New Zealand

New Zealand does not have legislation which specifically targets greenwashing. Advertising claims are regulated under the Fair Trading Act 1986 (FTA) and the Financial Markets Conduct Act 2013 (FMCA), for financial products and services.  Both Acts prohibit:

• misleading or deceptive conduct (note, a claim may be misleading even if it is true); and
• unsubstantiated representations (i.e. when the maker of the representation does not have reasonable grounds for the representation, irrespective of whether it is false or misleading, or whether substantiation is in fact possible).

The Acts also contain more detailed prohibitions on false and misleading representations regarding the nature, manufacturing process, characteristics, standard, uses and benefits of goods and financial services respectively.

The New Zealand Commerce Commission (the Commerce Commission), the regulator responsible for enforcing the FTA, published Environmental Claims Guidelines stating amongst others that environmental claims should:

• Be truthful and accurate: companies must consider whether their environmental claims are false or misleading from an objective perspective of what a reasonable consumer would understand the claim to mean.
• Be specific: environmental claims should provide complete and detailed information to prevent giving a misleading impression of general environmental claims made.
• Substantiate claims: environmental claims should be supported by credible information that indicates a solid factual foundation such as research, test results, or evidence.
• Do not exaggerate: environmental claims should not overstate an environmental benefit by making general claims.
• Take care when relying on tests or surveys – must ensure that test results are interpreted and reported accurately.
• Consider the overall impression: if the overall impression associated with an environmental claim is misleading, this will breach the FTA no matter what information is also provided in the fine print.

The Financial Markets Authority (FMA), the regulator responsible for enforcing the FMCA, issued guidance for financial products or services with environmental elements. It repeats considerations noted in the Commerce Commission’s guidance above, and notes that companies should not engage in partial disclosure or cherry picking as confusing and misleading conduct includes omissions that extend beyond positive actions and statements.

The New Zealand Advertising Standards Authority (ASA) published the Advertising Code (ASA code) that provides guidance on responsible advertising. The ASA code notes that all advertising, which includes environmental claims, must be legal, decent, honest, truthful, and respect the principles of fair competition, so that the public can have confidence in advertising.

 

Enforcement actions

Legal actors who can initiate court proceedings

Any person can bring civil proceedings to the High Court for a breach of the FTA.  In practice, claims are brough by regulators (the Commission and FMA), NGOs (such as Consumer NZ and Lawyers for Climate Change Action New Zealand), and competitors.

A notable example of a direct competitor greenwashing claim includes Godfrey Hirst pursuing proceedings against local competitor Bremworth by challenging Bremworth’s marketing claims that its wool carpets are better for people and the environment were misleading, thereby breaching the FTA.

However, the Commerce Commission and the FMA are the only actors empowered to bring enforcement proceedings under the FTA and FMCA respectively, with a wider set of enforcement tools and remedies.

Potential legal sanctions for inadmissible environmental claims

Under the FTA, the New Zealand courts can grant injunctions, orders to disclose information or publish advertisements, and other orders including compensatory awards, and damages. Penalties under the FTA can be up to NZD600,000 for companies and NZD200,000 for individuals.

In enforcing the FMCA, the FMA may use formal feedback letters, monitoring reports, and issuance of a public warning. In matters where the spread of information is likely to confuse investors on material matters, the FMA may issue a stop order preventing further publication. Failure to comply with a stop order can result in a fine of up to NZD300,000

A successful court action by the FAM may result in civil liability orders that can include a pecuniary penalty or compensatory order and/or fines up to NZD500,000 to NZD2.5 million depending on whether an individual or company was in breach.

The ASA has no formal sanction or enforcement powers. If a complaint under the ASA code is upheld, advertisers are required to immediately withdraw the advertisement in accordance with self-regulatory principles.

