‘Derived from nature” … “Good for the planet” … “Made from plants, not plastic” … “Compost me” …
Such words used to stand out on supermarket shelves for their rarity: products in muted, earthy-toned packaging in a sea of brightly coloured brands wrapped in plastic.
Now, they’re the norm. From compostable courier bags to “better” detergents, we’re awash in green claims. Marketers know that to brand goods as “environmentally friendly” or “sustainable” gives them a competitive advantage. But how is a consumer to know that the claims on the packet stack up?
“New Zealand lacks regulation and greenwashing is everywhere,” says Gemma Rasmussen, Consumer NZ’s head of research and advocacy. “I work in the space of environmental claims, yet if we went to the supermarket and you asked me which products are genuinely sustainable and which products are greenwashing, I wouldn’t be able to tell you.”
Greenwashing is a broad term, defined by the United Nations as misleading the public to believe a company or other entity is doing more to protect the environment than it is.
The concept pops up everywhere, from investment products in the finance sector to corporates’ claims about their climate change transition plans and vague marketing slogans that aren’t backed by evidence. And it turns out, we’re suckers for a promising story.
“Repeated research has shown consumers prefer buying products that they consider to be ‘green’,” says Kath Dewar, of ethical marketing consultancy GoodSense. “Most of us in Aotearoa want to do the right thing by nature, and picking an item on a shelf that promises to do that is an easy win.”
The type of greenwashing most frequently encountered is sustainability claims. It’s on canned tuna that claims to be “responsibly fished”, or the chocolate wrapper that says it’s compostable but fails to mention that’s only the case in certain types of facilities we don’t have in New Zealand. It’s the driving force behind “eco” brand names and vague claims that a product is “nature inspired”.
The trend isn’t limited to New Zealand; products touting environmental sustainability have become the norm around the world. But compared to the European Union, the UK and Australia, New Zealand is lagging when it comes to regulation, Rasmussen says.
“The Commerce Commission has issued guidelines for businesses, which say environmental claims must be truthful, specific, and substantiated by a credible source of information. But what we don’t have are effective systems for reporting and enforcement.”
Grass-fed butter?
Under the Fair Trading Act, since 1986 it has been unlawful for manufacturers to make misleading or deceptive claims on their products. Lawyers for Climate Action executive director Jessica Palairet says the act does capture greenwashing – in theory. The core test is whether an average consumer is led to believe something that isn’t accurate.
This relies on someone complaining to the Commerce Commission or filing court proceedings, and Rasmussen doesn’t think that’s sufficient. “Consumers make decisions in a couple of seconds in the supermarket, and they need to be able to trust what they read on the packet. Most don’t go around identifying breaches of the Fair Trading Act.”
But there are some examples of other groups – like NGOs or trade competitors – taking companies to court for misleading environmental claims. Most recently, Greenpeace has filed proceedings against Fonterra.
“We are suing Fonterra because of a misleading claim on the packaging of Anchor butter that states the product is 100% New Zealand grass-fed,” says Greenpeace Aotearoa spokesperson Sinead Deighton-O’Flynn. “In reality, grass only makes up 80% of a Fonterra dairy cow’s diet.”
A browse around Fonterra’s website reveals that under the dairy co-operative’s own definition, a “grass-fed” cow is one that consumes at least 80% grass in the paddock. The other 20% is made up of products including silage, hay and forage crops. Elsewhere on its site, it says its farmers also use palm kernel as supplementary feed when there is less grass growth. Palm kernel is a seed found inside the fruit used to produce palm oil. Together, palm kernels and palm oil are used in a wide variety of products. But they’re highly controversial ingredients.
“We’re taking Fonterra to court to get some transparency, so consumers can decide for themselves whether they want to buy butter that has links to the industry destroying forests and rare wildlife habitats,” Deighton-O’Flynn says.
Consumers make decisions in a couple of seconds in the supermarket, and they need to be able to trust what they read on the packet. Most don’t go around identifying breaches of the Fair Trading Act.
Daniel Street, a partner at law firm DLA Piper, frequently advises companies that are trying to convey their commitment to sustainability without misleading consumers. He says claims advertised on product packaging are tough to get right.
