. In that report, Commissioner Hayne questioned the utility of infringement notices as an enforcement tool beyond instances of 'lax administrative conduct',2 stating that 'if the provision involves contestable matters of judgement—for example an alleged breach of the prohibition on false and misleading conduct or the duty of utmost good faith—the issue of an infringement will rarely, if ever, be an appropriate regulatory response'.3

Nevertheless, ASIC has demonstrated it is also prepared to use 'sharper tools' in its enforcement toolkit, with the commencement of the first civil penalty proceedings for greenwashing and, more recently, foreshadowing further court action for alleged greenwashing conduct in the superannuation sector.4 

While it is presently unclear precisely how ASIC decides whether it issues an infringement notice or seeks civil penalties in court for alleged greenwashing, it is clear that ASIC will remain very busy investigating and enforcing alleged greenwashing during 2023.

ACCC—internet sweep and targeted investigations

The ACCC is also increasingly focused on greenwashing. On 2 March 2023, the ACCC released its findings from an internet sweep for misleading 'green' claims. The sweep found that concerning claims were most prevalent in the food and drink, cosmetic and clothing sectors. ACCC Deputy Chair, Catriona Lowe, said the ACCC's sweep 'indicates a significant proportion of businesses are making vague or unclear environmental claims… Where we have concerns, we will be asking businesses to substantiate their claims'.

The ACCC's sweep identified eight key greenwashing issues concerning business practices:

  • An increase in vague and unqualified claims such as 'green', 'kind to the planet', 'eco-friendly', 'sustainable', or 'recyclable' when marketing products.
  • A lack of substantiating information or evidence to corroborate environmental and sustainability claims.
  • The use of absolute and highly impressionable claims, such as '100% plastic free', '100% recyclable', 'non-pollution' or 'zero emissions' when marketing products.
  • The use of nebulous comparisons between the environmental benefits of one product over another without clearly stating the source information (eg 'X product uses less water' without explaining what this was being compared to).
  • A deliberate exaggeration of the benefits of their products or making claims that relate only to a specific aspect of the product's lifecycle (eg making claims that a business' products generate zero emissions, however the claims only considered emissions associated with the use of the product, and not from its production, transport or disposal).
  • The use of aspirational sustainability claims such as net zero targets or reduced packaging targets without a comprehensive plan on how to achieve these goals.
  • The use of third-party certifications such as certification trademarks without detailing the nature of the certification or whether it applies only to a particular product or the entire range.
  • The use of images such as logos or symbols on their packaging and websites with green colouring, and nature-based imagery (ie leaves or the planet) when marketing products.

There are already several greenwashing investigations underway, and the number of investigations is only set to rise as the ACCC conducts further targeted reviews. The ACCC has also indicated it will provide economy-wide and sector-specific guidance materials to address greenwashing concerns.

Action taken by environmentally focused third parties

In addition to the action taken by regulators, action by environmentally focused third parties is also increasing. Some examples of this include:

  • In November 2022, environmental action group Comms Declare (represented by the Environmental Defenders Office), formally complained to the ACCC and Ad Standards that Shell Australia may have breached sections of the Australian Consumer Law (ACL) and Ad Standards’ Environmental Claims Code. It relates to statements made by Shell in marketing materials. The complaint alleges that these materials give consumers the false impression that Shell has a plan to become net zero by 2050.
  • In August 2021, the Australian Centre for Corporate Responsibility (ACCR) filed proceedings against Santos. The ACCR alleges that Santos engaged in greenwashing by publishing ‘net zero emissions’ targets in its annual report. While Santos committed to net zero by 2040, the concern is that it will increase its greenhouse emissions in the short term through planned expansions.
  • Internationally, environmental action groups—including Oxfam and Friends of the Earth—have taken action against BNP Paribas alleging that, among other things, the French lender has failed to meet its commitment to become carbon neutral by 2050. BNP Paribas repeated its objective of achieving carbon neutrality several times in its Universal Registration Document, which contains its Annual Financial Report. This included an explicit commitment to 'financing a carbon-neutral world by 2050, which corresponds to a temperature increase limited to 1.5°C compared to the pre-industrial era'. The environmental action groups claim that such commitments are 'greenwashing' if they do not involve the implementation of measures capable of allowing BNP Paribas to reach their net zero goals. BNP Paribas continues to financially support the expansion of fossil fuels, including indirectly funding eight European and North American oil and gas companies involved in more than 200 new fossil fuel projects.

Greenwashing is the 'E', the 'S' and the 'G'

There are three broad categories of greenwashing which have been highlighted by the regulators to date:

  • Claims about the environmental qualities or characteristics of the projects, products or services that businesses are selling—such as '100% recycled', 'eco-friendly' or no investment in 'polluting and carbon intensive activities'.
  • Claims about a business' future environmental targets or goals—eg 'net zero by 2040' or 'we will phase out plastics by 2025'. These are representations about 'future matters', meaning at the time you make the claim, you must have reasonable grounds for doing so.
  • Claims by superannuation and investment funds as to the scope and nature of investment screens applied to ESG-focused investment options.

The subject matter of the representations which fit within the third category cover not just the 'green credentials' of financial products and services, but also their suitability for ESG-conscious consumers more broadly, including with respect to animal welfare, corporate governance, tobacco, alcohol and gambling. In this way, the term 'greenwashing' may be something of a misnomer. While ASIC and the ACCC use the term 'greenwashing', it is really referring to the 'E' (environment), 'S' (sustainability) and 'G' (governance) of ESG.

Representations about current credentials, products or services

ASIC and the ACCC are focusing on misleading representations made by companies regarding the current environmental qualities or characteristics of the projects being operated, as well as products or services they are supplying.

