Is your recyclable claim ocean bound or court bound? ACCC’s first greenwashing case against Clorox

Articles Written by Michele Laidlaw (Partner), Mei Gong (Senior Associate), Marc Vermeulen (Law Graduate)
plastic bag in the ocean

Recyclable claims are increasingly common in the FMCG industry as businesses seek to differentiate themselves and target environmentally conscious consumers. Soon after reconfirming greenwashing as a key enforcement priority in 2024, the ACCC has commenced Federal Court proceedings against Clorox Australia Pty Limited (Clorox) for making false or misleading representations regarding the composition of its kitchen and garbage bags. We explore the problematic recycled claims in the case and provide tips on how to avoid the ACCC shining a spotlight on your recyclable claims.

What were the problematic recycled claims?

The ACCC alleged that Clorox represented that its GLAD-branded kitchen tidy and garbage bags comprised of 50% recycled plastic waste collected from the ocean or sea (or from an ocean or a sea, including up to the shoreline). The alleged claims were made between June 2021 – July 2023 for kitchen tidy bags and between May 2022 – July 2023 for garbage bags.

The ACCC alleged that these representations were false or misleading because up to 50% of the material for the bags were made from plastics collected from communities on land, situated up to 50km from a shoreline.

In particular, the ACCC was concerned about the following claims on the kitchen tidy bags (although the claims concerning the garbage bags were substantially the same):

Front and side packaging

  • the statements GLAD to be Green text in large font, with a green coloured background underlying the words “to be GREEN” at the top of the packaging;
  • the claim “50% Ocean Plastic Recycled Bags”, in the centre of the packaging in large blue font; and
  • the claim in smaller font, Made Using 50% Ocean Plastic” (or later the claim “Made using 50% Ocean Bound Plastic”), at the bottom of the front packaging, around an image of a wave, overlayed on an image of a blue coloured waste disposal bag.

Back packaging

  • revealed the actual product, which was a blue colour; and
  • included more detailed and qualified claims, including a claim that the bags were “*made using 50% ocean bound plastic that is collected from communities with no formal waste management system within 50km of the shore line”.

The ACCC argued that Clorox’s conduct deprived consumers of the opportunity to make informed purchasing decisions, which may have led to consumers purchasing the product where either there was no such environmental benefit as claimed or such benefits were overstated. It also argued that the conduct undermined competition by overstating or misstating the relevant recyclability claims.

The ACCC is seeking orders for declarations, penalties, injunctions, corrective notices, the implementation of a compliance program and costs. The ACCC has alleged that the false or misleading representation was made each time a product was supplied, presented for sale or viewed, which, if accepted by a Court, would lead to a significant number of breaches and potential significant penalties.

What should you do now?

Closely review any recycled claims you are making and ensure there is evidence to back it up

The ACCC has shown a keen interest in recycled plastics claims, with the Clorox case following the regulator’s first enforcement action against MOO Premium Foods Pty Ltd (MOO) in November 2023. MOO claimed its yoghurt tubs comprised “100% ocean plastic”, while the ACCC argued that the plastic used was collected from coastal areas rather than from the ocean. MOO provided a court-enforceable undertaking under which it committed to conducting internal audits of the ‘ocean bound plastic’ resin used in its packaging.

FMCG businesses should be closely reviewing any recycled plastics claims they are making. In particular, businesses should:

  • avoid using broad and non-specific terms such as ‘green’, ‘eco-friendly’ and ‘sustainable’ and be wary that visual elements do not provide a misleading overall impression;
  • ensure any such claims have sufficient substantiation; and
  • ensure any disclaimers or qualifications are of sufficient size and placement – in this context, both MOO and Clorox had disclaimers at the back of the respective packaging to qualify the claims, but these were considered deficient by the ACCC.

Have a robust complaint handling and escalation process, and staff training process

While the ACCC has independently conducted internet sweeps of greenwashing claims, consumer complaints to the ACCC still remain a significant avenue for alerting the ACCC to greenwashing issues. From July 2024, designated consumer and business advocacy groups will also be able to fast track their complaints relating to significant or systemic market issues affecting consumers or small business in Australia to the ACCC.

It remains critical for businesses to have a robust complaint handling and escalation process to ensure complaints regarding alleged misleading environmental claims are promptly escalated for appropriate consideration. Targeted ACL training for marketing staff and front-line staff, i.e. call centre representatives, will remain useful to limiting businesses’ operational risk exposure to greenwashing claims.

More judicial and regulatory guidance on greenwashing to come

The ACCC’s Chair, Gina Cass-Gottlieb, has indicated that the ACCC has a number of in-depth greenwashing investigations including in the energy and consumer products sector, so we expect more greenwashing action to come through the Courts, along with possible judicial guidance.

In addition to the ACCC guidelines published in late 2023, the ACCC has also indicated it is developing guidance to assist businesses that would like to use third party trust marks or make claims relating to their emissions and offsets.

The ACCC is not alone in its ongoing efforts to combat greenwashing. UK and EU regulators have also taken steps to regulate environmental claims made by businesses, particularly relevant for international FMCG businesses. By way of illustration only:

  • In January 2023, the UK’s Competition and Markets Authority (CMA) commenced a review of FMCG products to analyse the environmental claims made by such products, targeting misleading claims about the recyclability of products and vague environmentally friendly statements with no supporting evidence. This has led to the direct investigation of a large FMCG business in December 2023.
  • In early 2024, EU countries agreed to incorporate new laws introduced by the European Parliament regarding environmental claims. EU countries have 24 months to incorporate the update into their national law, which bans greenwashing conduct. The new laws make clear new practices that are likely to be misleading, such as environmental claims related to future environmental performance without clear verifiable commitments and no independent monitoring system.

Should you have any questions about your environmental claims or want to discuss this article, please reach out to our greenwashing expert, Michele Laidlaw or any other member of our competition team listed in the key contacts section below.

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

Related insights Read more insight

Digital Bytes – cyber, privacy & data update

2024 is off to brisk start in the cyber, privacy and data space – regulatory developments in cyber security and artificial intelligence (AI) continue at pace.

Payment times reports due 31 March 2024

An increase in enforcement action by the Regulator under the Payment Times Reporting Act 2020 (Cth) (PTR Act) has been happening over the last 12 months. Companies covered as reporting entities...

“The law made me do it” – when misleading labels are not misleading conduct

Last week, the High Court held that a party is unlikely to have engaged in misleading or deceptive conduct if it has made a misrepresentation that is otherwise compliant with a different, more...