Carbon neutral claims: 5 things you need to consider

Interest in carbon neutral claims is growing, particularly amongst the FMCG sector as manufacturers look to reduce their carbon footprint and promote their sustainability credentials to consumers.

But substantiating a “carbon neutral” claim is not always straightforward. Here are 5 things to consider before embarking on a “carbon neutral” campaign.

1. What does “carbon neutral” mean?

Carbon neutral claims are intended to convey a message about the amount of carbon emissions associated with a particular thing or process (eg a product, service, organisation, building etc).  When used in connection with a product, the claim is likely to convey that there are no net carbon emissions across the entire product lifecycle, including its use, operation and disposal as well as its manufacture.

The ACCC has specifically warned against making carbon neutral claims for products that do not factor in carbon emissions across the entire product lifecycle.

In each case, it is important to consider:- 

• what does my carbon neutral claim actually relate to (eg a product, a service, a manufacturing site or something else)?

• have I accurately defined the carbon emissions boundary and calculated all relevant emissions? For products, has the entire lifecycle been factored in?

• if certain emissions are not factored in to the calculations, is it possible to qualify the claim?

2. Do I need to get certified?

There is currently no legal requirement to become certified before making a generic “carbon neutral” claim in Australia. The only legal requirement is that the claim is not false, misleading or deceptive in contravention of the Australian Consumer Law.

Certification to a reputable standard can, however, provide a useful mechanism for substantiating a carbon neutral claim.

There are a number of certification programs and standards in Australia, including the Climate Active Carbon Neutral Standards (CNS) administered by the Australian Government Department of Environment and Energy. To date, the Australian Government has released 5 different Carbon Neutral Standards that set best practice guidelines for becoming carbon neutral. Businesses can either self certify against the relevant CNS or apply to the Department to get certified. Either way, careful consideration of the relevant CNS requirements is required, including the process for calculating carbon emissions, reducing emissions and then purchasing carbon offsets to ensure that net emissions are zero.

There are some added benefits to becoming Government certified under the CNS regime, including rights to use the official CNS logo in return for the payment of an annual certification fee and compliance with applicable licence terms.

If going down the CNS certification path, it is particularly important that the correct CNS is chosen in the context of your desired objectives. Getting certified to the CNS for Organisations is unlikely to assist if seeking to make carbon neutral claims on product packaging. If in doubt, early engagement with the Department of Environment and Energy can help ensure that you are using the correct CNS.

3. Calculating carbon emissions

Before making a carbon neutral claim, the carbon emissions boundary needs to be defined and relevant carbon emissions within that boundary calculated. But what if your product is new and you have no emissions data?

The CNS for Products and Services ordinarily requires emissions data to be calculated over a 12 month period (the “base year”) before a carbon neutral claim can be made. However it acknowledges that emissions data may not exist. In those cases, or where data does not provide a meaningful comparison, the CNS contemplates that base year data can be estimated or projected provided that any estimated data is representative.

 
4. Purchasing carbon offsets

If relying on carbon offsets to make a carbon neutral claim, care should be taken to only purchase carbon offsets from reliable sources.

If certifying to one of the CNS, there are restrictions on who you can reliably purchase carbon offsets from to ensure that the offset units represent genuine and credible emission reductions. The CNS provides a list of eligible offset units that have been assessed by the Department as meeting the Standard’s offset integrity principles. The Department’s list is a useful guide even if not certifying to the CNS.

 
5.  Use of qualifiers

Where certain carbon emissions are not factored in, or the carbon neutral claim only relates to a specific part of the product lifecycle, there is the potential for a carbon neutral claim to mislead or deceive. While qualification may be possible, careful consideration should be given to the placement and prominence of any qualifying statement, particularly if claims are being made on product packaging.

DISCLAIMER: The information in this article is of a general nature. It does not constitute formal legal advice and should not be relied upon as such. Please contact Provenance Legal if you require advice about a specific legal matter.