In the largest penalty to date under the Competition and Consumer Act 2010 (Cth), the Federal Court in December 2019 ordered Volkswagen to pay $125 million in penalties for making false or misleading representations when importing more than 57,000 diesel vehicles into Australia between 2011 and 2015, and when listing those vehicles on the Australian Government’s Green Vehicle Guide website. Volkswagen was fined for failing to disclose that the vehicles were fitted with ‘two mode’ software, which caused them to operate in one mode for the purposes of nitrogen oxide emissions testing and another when being driven. If tested in that second mode, the vehicles would have breached Australian emissions standards.

While in the UK, the Advertising Standards Authority (the ASA) has taken action against Unilever for making claims that Persil washing liquid is 'tough on stains, kinder to our planet' without a clear basis for the comparison. The ASA found that the use of 'kinder' in the statement was ambiguous, as it did not explain whether the advertised liquid detergents were 'kinder' in comparison to Persil’s previous detergents or other similar products.


How to avoid misrepresentations about current green credentials, products or services

The key risk with promoting current environmental credentials is overreaching. Always consider how customers and investors will understand broad claims such as 'sustainable', 'green', 'socially responsible' and 'recycled'. Companies should always consider:

  • whether the impression from the green claim would be accurate
  • whether there are reasonable grounds to assert the claim
  • whether claims can be substantiated when asked by a regulator.

Broad or absolute claims such as ‘green’, ‘environmentally friendly’, '100% recyclable', 'non-polluting', or 'zero emissions' may overstate the environmental benefit. Some environmental claims require context and qualification to avoid misleading your audience.


Consider making claims more targeted. Specify how it is environmentally friendly (eg because it reduces water consumption, or uses sustainable materials).


Ensure not to omit any relevant information when promoting green credentials (eg stating that a product is recyclable despite there being no system in place to recycle it). In the financial services sector, this includes explaining how sustainability-related considerations are incorporated into investment decisions or stewardship activities.


When making green claims which involve a production process, consider whether you can accurately make the green claim with respect to the entire process.


It is important to ensure any third-party certification scheme is credible and robust.

Representations about future green targets or goals

The ACCC and ASIC are also focused on public commitments by companies as to future green targets or goals. Examples of this include commitments in annual reports or sustainability reports to 'net zero', 'carbon neutral' and 'low carbon' targets.

For example, ASIC issued an infringement notice to Black Mountain Energy Limited (BME) for $39,960. ASIC was concerned about BME's claims that it was creating a natural gas project with 'net zero carbon emissions' and that greenhouse gas emissions associated with the project would be net zero. ASIC considered that BME either did not have a reasonable basis to make the representations, or that the representations were factually incorrect.

How to avoid misrepresentations about future green targets or goals

You must have ‘reasonable grounds’ each time you publish a future representation (ie the intention and the ability to achieve the plan). Potential indicators of reasonable grounds include:

  • a sufficiently detailed plan
  • informed by appropriate standards and guidelines
  • appropriate resourcing
  • not relying on unrealistic pathways
  • appropriate measuring of progress or milestones
  • for ‘net zero’ claims, the plan is not overly reliant on carbon offset (rather than emissions reduction).

Monitor progress against the target—if circumstances change, consider whether you still have reasonable grounds for making the claim (and whether you need to update the market).


If your target relies on assumptions, consider disclosing these when you publish a future representation. If these assumptions can no longer be relied upon, consider whether you still have reasonable grounds for making the claim.


Based on those 'reasonable grounds', you must clearly explain the target or goal; how and when you plan to meet it; how progress will be measured; and your key assumptions that inform those goals and measurements.

Representations on investment screens

ASIC is also focused on the accuracy of the representations organisations make about the sustainability credentials of financial products and services. This includes the accuracy of representations with respect to 'investment screens' that are applied to investment options based on ESG considerations. Investment screens are screens which organisations may apply to avoid investing, eg in organisations which are primary producers of fossil fuels or have poor human rights records. ASIC enforcement action to date has focused on whether representations as to the scope of 'negative or exclusionary' screens are accurate.

One example is Diversa Trustees' claim that its superannuation product, Cruelty Free Super, did not invest in companies involved in 'polluting and carbon intensive activities', 'financing or support of activities which cause environmental and social harm' or 'poor corporate governance'. ASIC was concerned that, while some investment screens were applied by Cruelty Free Super, they were more specific and were implemented on a more limited basis than its website had suggested. Ultimately, Diversa Trustees paid a fine of $13,320 pursuant to an infringement notice from ASIC.

How to ensure representations on investment screens are accurate:

Regularly review and update all public representations, including website and other promotional statements for 'sustainable' investment products and services, to ensure they accurately reflect applicable ESG investment screens, paying close attention to screen limitations and exclusions.


Where third-party providers are involved in the application of investment screens, work with those providers closely to ensure that the screening process remains fit for purpose and consistent with investment goals and targets.


Ensure that ESG, external communications and legal and compliance teams are working together to ensure that internal sign-offs on ESG promotional activity are robust and effective.

For further background on greenwashing, the associated regulatory framework and questions organisations should consider when offering or promoting sustainability-related products, see our Insight: New ASIC guidance on how superannuation and managed funds can avoid 'greenwashing'.


  1. ASIC Media Release 22-30 dated 3 November 2022.

  2. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Final Report, Volume 1, p. 439.

  3. Ibid.

  4. ASIC pursues 'several' super funds for greenwashing, expects court action, Hannah Wootton, the Financial Review, 13 March 2023.