Challenging environment

Fear of backlash over sustainability claims has driven large financial services companies to strip all mention of environmental progress from their websites for fear of retribution, according to the Australian Association of National Advertisers (AANA) CEO, Josh Faulks.

Finding a balance between ‘greenhushing’, realistic constructive sustainable communications and being called out by the regulators for greenwashing is what the advertising industry body is hoping to address as its officially debuts its new Environmental Claims Code, effective 1 March 2025.

The second iteration of the AANA’s self-regulatory extends beyond the original – first introduced in 2009 – by including images, sounds as well as addressing any broad or vague environmental claims by brands. It also makes plain the requirement for advertisers to now ensure any claims made in their advertising about future actions or sustainability targets are realistic, achievable and based on solid evidence.

“One of the first things I did when I came into this job was bring forward the review of the environmental claims code. It wasn't due for a while, but we brought it forward because of that shift in community expectation, standing and around how the world sees this as people are moving quite quickly,” Faulks tells Mi3. “The reason for that is, and it's something I'm particularly passionate about, is that greenwashing undermines that consumer trust and confidence in these claims.

“But we've also got a problem on the other side, which is the greenhushing piece. A lot of businesses I'm talking to now, and these are the biggest companies in Australia, have CMOs saying we can't make environmental claims because of our laws. The risk teams are saying it's too risky in terms of regulatory action, consumer backlash, and so on.” 

A case in point from Faulks: “I can't say who it was, but I’ve heard of big finance companies where they've gone through and stripped everything relating to the environment off their website because they don't want to get fined. It's that kind of conservative [approach to] risk we’re seeing right now.

“Marketers have their legal teams and compliance teams on them going, hang on a second, we don't want the ACCC going after us. But we can't transition to that sustainable future unless we're talking about it, and we can have the conversation about what we're doing.”

Which is why Faulks and the AANA have launched the latest Environment Claims Code. “The objective of this code is to try and start to build trust with consumers around environmental claims, to say there are really clear standards brands need to adhere to,” continues Faulks. 

“The second part is to create clear guidelines and standards for business to give them the confidence to be able to make those claims. So we can have that conversation about transitioning to a sustainable future.

“I'm not saying this is going to be the solution. It's a step in the right direction for that.”

Shifting sands

The AANA’s move on the Code comes in a swirling storm of heightened regulatory and consumer pressure on businesses to not just start to talk the sustainability talk, but actually walk the walk. Its launch also comes just days before the expected Australian launch of Ad Net Zero, a global initiative aimed at helping the advertising industry transition to net zero through a five-point action plan. The AANA, MFA, IAB and Ad Council Australia are all backing the initiative.

The AANA’s own draft code was first released for public comment in January after a year of review and with the specific ambition of complementing both Australian Consumer Law as well as the ACCC’s ‘Making Environmental Claims’ guidelines released in December last year.

It also comes on the heels of new climate emissions reporting for businesses. As reported by Mi3, from 1 July 2024, Australia’s largest organisations and financial institutions became subject to mandatory climate reporting laws requiring them to disclose information relating to carbon emissions governance, strategy, risk management, metrics and reduction targets. The rules begin trickling down to companies with over $200m from 1 July 2026, then from 2027 to companies with two of the following: More than $50 million in consolidated revenue; at least $25m in gross assets; at least 100 employees. In the first year, reporting is restricted to Scope 1 and Scope 2 – direct emissions generated by the business. But from year two, reporting conditions also require companies to disclose Scope 3 emissions – those occurring up and down a company’s supply chain. In fact, Scope 3 are estimated to account for up to 98 per cent of a company’s total emissions.

Then there’s the crackdown on greenwashing itself. In August, the Australian Securities and Investments Commission (ASIC) successfully upheld its first greenwashing civil penalty, in a case against Vanguard Investments Australia. The Federal Court fined Vanguard $12 million for making misleading claims about certain environmental, social and governance (ESG) applied to investments in one of its index funds.

Additionally, a Senate inquiry into greenwashing over the last 18 months has had particular emphasis on environmental and sustainability claims being made by companies across the energy, automotive, household products and appliances, food and drinks packaging, cosmetics, clothing and footwear industries. A final report is due within weeks.

Faulks reiterates AANA isn’t the sole solution. Through the Ad Net Zero initiative, which is now reflected in about half of the world’s countries, there’s a concerted effort to share more of the positive stories about who's doing this well.

“The interesting thing is it's moving away from this concept of ego marketing, where you tell everyone how good you are – consumers are turned off increasingly by that. It's more about how you can help them with the right sustainable products and services, how you can move them and enable them to be more sustainable,” Faulks says. 

“The Ad Net Zero piece is about the industry making sure – and it's a very clear ambition – we’re leading the behavioural change necessary to transition to a sustainable future. That's quite aspirational, but I think we were very clear we needed to do that. Ad Net Zero is just the framework we're using to achieve that.”

But Ad Net Zero’s fifth pillar, around how you influence behavioural change, is key in how the industry starts talking about sustainability in a way that builds trust at the same time as it gives business the confidence to do it, says Faulks.

“We want to change that situation and say you can still talk about it. Here are the guidelines, and if you adhere to these guidelines and their standards, through the code and the ACCC guidelines that are all aligned, then you can make environmental claims. And this is what good looks like, and what good creative looks like.

“That ambition is a big one, but how do we lead that behavioural change necessary to transition to that sustainable future without it?”

The AANA is supporting the launch of the new Environment Claims Code with bespoke, in-person member training, free advice on individual campaigns, and a new 30-minute online training module complete with exam and certificate.

“The code is a good start, Ad Net Zero is another start. We're not saying it's the whole solution, but we need to work as an industry together to try and rebuild that trust in those environmental claims,” adds Faulks. “For businesses, they need to know these are the guardrails and standards we need to adhere to – this is what good looks like rather than just the basics. And then we can hopefully all work together to do that. I love the aspiration. That's what we're trying to do. We're trying to literally have an impact, to make a positive bit of difference.”