As sustainability pressures mount, agribusinesses must navigate evolving regulations, market demands, and the ACCC’s greenwashing crackdown. With new financial disclosure requirements and increasing consumer expectations, how can businesses stay compliant while promoting their sustainability efforts? In this Q&A with Charles Fisher, explore key legal risks, best practices for substantiating claims, and strategies to avoid misleading marketing pitfalls.
1. What are the key regulatory and market drivers in the food retail industry that are pressuring Agribusinesses to adopt more sustainable practices, and how can they navigate these pressures effectively?
In Australia, our regulatory drivers are behind those in other jurisdictions around the world, in particular Europe. However, with Treasury’s recent mandating of financial disclosures to include emissions reporting, larger upstream companies (such as supermarkets and food manufacturers) could be required to declare their “Scope 3” emissions, which could require agribusinesses supplying large companies to measure and disclose their emissions. However, the main drivers in Australia at the moment are simply market-driven: consumers are now expecting food suppliers to be improving and marketing their sustainability credentials… but unfortunately these same consumers also are not currently prepared to pay a premium for this investment.
2. The ACCC’s greenwashing campaign has gained attention in recent years. How has this campaign specifically impacted Agribusinesses, and what precautions should they take when marketing their sustainability efforts?
I think it would be fair to say that the ACCC’s greenwashing campaign should certainly have Agribusiness concerned, but that published actions taken so far against food products have focused on packaging claims (such as recycled ocean plastic claims) that arguably could apply to any industry. ACCC developments and enforcement actions over the last year that should concern Agribusiness more (at the time of writing) than greenwashing should be breaches of the Dairy and Horticulture Codes of Conduct, the new Food & Grocery Code of Conduct, ACCC responses to avian flu outbreaks impacting egg availability and labelling, and upcoming ACCC pre-approvals of mergers and acquisitions,
3. When it comes to substantiating sustainability claims, how clear are the regulatory guidelines and industry best practices? Can AgriBusinesses rely on these resources to determine where the “finish line” is in terms of compliance?
There is a lot of ACCC guidance on where the finish line is in terms of substantiating sustainability claims, but sadly no certainty. It continues to be left to industry to determine best practice and wait to see if the ACCC ever disagrees with this best practice. However, I think it is important to observe that it is the phrasing and presentation of the claims in market that presents a much bigger risk than holding sufficient substantiation evidence. An AgriBusiness company is far more likely to present a claim in a way that the ACCC views as communicating different, unsubstantiated claims to the reasonable consumer than to make a clear, accurate claim and be found to have insufficient evidence backing that claim up. The ACCC’s own guide to business on Making Environmental Claims includes 8 Principles for making trustworthy environmental claims; one of those principles focusses on substantiation evidence and the remaining seven principles focus on the presentation and understanding of those claims by the reasonable consumer.
4. What legal risks do Agribusinesses face when promoting their sustainability credentials, and what steps can they take to mitigate these risks, especially regarding consumer protection and false advertising concerns?
The penalties for misleading and deceptive conduct in the Australian Consumer Law have increased dramatically, from a maximum penalty of $10 million per offence to now $50 million per offence. These legal risks apply to all marketing claims (not just sustainability claims), but the ACCC’s current greenwashing campaign suggests that marketing of sustainability credentials will be scrutinised more at this time than other more established claims commonly made by AgriBusiness (e.g. “fresh”, “natural”, “organic”, etc.). That said, if any AgriBusiness company is making strides towards improving its sustainability credentials and can substantiate these improvements, that company should be able to market that. Consumers want to hear it. The key risk mitigation approach will be ensuring that how the claim is worded and presented is clearly and accurately understood by the reasonable consumer.
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