Sales & Marketing

11 Nov 2008

Thinking of making a 'Grrrrrreen' claim – then think twice

If two recent investigations by the Australian Competition and Consumer Commission (Commission) (Australia's equivalent to the New Zealand Commerce Commission) are anything to go by those making 'green' claims should sit up and take notice.

Two Australian advertisements recently came under fire in legislation equivalent to New Zealand's Fair Trading Act.

The first was the campaign launched by V8 Supercars Australia Pty Ltd (Company) regarding the 2007 Australian V8 Championship Series (V8 Series). The Company advertised “This year we're planting more than our foot” and announced it would plant 15,000 native trees to fully offset the carbon emissions from the V8 Series. The second string of advertisements to come under scrutiny were those by GM Holden (GM Holden) claiming that select motor vehicles in the Saab range were “Grrrrrreen” and, amongst other things, that “Every Saab is green”.

This article will discuss each of the advertisements and the claims made in them and consider their importance to New Zealand manufacturers and advertisers.

The V8 Series - 'Racing Green Programme'

In 2007 the promoters of the V8 Series launched its Racing Green Programme. The promoters announced that 15,000 native trees would be planted to fully offset the carbon emissions created as a result of the V8 Series. The carbon emissions to be offset included not only the V8 Series itself, but, transport of the racing teams, air travel to the events and other activities.

The Commission's concern was that the claim suggested or implied that the trees would quickly absorb the carbon emissions when in fact it was likely that it would take several decades for the trees to absorb the emissions from one year's racing.

The Commission's Chairman stated that “if businesses wanted to make claims that planting trees would offset carbon emissions, they must explain this will only occur over the full life of the trees”.

As a result of the Commission's investigation the Company provided the Commission with a court enforceable undertaking that:

• any future claims that it publishes about “green marketing” will be first considered by a solicitor with experience in trade practices law (the equivalent to New Zealand's Fair Trading Act) to ensure that it complies with the Act;
• any future claim it makes about trees being planted to offset carbon emissions will include an explanation about the time before those emissions will be offset; and
• an acknowledgement of the Commission's concerns and the undertaking will be placed on its “Racing Green” pages of the V8 Supercars website.

The Commission's Chairman observed that whilst it supported businesses taking steps to reproduce negative effects on the environment, they “need to make sure that any representations that are made are correct and easily understood”.

The 'Grrrrrreen' Saab

The Commission recently initiated proceedings against GM Holden which resulted in the Australian Federal Court granting consent orders. The Commission's investigation focused on an advertising campaign promoting certain motor vehicles in the Saab range (Saab range). The Commission considered that the representations contained in those advertisements was conduct likely to mislead or deceive consumers.

The advertisements in question appeared in various print media between July 2007 to September 2007 and included catch phrases such as “Grrrrrreen”, “Every Saab is green. With carbon emissions neutral across the entire Saab range”, “shift to Neutral” and that “Saab will plant 17 native trees on your behalf in the first year as a carbon offset”.

The Commission alleged that the advertisements could mislead consumers as to the carbon neutrality of motor vehicles in the Saab range. Notwithstanding GM Holden's advice that although disagreeing with the Commissions' stance it had separately determined to withdraw the advertising campaign the Commission forged on and commenced legal proceedings in the Federal Court of Australia.

The Commission alleged that GM Holden had represented that vehicles in the Saab range were carbon neutral and that in the first year following purchase of any such vehicle, they would plant 17 native trees on behalf of the purchaser of that vehicle which would offset the carbon dioxide emissions for the life of that vehicle. The Commission alleged that the advertisements were misleading or deceptive in that the carbon dioxide emissions from any vehicle in the Saab range would not be neutral over the life of that vehicle and that the planting of 17 native trees would not offset the carbon dioxide for more than a single year's operation of the vehicle.

In the course of proceedings GM Holden acknowledged that in fact no vehicle in the Saab range was carbon neutral over the life of that vehicle, and, that planting 17 trees would not provide for more than one year's carbon dioxide offset of any vehicle in the Saab range.

GM Holden stated that it had intended to promote the carbon offset program accurately and had no intention of misleading consumers. It did however accept that consumers could have interpreted the advertisement to mean that by planting 17 native trees the carbon dioxide emissions for the lifetime of the vehicle would be offset. GM Holden of its own volition had an additional 12,500 native trees planted. These additional trees were said to be more than enough to offset the carbon emission of any vehicle in the Saab range based on a 10 year vehicle life.

The Court determined that corrective advertising was not required by GM Holden given the short duration of the advertising campaign, the fact that the campaign was more than a year ago, and, that the continuing impact of the statements would likely be very limited. Further, planting of the additional native trees was enough to offset the carbon emissions of those vehicles. GM Holden were fortunate not to have a fine imposed, and perhaps the Commission's drive for bringing this action was to send a clear signal to all those who make “Green” claims to think carefully before doing so.

What do these decisions mean for New Zealand manufacturers and advertisers?

Claims that your product is 'green' and planting native trees to offset carbon emissions of a product may be considered the right thing to do. However both these cases highlight that the Commission is taking an active interest in such claims. And, if history is anything to go by, the New Zealand Commerce Commission is likely to follow suit. 'Greenwashing' is becoming big business, and manufacturers and advertisers alike must ensure that they keep their hands 'clean and green' and avoid the wrath of the Commerce Commission or other bodies such as the Advertising Standards Authority. The V8 Series decision highlights the need to clearly explain the actual length of time it will take for the offset of carbon emissions to occur rather than suggesting or implying almost immediate offsets. Consumers must be told the reality and not led down some fanciful path.

Practical steps you can take to avoid the wrath of authority

As was seen by the undertakings provided to the Commission in the V8 Series case, good legal advice, before making any claims about a product being 'green' or its carbon emissions neutrality, may avoid manufacturers and advertisers being investigated.

Learn from the mistakes of our neighbours. Ensure that your claims can be substantiated and are not misleading or deceptive under the Fair Trading Act.

There are several ways to ensure compliance with the Fair Trading Act. These include:

• picking up the phone and talking to your lawyers. This will avoid the cost of bad publicity, not to mention the time and effort involved in unravelling or defending such claims;
• ensuring your claims can be substantiated with scientific research; and
• visiting the Ministry for Economic Development website which contains some helpful guidelines.

Authors

Peter Stubbs

Partner - Corporate & Commercial

DDI: +64 9 977 5010

Mobile: +64 21 955 230

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Craig Nelson

Senior Associate - Corporate & Commercial

DDI: +64 9 977 5185

Mobile: +64 21 918 309

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