The Trade Practices Act And Carbon Claims.

As Australians become increasingly aware of the effects of climate change and the impact their choices of consumer goods  and services are having on the environment, many business are recognising the opportunity to differentiate themselves from their competitors on their 'green credentials', including carbon offsets. Indeed, the use of green credentials as a marketing tool has become a valuable asset in its own right.

The difficulty for environmentally conscious consumers, as noted by the Australian Competition and Consumer Commission  (ACCC) Chairman, Graeme Samuel, is verifying and understanding the carbon offset claims made by businesses. To assist both consumers and businesses, the ACCC has recently launched guidance material on carbon offsets claims.

The ACCC publication Carbon claims and the Trade Practices Act released on 27 June 2008 (the guide), is essentially a guide for businesses on their obligations under the Trade Practices Act 1974 (the Act) when making carbon offset, carbon neutral and low carbon claims that may be misleading.

The guide identifies the particular issues that should be considered in making, and evidence required to substantiate, any carbon offset, neutrality or emissions claims. It addresses matters such as:

additionality (that is, the benefits of the carbon reduction were 'in addition' to those that would have happened in any event)

timing and forward crediting of offsets (specifically, managing the risk of claiming credits that may not eventuate)

double counting of offsets (e.g. where an offset is not 'retired')

permanence and risk management

offset quality

co-benefits (that is, the reduction of other pollutants)

standards, accreditation and logos

direct vs indirect scope of emissions

footprint calculators (in particular, the assumptions used in such calculators)

low carbon claims

The guide provides a promising first step but it is not a standard against which carbon emission claims can be measured. That is not the ACCC's role.

Businesses will need to ensure that any claims they make are specific, objectively verifiable and otherwise comply with the guide. Given the confusion over what terms like 'carbon neutrality' mean, the ACCC also recommends that consumers be provided with an accurate, 'full picture' about carbon claims being made so that they can make an informed decision.

The guide also outlines specific prohibitions against false or misleading representations that are, for regulatory purposes, easily identifiable. Such representations include representing that goods or services have sponsorships, approvals, performance characteristics and benefits that they do not have.

Predominately, the guide outlines what the ACCC considers not to be 'carbon offsets' and provides a number of recommendations that business industries should consider applying when making carbon claims. The underlying theme of the recommendations is clarification by business on claims made about carbon emissions. By way of example, of particular concern to the ACCC is the private standards that corporations apply to their goods or services, whether by logos or other images, which gives the impression that they are affiliated with green groups or their carbon emission claims have been verified by an independent third party. The ACCC recommends to alleviate potential confusion business industries should provide access to 'further information on the scheme identified with the logo'.

The guide is potentially of international significance as industries seek to maximise the value of the green credentials including in some cases through the imposition of private product standards such as the 'food miles' (which is a measure of how far food travels from paddock to plate) labels that are beginning to appear in some overseas supermarkets. The guide produced by the ACCC clarifies, at least to Australia, that a claim on packaging and the private standards on which they are based need to avoid being misleading or deceptive.

The guide is available at:

http://accc.gov.au/content/index.phtml/itemId/833279/fromItemId/3737

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Iain Sandford

Minter Ellison 

Aurora Place 

88 Phillip Street

Sydney

New South Wales 

2000

AUSTRALIA

Tel: [phone]

Fax: [phone]

E-mail: [e-mail]

URL: www.minterellison.com

Click Here for related articles

(c) Mondaq Ltd, 2008 - Tel. [phone] - http://www.mondaq.com