“The advice we always give people is that the claim has to stand on its own feet. But when you’re formulating these shorthand green claims to stick on product packaging, it’s very easy to make assumptions about what the consumer reading it will know.
“I agree with Greenpeace that having a detailed explanation of what you mean by ‘grass-fed’ on your website, with no reference to that on your product packaging, is not going to help a consumer buying Anchor butter in the supermarket.”
But will this case be enough to deter other companies from similar practices? GoodSense’s Dewar isn’t so sure. “Cadbury New Zealand’s brand has never fully recovered from the revelations in 2009 that it had started using palm oil in its chocolate and was decreasing the size of its bar,” she says.
Four years after that incident, the Listener reported that Whittaker’s was on its way to leading the chocolate market.By 2020, its share of chocolate block sales had reached 52%. “Trust takes a long time to earn and it can be destroyed in an instant,” she says.
Compostable where?
Greenwashing on consumer goods isn’t limited to the products themselves. Unsubstantiated or misguided claims about single-use packaging are having a major impact on the waste sector, too.
The popularisation of “compostable” packaging has been a nightmare for those doing actual composting, says Liz Stanway, co-founder of Raglan-based recycling and resource recovery centre Xtreme Zero Waste.
“There’s guidelines galore about packaging in New Zealand, but there’s no regulation,” says Stanway, who sits on the Waste Management Institute of NZ’s organic materials committee.
“Over the past few years, we’ve replaced single-use plastic with other single-use materials, and the composters are just expected to just get rid of it. But I don’t think many of the packaging companies consulted composting companies beforehand.”
It’s so much of a concern that the composting industry and the institute issued a position statement in 2019 outlining the requirements that compostable packaging needs to meet to be acceptable.
“[We] are gravely concerned that a wide range of compostable materials, which could devalue compost, are appearing on the market,” the statement read. “This includes nappies and sanitary products, and containers that contain residues that impact compost quality and value – eg, containers for janitorial products, cleaners, shampoos, pens, etc.”
Most of us want to do the right thing – but understanding what the right thing is needs to be a critical conversation.
Packaging New Zealand president Harry Burkhardt understands the concern, but says it’s not simple for manufacturers trying to choose environmentally friendly packaging, particularly with food products.
“Packaging is designed to extend shelf life and protect food quality,” he says. “None of us are in the business of poisoning our customers, so that is the highest priority. Most of us want to do the right thing – but understanding what the right thing is needs to be a critical conversation.”
It’s an area where regulation would come in handy, says University of Auckland associate professor of environmental engineering Lokesh Padhye.
“Some companies say their products are compostable, but they don’t even specify if they mean home-compostable or industrially compostable,” he says. “Those are two completely different things. But there are plenty of businesses out there – just like consumers – that don’t grasp how different they are.”
To be certified compostable, a product needs to be made of materials that will decompose into their basic components of water, carbon dioxide and biomass. New Zealand does not have a universally accepted certification standard for either home or commercially compostable products, but by general rule of thumb, a product deemed home-compostable should be able to biodegrade in temperatures of 20-30°C.
Most “compostable” products are commercially compostable, meaning they need high temperatures (on average 65°C), oxygen and sufficient moisture to biodegrade.
But compostable certifications are about more than whether products will break down, Padhye says. Robust tests also require a chemical analysis to see if they contain toxic elements such as heavy metals or fluorine.
Surprising additives
Padhye was part of a university team commissioned by the Ministry for the Environment to undertake research into additives in compostable products to help improve the practices. And the findings were confronting.
“We tested a range of different products that New Zealanders use in everyday life for additives and toxic substances like PFAs – which are known as forever chemicals – microplastics, and heavy metals.” All but one of the 10 products tested contained some combination of concerning materials.
“One of the products we tested was [clean] pizza boxes. These are cardboard boxes, and people may assume they are compostable. But whatever contaminants we tested for, the pizza boxes had them.”
Their report said the finding raised “concerns about the potential for these chemicals to transfer into food through the packaging”.
The work made it clear for Padhye that the country needs some sort of regulation around what products can be labelled as compostable. “Some New Zealand producers rely on international certifications, but we don’t have any regulations around all the different ones, so producers can put anything on their products and there is nothing to check if it’s accurate,” he says.