Recent enforcement action

The FMA has recently censured Pathfinder Asset Management under the FMCA for misleading claims in relation to animal testing and its investment in fossil fuels. The censure focussed on adverts representing fictional customers’ stories which represented that Pathfinder’s funds did not invest in companies involved in fossil fuels or animal testing. Pathfinder’s funds are invested in five companies which use animal testing for pharmaceutical purposes, and one company that generates electricity using fossil fuels, but had been given exceptions to Pathfinder’s general criteria requiring no greater than 5% of revenue being derived from fossil fuel activities and animal testing – in line with Pathfinders policies. By failing to qualify or substantiate the claims made in its advertising campaign, the FMA considered the adverts were misleading.

 

Potential mitigation of greenwashing risks

The Commerce Commission and the FMA are both proactive and responsive in addressing concerns about environmental claims (and perceived greenwashing). We have seen regulators and NGOs progress from guidance and engagement to enforcement action in the courts. Notably, New Zealand’s consumer-based class actions regime and litigation funding creates a broad prospect of potential environmental claims.

Product advertising

• Companies must be careful when highlighting the environmental benefits of a product if only one aspect of the product has the stated environmental benefit.
• For example, the Commission issued a warning letter to a taxi company that claimed they use LPG cars that "reduce CO2 pollution by up to 25%" and that one of its vehicles was "20% more fuel efficient than traditional automatic transmissions." These claims were considered misleading because the representations overstated the positive features of the taxi fleet.

Brand/corporate advertising and aspirational claims

• Companies should ensure that aspirational claims, goals, and targets are grounded in an actionable plan that involves realistic targets or roadmap to achieve the advertised goals.
• Recently, a collection of NGOs filed a proceeding against a major fossil fuel supplier, seeking declarations from the High Court that part of its green advertising campaign gave the impression that the company was significantly reducing its emissions to mitigate its contribution to the climate crisis when, in fact, its actions are more limited.

Use of third-party certifications/ecolabels

• Companies should not use internal certification processes in support of their products as this is not credible. It is important that companies do not overstate environmental benefit through third party certifications. Any paid promotions and sponsorships must be clearly stated.

Carbon neutral/zero emissions claims
The Ministry of Environment’s guidance notes principles for credible voluntary carbon offsetting claims:

• Transparency: carbon neutral and zero emissions claims should provide details to support such claims that are clearly stated and accessible.
• Real, measurable and verified: carbon neutral and zero emissions claims must be supported by evidence from accurate monitoring and reporting that is verified by a credible third party.
• Additional: companies advertising the claims must ensure that the GHG emissions reductions advertised are due to the specific interventions or actionable steps taken by the company.
• Not double counted: when advertising carbon neutral or zero emissions claims, companies must ensure that only one entity is using the reduction for achievement of their emissions reduction or carbon neutrality goals.
• Address leakage: companies should not be advertising carbon neutral or zero emissions goals that although they have decreased emissions within the boundary of the credited activity, have nevertheless led to increased emissions elsewhere.
• Permanent: only reductions or removals that can be maintained over time and are unlikely to be reversed should be advertised.

The need for credible carbon neutral/zero emission claims was highlighted in a recent competitor complaint upheld by the ASA. Electric Kiwi complained to the ASA that Meridian’s advertising campaign suggested customers would receive greener renewable energy with Meridian. While Meridian generates electricity from 100% renewable sources, the electricity that Meridian sells to customers is from the national grid, which includes electricity generated from coal and other non-renewable sources. The ASA, therefore, upheld Electric Kiwi’s complaint, resulting in Meridian’s advertisement being removed.

Recycled/recyclable claims

• WasteMINZ (the largest representative body of the NZ waste sector) has issued guidance on claims relating to recyclability, reusability and reparability.
• When marketing a product as recyclable, companies should consider whether the customer has appropriate collection and processing services available to divert it from waste and reprocess it into original or new products¹.

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¹The term “recyclable” should only be used for items that can be accepted at all kerbside collections across New Zealand. However, items that are less widely accepted that do not have provision for kerbside recycling, should include information on how customers should recycle, for example noting “recycle at store drop off” on the packaging.