By Emma Farncomb and Heidi Bruce

On the 1^st of March 2025, the new Environmental Claims Code (“New Code”) released by the Australian Association of National Advertisers (“AANA”) came into effect, setting a ‘new standard’ for advertisers engaging in environmental claims.

In line with the increased regulatory focus on greenwashing (the act of making false or misleading claims about the environmental benefits of a company’s products or practices), the New Code establishes five clear rules for advertisers when using environmental claims as part of the Australian self-regulatory system for advertising, under which complaints about advertising lead to rulings administered by Ad Standards. As will be discussed below, it complements the Australian Consumer law and reinforces the Australian Competition and Consumer Commission’s (“ACCC”) Guidance on Environmental Claims, with the main purpose of ensuring advertising is ‘truthful, clear and verifiable’. It adds a new weapon in the arsenal against greenwashing, involving a relatively simple method for complaints to be made and ads being effectively ruled off air if they breach the rules.

The New Code is broader in scope and stronger in application than the 2021 AANA Environmental Claims Code (“Old Code”) and so will capture claims that previously fell outside the scope of the Old Code. Advertisers must be familiar with these new rules, so they can take the necessary steps to ensure their environmental claims are specific and can legitimately be substantiated with sufficient evidence.

When does the New Code apply?

The New Code applies to any ‘advertising’ containing an ‘environmental claim’.

The term ‘advertising’ includes any advertising, marketing communication or material which is published or broadcast (using any medium) and that:

a) the advertiser has a reasonable degree of control over its content; and

b) 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 (i.e. media statements and annual reports) and promotions for broadcast media. However, it must be noted that if an image of a label or packaging that contains environmental claims is displayed in an advertisement, this will be considered an element of that advertisement and as such, will be subject to the New Code.

In relation to the definition of ‘environmental claim’, this is broader than the Old Code, capturing any message or representation (including text, images, graphics, audio or symbolic representations) that gives the impression that an industry, business, product or service:

a) has a neutral or positive impact on the environment;

b) is less harmful for the environment than alternatives; or

c) has specific environmental benefits.

This can cover claims dealing with a broad range of subjects such as sustainability, carbon footprint, emissions, recycling, renewable energy, or other claims touching on green, eco or climate related issues, with some examples and implications considered below.

Who is the Target Consumer?

Before discussing the five key rules (as set out below), it is important to note that under the New Code, advertisements are assessed from the perspective of the “Target Consumer”, which is defined as “the average and reasonable consumer of the target audience” (expressly aligning with the approach taken under the ACL).

 The 5 Key Rules Under the New Code:

1. Advertising must be truthful and factual

This rule emphasises that the “overall impression” created by the advertisement, including any environmental claims, should not be false, inaccurate, misleading or deceptive to the Target Consumer. This involves considering the overall impression that is created by the environmental claims within the context of the advertising.

Within the Practice Note of the New Code, it is further emphasised that advertisers should ensure all environmental claims remain valid throughout the entire life of the advertisement or campaign. If a claim is made and it is subsequently discovered that it is no longer verified or reasonable to make, it should no longer be made. 

2. Environmental claims must be supported by evidence

Rule 2 outlines that advertisements must:

1. 1. have reasonable grounds for making an environmental claim, based on evidence held at the time the claim is made; and
   2. not misrepresent third party certifications and validations supporting any environmental claim.

If you are promoting a third party certification for instance, you should not be overstating or exaggerating what the certification stands for. The Practice Note goes into further detail providing guidance on common types of claims such as scientific claims, claims about the environmental impacts of a product throughout its life cycle, and compostable claims.

Another very important requirement for environmental claims is clear from the Practice Note here. If an environmental claim is based on a single attribute, this must be made clear and be adequately substantiated. For example, if you are claiming a product is a more sustainable alternative because it is plastic free, or because it uses a recyclable component, it may be that you need to adequately clarify that basis of the claim.

3. Environmental claims must be clear

This rule provides that claims must:

a) be in clear language, having regard to the Target Consumer i.e. scientific terminology or references should be relevant and accurate, and technical claims should be used in a way that can be readily understood by the Target Consumer;

b) be specific; for example, broad or vague claims such as ‘eco-friendly’ or ‘sustainable’ could be misleading without any limitation or basis specified;

c) include important limitations, conditions or qualifications in a way that is clear to the Target Consumer i.e. absolute 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”.