Whatever contaminants we tested for, the pizza boxes had them.
Consumer NZ’s Rasmussen and marketer Dewar agree, saying New Zealand needs more guidance, and that guidance needs to be enforced. Both would like to see the Commerce Commission play a bigger role.
“The commission is underfunded and under-resourced, and it only investigates if somebody makes a complaint,” says Dewar. “But where there’s no effective enforcement, there’s a low impetus for change.”
The commission has prosecuted just five companies since 2010 for environment-related breaches of the Fair Trading Act. Two were for unsubstantiated claims about the benefits of water filters, two related to the environmental impact of plastic bags and one concerned the energy efficiency of heat pumps. The most recent prosecution was in 2019.
Collectively, the five companies were fined more than $1 million. But, say Rasmussen and Dewar, five prosecutions in 15 years is insignificant compared with the number of products on New Zealand shelves that demonstrate potentially unsubstantiated environmental claims.
Since 2019, the commission has sent just two warning letters to businesses about environmental claims, warning that their statements about recyclability probably breached the Fair Trading Act.
One went to Chilltainers, a manufacturer of thermal food cartons designed to keep perishables chilled and fresh. The company updated its website to say its products are not recyclable in all New Zealand cities but made no other changes to the packaging. It has not heard from the commission since.
The other went to Glopac, which makes takeaway food and drink containers. General manager Chris Thomson acknowledges the company had made a mistake.
“We always knew that our coffee cups weren’t recyclable – in New Zealand none of them are,” he says. “But we made an honest mistake with the logo that we used, and we were reported by a trade competitor.” Glopac has since changed its logo and now focuses on making its products compostable.
Asked if it could do more about greenwashing, the commission’s general manager of competition, fair trading and credit, Vanessa Horne, said there is also ongoing work to proactively engage with businesses to educate them about obligations when making claims about environmental credentials. Asked if it would support a regulatory framework like that of the European Union, she referred the question to the Ministry of Business, Innovation and Employment.
European crackdown
The European Union is most often cited as a leader on green claims. Earlier this year, the European Council and Parliament agreed to new rules that will ban the use of generic environmental claims such as “environmentally friendly”, “natural” and “climate neutral” unless they are proven, and sustainability labels, unless based on approved certification schemes.
In addition, the European Parliament is working on a verification system for companies wanting to make environmental claims. Under the planned directive, they would need to substantiate claims about environmental impact and performance before publishing them.
Rasmussen would love to see something similar here. “With that kind of system, consumers know everything they’re seeing on the shelves has been pre-approved and is based on evidence,” she says.
But DLA Piper’s Daniel Street disagrees. “All that is going to do is create more problems,” he says. “As soon as you have a list of 50 defined terms that can only be used if they’re verified, companies will just start using other terms. It’s such a rapidly evolving space that the terms that are captured would need to be constantly updated.”
Marketers know that to brand goods as “environmentally friendly” or “sustainable” gives them a competitive advantage.
Street doesn’t think New Zealand needs any more regulation. “Our laws are fine. If we did introduce new laws, what would they say? ‘Thou shalt not use the words “carbon zero” unless you have x and y?’ We banned misleading claims years ago with the Fair Trading Act. What we need is guidance, and the regulators in New Zealand have already put that out.”
He does concede he would like to see more enforcement activity from the commission, but it doesn’t have to be prosecutions. “Targeted engagement with companies on particular claims in the greenwashing context will, in 95% of cases, give you an effective outcome at a low cost for the regulator.”
But the commission is lagging compared with its overseas counterparts even in this space. Regulators in Australia and the UK have conducted internet sweeps of various sectors to gauge the extent and severity of the greenwashing consumers face on a regular basis.
In 2023, the Australian Competition and Consumer Commission (ACCC) released findings that looked at nearly 250 businesses and brands across eight sectors. It found 57% had made environmental claims considered to be concerning, with the greatest proportion in the cosmetics and personal care, textiles, and food and beverage sectors. The most common issue was the use of vague and unqualified claims, like “green”, “kind to the planet”, “eco-friendly”, or “sustainable”.
The sweep resulted in the ACCC issuing new greenwashing guidelines, not dissimilar to our Commerce Commission’s. But they’re backed up by action. Since November 2023, the ACCC has taken enforcement action against at least two companies for misleading claims.
