What are Codes and how are they fighting greenwashing?

You may have heard of greenwashing, maybe even greenhushing. But have you heard of greenlashing? Here’s what we’ve noticed happening abroad in the environmental communications space, along with a New Zealand comparison and what businesses here should be doing.

More calls for consumer protection with environmental claims

We are witnessing a global rise in greenwashing cases by businesses daily.

Greenwashing is defined as disingenuous or misleading environmental claims. These instances of businesses greenwashing are undermining public trust in climate action. This negatively impacts the many more businesses who are actively making strong climate action to decarbonise. As a result, greenhushing, which is businesses choosing not to share about their environmental action, is also on the rise.

Being able to evidence understanding and support for climate-related reporting and claims is a key advantage for New Zealand businesses. It not only helps them to remain competitive but also instils credibility in climate actions and maintains momentum towards the 1.5°C target set by the Paris Agreement to limit global warming.

Around the world, governments and industry bodies are responding by introducing legislation, directives, and codes to guide regulators and give business guidelines.

What is a code?

A code is a set of principles, guidelines, or rules designed to help comply with standards and/ or legal or regulator requirements. Codes usually have a specific industry or scope of focus. While they can be applicable to many sectors, they often have particular requirements.

Looking internationally helps set precedents and gain perspective on what’s happening in the climate and carbon space.

Notably, in the UK, is the Competition and Markets Authority (CMA), a government department setup to protect consumers and the UK economy from unfair practices by businesses. In 2021, the CMA published its Green Claims Code that sets out guidance for businesses in making green claims on their products or advertising. Green claims (sometimes called ‘environmental claims’ or ‘eco-friendly claims’) are claims that show how a product, service, brand or business provides a benefit or is less harmful to the environment. Claims that are false or misleading are commonly referred to today though as “greenwashing”.

Instances of greenwashing rise for various reasons, including:

• Businesses are taking more climate action, so they’re making more claims than they used to.
• Consumers are more informed and seeking to buy sustainable products. They’re looking for information on packaging and businesses are looking to provide that.
• Businesses are wanting to capitalise on the higher demand for sustainable products, without doing the work or diligence.

The Code is actively being used and having an impact on claims in the market. Recently, investigations have been underway in the UK shining the spotlight on misleading claims by organisations such as Unilever. In March 2024 it was announced after an investigation that Asos, Boohoo, and Asda must avoid making misleading claims about the green credentials of their clothes in future, after a regulatory crackdown on “greenwashing” in the fashion sector. This includes avoiding using eco-friendly language, that’s too broad and vague. For example, Asos named a clothing range “Responsible Edit”, which makes it sound more sustainable to shoppers than it is. Unilever also came under fire for using visuals such as green leaves.

The CMA Green Claims Code, while applicable to the UK, is a useful tool for checking alignment internationally. It sets out six key points to ensure environmental claims are genuinely green:

1. Be truthful and accurate: Businesses must live up to the claims they make about their products, services, brands, and activities.
2. Be clear and unambiguous: The meaning that a consumer is likely to take from a product’s messaging and the credentials of that product should match.
3. Do not omit or hide important information: Claims must not prevent someone from making an informed choice because of the information they leave out.
4. Only make fair and meaningful comparisons: Any products compared should meet the same needs or be intended for the same purpose.
5. Consider the full life cycle of the product: When making claims, businesses must consider the total impact of a product or service. Claims can be misleading where they don’t reflect the overall impact or where they focus on one aspect of it but not another.
6. Be substantiated: Businesses should be able to back up their claims with robust, credible, and up to date evidence.

The EU Green Claims Directive (GCD)

The European Parliament is taking a step further to tackle greenwashing with regulation. In March 2024, the European Commission adopted a proposal for a Directive on Green Claims. The proposed Green Claims Directive (GCD) will require companies to substantiate the voluntary green claims they make in business-to-consumer commercial practices, by complying with a number of requirements regarding their assessment (e.g. taking a life-cycle perspective) to prevent false or misleading advertising from hindering the green transition. Under the GCD, only companies that have verified their claims by a third party as environmentally friendly can reap commercial benefits from using green claims. This will be finalised by the European co-legislators (the European Parliament and the Council of the EU) in the next legislative term, which will begin after the European Parliament elections in June 2024.

