Washing your labels

17 November 2008
The media and consumers are increasingly concerned about carbon footprints, green miles and environmentally friendly manufacturing. In turn, advertisers and marketers are looking to the eco-credentials of their products for some leverage and differentiation in the market.

Eco claims for FMCG products can be about the product, the packaging, or the whole production process. You can use many different logos and certification marks to show your product has some eco-friendly or sustainable qualities. You can make assertions and claims on your packaging, advertising, and websites.

The Ministry of Economic Development has recently launched a website to help consumers and producers with some of the eco label and sustainability issues.  The directory has over 200 entries.  The directory can be found at www.med.govt.nz/ecolabels.

The website aims to educate consumers and help producers select the appropriate eco labels for their products and services. The directory identifies who owns the labels, what each label signifies, what standards must be complied with to use the labels, whether it is an international standard, and whether users are audited to ensure they comply.

Increasingly the use of eco labels and claims made about environmental friendliness and sustainability are coming under scrutiny.

Unsubstantiated and misleading claims about the ecology and the environment are called greenwashing. In New Zealand greenwashing is a breach of the Fair Trading Act. The Commerce Commission has announced that sustainability claims are one of the areas they will focus on in the next three years.

A taxi company was warned by the Commerce Commission over its ‘going green’ campaign. The company agreed to change its claims given it could not substantiate them.

The issue is an international one and the Commerce Commission watches how other countries are dealing with the problem.  What is clear is that it is an increasing problem.

In Australia the promoter of the SAAB motor vehicle was sued over its ‘grrrrrreen’ claims.  The claims were found to be misleading. To make amends, the promoter agreed to plant 12,500 native trees.

More recently the Australian brewer Coopers was criticised by environmental groups for claiming to have Australia’s ‘greenest beer’. But the energy recovery and water use practices at the brewery may in fact support their green claim.

There are many things to watch out for when making environmental claims.  It is a matter of assessing the truthfulness of any claims and thinking what consumers will make of the claim. Businesses need to ensure that any claims they make can be backed up.

It may be misleading to portray a product or process as ‘green’ based on a single factor, especially if other factors that make up the whole of the product are far from green.

Any claims should be relevant to the product.  For example claiming your product is CFC free and is good for the ozone is irrelevant if the product is a chocolate bar.

Having no proof of a claim can lead to problems.  Using general terms such as “eco friendly” can give rise to criticism, dispute and confusion.  Fines under the Fair Trading Act can be up to $60,000 for individuals and $200,000 for companies. In Australia, LG Electronics Australia was reportedly forced to pay out over $3 million in rebates because of inaccurate efficiency rating labels on 15,000 air-conditioners.

And beyond financial penalties there can be crippling damage to your business reputation if you are found to have made false or misleading claims about the eco friendliness of your product.

The Advertising Standards Authority has a code for environmental claims.  Generalised claims must take into account the life cycle of the product and manufacturing methods.  The claims must be substantiated. The code applies to all advertising including packaging shown in advertisements.

The New Zealand Commerce Commission has helpful guides on misleading conduct in general, but nothing specific on environmental claims.  This will no doubt change as they investigate more greenwashing. Meanwhile the Australian Competition and Consumer Commission has guides on green marketing, carbon claims and environmental issues (www.acc.gov.au).

For consumers, the MED website is a useful starting point to find out about claims and whether labelling hype is just greenwash. For businesses, taking care your labels contain accurate and sustainable claims will help keep your reputation clean.

An edited version of this article was published in FMCG, November 2008.