Furthermore, additional clarification is also provided in relation to ‘emissions-related’ claims. For instance, if an advertiser uses headline claims such as ‘carbon neutral’, ‘climate neutral’, or ‘net zero’, it is noted that they should provide further information to explain these claims to ensure Target Consumers can easily understand and comprehend the broad headline claim.

4. Environmental claims must reflect a genuine benefit to the environment

Under rule 4, environment claims must be about a genuine benefit to the environment, that is not overstated or exaggerated. For example, advertisers will risk misleading consumers if they advertise an environmental benefit that is irrelevant, insignificant, or if they simply advertise a product as complying with existing laws (unless this is made very clear). An example of this would be a mining company advertising the restoration activities being undertaken and promoting the company as mining responsibly and sustainably, in a way that suggests the company generally going above and beyond, when these activities were being done to meet minimum legal requirements.

5. Future claims must be based on reasonable grounds

As per rule 5, environmental claims about future environmental objectives, such as aspirational targets or environmental goals, should only be made if the advertiser has reasonable grounds at the time the claim is made. Reasonable grounds may include having verifiable data, clear plans and milestones that outline how the specific target or goals will be met.

This will catch ‘aspirational’ claims about future goals by a company, such as claims about emission reduction goals, net-zero targets, sustainability targets, ‘carbon neutral by 2028’, ‘phasing out plastics by 2030’, and so on. It is not enough just to have an aspiration or a goal for the future, there must be credible plans in place, to demonstrate that the goals are genuine and have a valid basis. Claiming to be on track to reduce a company’s polluting emissions to net zero when no credible plan is actually in place, is likely to be misleading. This is consistent with greenwashing concerns expressed by the ACCC and by regulators in other markets.

Consequences

Since the New Code will join Australia’s self-regulatory advertising and marketing system as one of AANA’s Advertising Codes, the consequences of breaching the New Code could include formal investigations by the AANA’s self-regulatory body, assessments undertaken by the Ad Standards Community Panel, and mandatory corrective action, such as ordering an offending advertisement to be discontinued, and taken off air until or unless it is modified.

Violations of this New Code could also expose advertisers to negative publicity and significant reputational damage.

The risks and practical issues involved are illustrated well by a recent case decided under the Old Code for the Gina Rinehart’s Hancock Prospecting’s advertisement (see below) which is relevant under the new rules also.

A closer look into the Gina Rinehart’s Hancock Prospecting ad case

On 5 February 2025, the Ad Standards Community Panel upheld a complaint made in relation to the environmental claim “Our clean gas keeps the lights, and factories, hospitals, and shops open from Tokyo to Toowoomba” which was referenced within the recent Hancock Prospecting advertisement. Due to the unqualified, unsubstantiated and broad nature of the claim “clean gas”, the panel found the advertisement in breach of two sections of the Old Code:

a) that environmental claims must “not be misleading or deceptive or be likely to mislead or deceive” (section 1(a)); and

b) that environmental claims must “be able to be substantiated and verifiable” (section 3(a)).

In relation to section 1(a) of the Old Code, since the claim “clean gas” did not have further disclaimers explaining the limitations of the word “clean” in the context of the advertisement, it was held to be misleading and deceptive or likely to mislead or deceive. In coming to this decision, the panel emphasised that the use of the word “clean” was false and implied that gas is ‘free of dirt or environmental pollution’ and is ‘not harmful’, which is not the case, given gas emits substantial amounts of environmental pollutants through its extraction. Regarding section 3(a) of the Code, after investigating the broad and unqualified claim “clean gas”, it was further found that the claim could not be supported by a high level of substantiation and as such was in breach of this section. The outcome of this decision resulted in the advertisement being discontinued and taken down immediately.

Although this case was found in breach of the Old Code, a broad and unsubstantiated environmental claim such as this, would have also been in breach of the New Code and proves to be a great example highlighting the importance for advertisers to review their advertising material and ensure all claims are specific, verifiable, true and adequately qualified.

Key Takeaways

Given the broad reach of the New Code, and how its requirements now synch up more closely with the ACCC regulatory guidance, advertisers must review all environmental claims to ensure they are truthful, clear, and verifiable. With the AANA and ACCC cracking down on greenwashing, if advertisers fail to be transparent and do not comply with the New Code, they will risk drawing consumer complaints, unwanted reputational damage and potentially the attention of others such as the ACCC. We could see this avenue used as a quick means to an outcome for advertisements sailing close to the wind on these issues. As such, awareness of the New Code and carefully reviewing all claims will be key for advertisers in ensuring the messaging within their campaigns is legally compliant.

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