Environmental green claims and social responsibility

Environmental claims influence purchasing decisions. Whether you're selecting packaging, comparing suppliers or communicating your organisation's sustainability initiatives, it's important to understand what environmental claims mean and the evidence that supports them. Terms such as 'eco-friendly', 'environmentally friendly', 'green' and 'sustainable' are commonly used in marketing, but without clear substantiation they can be misleading. Understanding how to assess these claims helps businesses make informed procurement decisions and communicate their environmental initiatives accurately.

In this article, we explore environmental claims, New Zealand's legal framework for making and assessing them, and why independent certification and evidence are increasingly important. We also look at international developments, including the European Union's proposed Green Claims Directive, and what these changes signal for businesses making environmental claims.

What are environmental claims? Or, what are green claims?

Environmental claims (sometimes called green claims) are statements made by businesses about the environmental attributes or benefits of their products, services or operations.

These claims may relate to a product's materials, manufacturing process, recycled content, recyclability, compostability, carbon footprint or end-of-life. They can also extend to broader business activities, including emissions reductions, renewable energy, responsible sourcing and sustainability commitments.

Environmental claims play an important role in helping businesses and consumers make informed purchasing decisions. However, these claims should be clear, accurate and supported by appropriate evidence. Vague or unsubstantiated claims can mislead customers and undermine confidence in genuinely better environmental outcomes.

The International Organisation for Standardisation (ISO) has drawn up a group of standards governing environmental labelling as part of its ISO 14000 environmental standards. The ISO 14020 family covers three types of labelling and declaration schemes: 

Type I (ISO 14024) – Independent, third-party certified environmental labels based on predefined criteria (for example, FSC certification or recognised ecolabels).

Type II (ISO 14021) – Self-declared environmental claims made directly by manufacturers or brands, such as "recyclable", "compostable" or "made from recycled content". These claims should be accurate and supported by evidence.

Type III (ISO 14025) – Quantified environmental declarations based on life cycle assessment, such as Environmental Product Declarations (EPDs), allowing products to be compared using standardised environmental data.

Greenwashing and the law

In New Zealand, environmental claims are regulated under the Fair Trading Act 1986, which prohibits businesses from making false or misleading representations. The Commerce Commission's Environmental Claims Guidelines provide practical guidance on how businesses should communicate environmental benefits accurately.

When assessing environmental claims, regulators consider the overall impression created by the marketing—not just the individual words used. Claims such as "eco-friendly", "green", "environmentally friendly" or "sustainable" may be misleading if they are broad, unqualified or cannot be substantiated with appropriate evidence.

Comparative claims, such as "greener" or "better for the environment", should also be supported by clear evidence explaining what is being compared and the basis for the comparison.

In addition to the Fair Trading Act, the Advertising Standards Authority (ASA) Code9 (ASA) requires environmental claims made in advertising, including websites and social media, to be truthful, balanced and not misleading. 

Any claims must be supported by evidence. Businesses should have reasonable grounds for any environmental claim at the time it is made. This may include recognised certification, independent testing, scientific evidence, research, test results or other credible information appropriate to demonstrate a solid factual foundation for the claim being made.

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Why environmental claims are receiving greater scrutiny

As consumers, businesses and investors place greater emphasis on environmental performance, environmental claims have become an increasingly important part of marketing and procurement.

At the same time, regulators around the world have increased their focus on ensuring these claims are accurate, specific and supported by evidence. Vague or unsubstantiated claims can undermine consumer confidence and make it more difficult for organisations making genuine environmental improvements to differentiate themselves.

This increased scrutiny is reflected in regulatory guidance from organisations such as New Zealand's Commerce Commission and international initiatives, including the European Union's proposed Green Claims Directive, which seek to improve transparency and reduce misleading environmental marketing.

Legal action and enforcement 

In New Zealand, environmental claims are primarily regulated under the Fair Trading Act 1986, which prohibits businesses from making false or misleading representations. The Act is administered by the Ministry of Business, Innovation and Employment (MBIE) and enforced by the Commerce Commission, which is responsible for promoting fair competition and protecting consumers. The Commerce Commission's Environmental Claims Guidelines encourage businesses to ensure environmental claims are:

• specific and relevant, targeting the key environmental aspects of the products and/or services concerned;  

• truthful be accurate—sufficiently substantiated and supported by adequate evidence; 

• subject to adequate verification and substantiation and are not exaggerated;

• measures to combat misleading, confusing and false environmental claims are effective. Where information is sourced from the Internet, additional care must be taken to ensure validity;  

• compliance and enforcement of consumer protection laws and regulations are strong, clear and transparent concerning claims; 

• encourage using plain language so that statements are easy to understand and comparable (i.e., claims can be easily compared when evaluating competing products).
  

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The European Commission Green Claims Directive 

On 22 March 2023, the European Commission published its Green Claims Directive (GCD) proposal. The Directive aims to eliminate misleading environmental messaging across European Union (EU) markets and address greenwashing concerns by providing detailed rules for how companies should communicate their environmental impacts and performance. 

These rules will require significant changes to how companies currently evidence and communicate their environmental claims. These regulations also impact how companies manage information related to their environmental credentials.

As well as fulfilling regulatory requirements, more robust environmental claims management could help companies reduce reputational and litigation risks while building brand equity. However, some companies may conclude that it is more cost-effective to limit the environmental claims made.

What international developments signal for New Zealand businesses

Although New Zealand businesses are primarily governed by domestic legislation such as the Fair Trading Act 1986, international developments demonstrate a clear trend towards greater scrutiny of environmental claims.

The European Union's proposed Green Claims Directive attracted significant attention by seeking to introduce more rigorous requirements for substantiating and verifying environmental claims. While the proposal's legislative future has become uncertain, the broader direction of travel is clear: regulators are increasingly expecting environmental claims to be specific, evidence-based and capable of independent verification.

For New Zealand businesses, this reinforces the importance of making environmental claims that are accurate, transparent and supported by credible evidence. Businesses exporting to international markets should also remain aware that environmental marketing requirements may differ between jurisdictions and continue to evolve over time.

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Evaluating environmental claims

Environmental claims are becoming increasingly common, but not all claims carry the same level of evidence. Some are independently verified through recognised certification programmes, while others are self-declared by the manufacturer.

Whether you're selecting packaging, comparing suppliers or communicating your own sustainability initiatives, it is worth taking the time to understand the evidence behind the claims being made.

Consider asking questions such as:

• What evidence supports this claim?

• Is the claim independently verified or self-declared?

• Which standard or certification does the product comply with?

• Is the certification current?

• Does the claim apply to the whole product or only part of it?

• Is the stated end-of-life pathway supported by recognised standards?

Asking these questions helps businesses make informed procurement decisions while ensuring environmental claims are communicated accurately and responsibly.

Need help evaluating packaging claims?

If you're reviewing packaging or comparing suppliers and would like help interpreting environmental claims, certifications or compostability standards, we'd be happy to help. Message us at hello@ecoware.co.nz.