The GCD and other related greenwashing regulations are leading to increasing number of greenwashing legal cases around the world.

The Commerce Commission’s Green Claims Code

In New Zealand, our version of a green claims code is run by the Commerce Commission who have published the Environmental claims guidelines. Regulatory bodies, like the Commerce Commission and Financial Markets Authority publish Codes or guidance to protect people that aren’t experts and ensure that businesses understand what they can and cannot do when making claims.

Monitoring how products and services are promoted can be costly and take a long time, but it’s crucial to protect our country’s economy. Greenwashing investigations have been on the rise globally and here in Aotearoa is no exception. The country has already seen investigations and High Court filings on climate claims. This signals a rise in people’s understanding of climate change and pollution, as well as more expectation from the brands that we buy from.

Staying silent on sustainability work can lead to more scrutiny

Toitū Envirocare is in the business of evidence-backed claims. With over 22 years in the carbon accounting space, we hold the standard in certification for carbon and environment, keeping our members aligned with best practice. Highlighting the hard mahi that’s been done is essential because progress in fighting climate change must be celebrated. However, we sometimes find that businesses are nervous about sharing their journey and the investments they’ve made, for fear of being accused of greenwashing. This lack of action is known as “greenhushing.” Transparency not communicated well can risk discrediting a brand and its values.

There’s a difference between trying to communicate and staying silent. We believe staying in the shadows will inevitably lead to more scrutiny. What’s needed is making information and ultimately your story accessible, and that’s where third-party certification can come in as a valuable tool. We’re not saying ours is the only one out there either – but Toitū is Australia and New Zealand’s only accredited carbon certification provider who certify to international ISO standards…

So, we’ve covered greenwashing and greenhushing. What’s next?

It’s potentially “greenlashing”. As elections take place around the world, green parties and policies are coming under fire for the financial cost of moving towards carbon neutrality. Many voters are battling a rise in the cost of living, so some policies are seen as unrealistically expensive and unfair. That doesn’t mean to say voters are disregarding the environment altogether though, attitudes towards protecting our planet remaining high.

As the political landscape changes here in Aotearoa, we should look out for similar imbalances in what we’re asking people to do, and the reality of what they may be going through. The need is for businesses to be transparent, yes. But invest in your communications, so that it’s accessible, engaging, and coming from a place of understanding.

4 actions to get you started

To support you in telling your climate story, here are our top 4 insights every business should be applying directly from our Brand and Marketing Manager, Tobias Tripp:

1. Carry out a review of what claims you’re making. You can’t manage what you don't measure, is the saying for carbon emissions, but the same goes for environmental claims. If you don’t know what’s being said by your company, then it becomes extremely challenging to manage the risk and ensure the right language is being used.
2. Link claims to evidence. Anything that communicates, suggests, or creates the impression that a product or organisation has a positive or zero impact on the environment, or is less damaging to the environment than competing products/organisations, should be considered an environmental claim. Therefore, any use of text, graphics, or communication should be clearly linked to a certification or verification that is clear, substantiated, and has environmental performance credentials evidenced alongside.
3. Avoid and remove generic claims where possible. Terms such as ‘environmentally friendly,’ ‘carbon conscious,’ ‘carbon neutral,’ ‘carbon/climate friendly,’ or similar statements that suggest or create the impression of environmental performance should be avoided. Seek to provide clear terms or evidence so that the claim is not considered generic. For example, the claim ‘climate-friendly packaging’ would be a generic claim, while ‘100% of energy used to produce this packaging comes from renewable sources’ would be a specific claim. And would need further evidencing to enable the claim to be true.
4. Be explicit about assurance or certification. When making environmental and carbon claims or using verification for reporting purposes, be explicit about the intended assurance or certification. For example, while Toitū Carbon Certification is a significant voluntary achievement, it should be contextualised in reports such as Climate-Related Disclosures or annual impact reports. Ensure all statements are supported by verifiable data and methods. Instead of shorthand claims like "we’re net carbonzero certified," provide the full name and explain the certification's scope and meaning. This clarity helps readers understand the context and purpose of the claims, avoiding potential greenwashing issues and is also in line with what the latest regulation is expecting in climate reporting.

If you’d like to add Toitū third party certification to your business’ communication toolkit, get in touch with our team here.