AUSTRALIA Trends and Developments Contributed by: Peter Briggs, Christine Wong, Mark Smyth and Tom Dougherty, Herbert Smith Freehills
material environmental issues in circumstances where directors are based overseas. This presents an emerging regulatory risk after an environmental crisis for businesses that have both local and overseas directors, officers, or other persons in senior management. If this prosecution trend continues, regulators may increasingly rely on the extraterritorial applica- tion of existing legislative provisions when carry- ing out initial investigations and seeking to rem- edy an environmental issue. By way of example, the Protection of the Environment Operations Act 1997 (NSW) currently allows for a person to be issued with a regulatory notice (eg, prelimi- nary investigation notices or clean-up notices) even if the person is outside of NSW, so long as the relevant matter or thing affects the environ- ment of NSW. ESG and greenwashing Australia has had the second-highest number of documented climate litigation proceedings globally, second only to the USA. Australia has a developed litigation landscape and has signifi- cant reserves of traditional energy sources such as coal, oil and gas. These factors have made it a fast-moving and higher-risk jurisdiction in climate-related litigation. Australian companies are operating within a landscape of increased regulatory surveillance, as the major Australian regulators have contin- ued to target greenwashing as an enforcement priority and recent decisions in favour of regu- lators have crystallised the threat of action for greenwashing and the significant pecuniary pen- alties that can come with it. In 2023, the Federal Senate established an inquiry into greenwashing by Australian compa- nies. The inquiry investigated the environmental
and sustainability claims made by Australian companies, the impact of greenwashing, and legislative options to protect consumers from greenwashing. The committee is due to report by 5 August 2025. As Australia comes to the end of its first major cycle of climate-related litigation, what follows is a snapshot of the key trends that have emerged to date, including relevant examples. Misleading and deceptive conduct: climate change disclosures and companies’ products Regulators have adapted existing and estab- lished causes of action for misleading and deceptive conduct to prevent greenwashing. Both ASIC and the Australian Competition and Consumer Commission (ACCC) have identi- fied greenwashing as an enforcement priority. To date, ASIC has been the more active, having issued 17 greenwashing-related infringement notices and three civil penalties proceedings. Representations that have attracted regulators’ attention have tended to: • be lacking in balance; • use broad or vague terminology or use absolute statements that are unqualified and devoid of context; and • use overly positive environmental imagery. Misleading and deceptive conduct claims have tended to focus either on companies’ climate- related disclosures and emissions reduction targets or on product claims companies have made. The latter type of proceeding has tended to cluster around hot-button terminology such as “carbon neutral” or “sustainable” . By way of example, in April 2024, the ACCC commenced its first-ever greenwashing proceeding against Clorox Australia Pty Ltd ( “Clorox” ) for mislead-
16
CHAMBERS.COM
Powered by FlippingBook