Key takeaways
- The updated and enhanced Australian Association of National Advertisers (AANA) Environmental Claims Code (the New Code)1 came into effect on 1 March 2025.
- The New Code lifts the standards applying to environmental claims, whilst at the same time broadening the types of claims to which the rules apply. The Practice Note accompanying the New Code has specific guidance in relation to particular types of claims, including life cycle impacts, compostable and recyclable claims, and emissions-related claims.
- Environmental and sustainability claims continue to be a popular and effective marketing tool across a range of sectors. Given the expanded reach of the New Code, businesses should ensure that current and future marketing material complies with the new standards.
What is the New Code?
The New Code is one of the advertising codes of conduct developed by AANA as part of Australia’s advertising self-regulation system. The New Code was launched following a review by AANA into the existing Environmental Claims Code, prompted by a marked increase in complaints to Ad Standards about advertising involving environmental claims (‘greenwashing’). In launching the New Code, AANA described it as setting a “new standard” for businesses engaging in environmental and sustainability claims, with the New Code intended to “complement and reinforce” the ACCC’s Guidance on Environmental Claims, and ensure such claims are “truthful, clear and verifiable”.
“Advertising” and “Environmental Claims”: When will the New Code apply?
To fall within the scope of operation of the New Code, the communication must:
- Be “advertising”; and,
- Involve an “Environmental Claim”.
“Advertising” is defined broadly, and includes any advertising, marketing communication or material which is published or broadcast (using any medium) and which (1) the advertiser has a reasonable degree of control over its content; and (2) draws the attention of the public in a manner calculated to promote or oppose (directly or indirectly) a product, service, organisation or line of conduct. Excluded from this definition are labels and packaging, corporate reports (for instance, media statements and annual reports) and promotions for broadcast media. This definition is broad enough to include, for example, material on websites and social media posts (so long as the content does not fall within one of the categories of excluded material).
In a significant update from the previous Code, the New Code contains a new, broader definition of “Environment Claim” that may capture claims that previously fell outside of the code.
Under the New Code, “Environmental claims” include “any message or representation” (however conveyed) which:
“gives the impression that an industry, business, product or service:
- has a neutral or positive impact on the environment;
- is less harmful for the environment than alternatives; or,
- has specific environmental benefits.”
What are the rules under the New Code?
The new Code has five key rules, as set out below. Importantly, the New Code provides that advertisements are to be assessed from the perspective of the Target Consumer, defined as “the average and reasonable consumer of the target audience”, expressly aligning the approach under the New Code with the approach under the Australian Consumer Law.
1. Environmental Claims should be truthful and factual
This rule emphasises that the “overall impression” created by the advertisement should not be false or inaccurate, or misleading to the Target Consumer. The Practice Note that accompanies the New Code that the overall impression of an advertisement can be misleading, even if the individual claims are factually correct. The Practice Note also emphasises the need for businesses ensure that Environmental Claims remain valid across the life of the advertisement or campaign, given the constantly evolving regulation, research and consumer understanding in this space.
2. Environmental claims should be supported by evidence
This rule requires advertisers to have reasonable grounds for making a claim at the time it is made, based on evidence held at the time of the claim. The Practice Note provides additional guidance on a number of common types of claims such as:
- Scientific claims: These should be “consistent with the body of evidence, not simply selective parts that can be used in a misleading way”.
- Life cycle claims: If an Environmental Claim relates only to part of the life cycle of a product or service, this should be clearly explained. While advertisers do not necessarily need to provide a full life cycle assessment in every claim, this is subject to the overall impression conveyed to the Target Audience, with broader claims likely to require consideration of life cycle implications.
- Compostable claims: These should be supported by reliable evidence (such as a current certification).
3. Environmental claims should be clear and not vague
This rule specifies that claims must:
- Be in clear language (having regard to the Target Customer). Scientific terminology or references should be relevant and accurate, and where technical claims are used (such as ‘recyclable’), industry standards should be adhered to.
- Be specific, avoiding overbroad or unqualified claims. Vague claims – such as “eco friendly”, “green” or “sustainable”, without any limitation – may be more easily misleading.
- Clearly include any important limitations, conditions or qualifications. Following on from Ad Standards’ decision to uphold a complaint against Aldi in relation to a “100% renewable electricity” claim,2 the Practice Note explains that absolute or broad claims that require qualification to be true should not be made without that qualification, including for example claims such as “Renewable” or “Produced with renewable energy”.
- The Practice Note explains that this does not prevent advertisers from offering additional information via website links, QR codes or other means. However, as with all fine print/disclaimers, this additional information should support, not contradict, the overall message conveyed by the advertisement.
4. Genuine Benefit
The New Code requires that Environment Claims must be about a genuine benefit to the environment, that is not overstated. As an example, this includes not advertising that, in essence, the product merely complies with the law (unless that is made clear). Again, factual claims of a benefit can still be misleading in certain circumstances (e.g. when a minor benefit is represented as more important than it is).
5. Future Claims
Advertising about future environmental objectives must be based on reasonable grounds at the time the claim is made. This includes verifiable data, clear plans and reliance on accepted methodology, and claims should be reviewed and revised to reflect any changes in the underlying data or plans.
Emissions-related claims
There have been a number of complaints to Ad Standards under the previous Environmental Claims Code about claims relating to emissions and emissions-related targets. Given this focus, the Practice Note provides additional guidance in relation to emissions related claims. This guidance emphasises that given the technical nature of these claims, broad claims such as “Carbon Neutral”, “Climate Neutral” or “Net Zero” may be more difficult for Target Consumers to understand. In these circumstances, it is incumbent on the advertiser to ensure emissions-related claims are:
- clearly expressed;
- based on a thorough assessment using established and recognised methodologies; and
- clear and transparent in communicating the actions underpinning the claim, including emissions reductions activities and reliance on purchased offsets.
For further information, please contact:
Sue Gilchrist, Partner, Herbert Smith Freehills
Sue.Gilchrist@hsf.com
Footnotes