In the UK, the Competition and Markets Authority’s biggest greenwashing investigation focused on the fashion sector. It resulted in major brands ASOS, Boohoo, and George at Asda giving undertakings to follow particular rules around green claims. It also wrote in September to 17 fashion brands telling them to review their sustainability claims.
Neglected label
With the new European Union requirements due to take effect in the next few years, Kiwi exporters are likely to be affected. “There will be huge implications for some of our businesses that will have to comply with the new labelling rules, but I don’t think that has been well understood,” says Laura Gemmell, chief executive of Eco Choice Aotearoa. Established by the government in 1989, Eco Choice Aotearoa’s environmental certification is one of the oldest in the world.
In a statement to the Listener, Minister for the Environment Penny Simmonds pointed to Eco Choice Aotearoa as a key mechanism for reining in greenwashing in New Zealand. She did not provide evidence of any further work in the pipeline.
However, Gemmell says the label is not used to its full potential. “When we were set up, we had some seed funding, but we haven’t received any since. We definitely feel we’re being underutilised by the government.”
The Eco Choice trademark is owned by the Ministry for the Environment but the agency is a registered charity and is governed by an independent board. Its income is from companies seeking certification: there’s an application fee and, if successful, an annual licensing fee to use the Eco Choice label.
Gemmell says Eco Choice could take on an important role when the EU requirements come into play. As one of the first comprehensive eco-labels, it helped to establish the Global Ecolabelling Network. “The EU ecolabel is part of this network, and it’s trademarked by the EU Commission,” she says. “We have been working to establish agreements to make dual certification streamlined and as low cost as possible.”
But its resources are limited, and Gemmell is hoping to see some more action on greenwashing from the government.
“We’re here, and we’ve got potential. But we’ve been knocking on the government’s door for 30 years and we’ve barely made any progress.”
Behind the labels
Even products with a well-established reputation may not live up to purchasers’ assumptions. Take ecostore and Earthwise, for example. Both brands are centred on environmental sustainability and the use of natural ingredients and have become major players in the cleaning and self-care markets.
For the most part, they are great options: many of their products earn “good” or “acceptable” ratings in Consumer NZ’s environmental assessments. But a closer look at the ingredients shows the devil is in the details. Both brands use palm kernel oil in several products.
On their websites, each has sections explaining the ingredient. “ecostore is committed to using certified sustainable palm oil as it is a healthier and safer alternative to petrochemicals,” its palm oil policy reads.
Earthwise’s FAQ page says it “is committed to sourcing sustainable palm oil that aligns with our ethos. We have a RSPO (Roundtable on Sustainable Palm Oil) membership and we also work closely with our suppliers to ensure they provide sustainably sourced palm oil”.
There’s truth in these statements. A lot of work has gone into creating a sustainable supply chain for palm oil and palm kernels. And many New Zealand businesses, including Fonterra, purchase palm oil that is RSPO certified.
But, as a Greenpeace International investigation uncovered in 2021, it’s far more complicated than it seems.
The RSPO offers members the option to buy from one of four supply chains. While some of these guarantee that the palm products are derived from certified sustainable sources, most New Zealand companies – including ecostore and Earthwise – buy from the “mass balanced” option. This mixes certified sustainable palm oil with ordinary palm oil throughout the supply chain.
Both companies defended their positions in statements to the Listener. “The mass balanced supply chain is recommended for companies like Henkel that rely on palm kernel oil, not palm oil,” says a spokesperson for Henkel, the German conglomerate that owns Earthwise.
Palm kernel oil is extracted from the seed of the palm fruit and accounts for just 10% of the plantation yield, it explains. “At this stage, the palm kernels from different plantations – from certified sources and others – are allowed to be mixed in order to process larger quantities.”
This sort of nuance surrounds consumers everywhere. The single-use cups used to serve hot drinks on Air New Zealand flights are another example. These are certified commercially compostable and say in bold letters, “This cup is made from plants, not plastic.”
They’re designed to make the passenger feel better about using the single-use vessel. But in reality, the cups are lined with polylactic acid, or PLA. Recent testing by University of Auckland researchers shows there’s potential for microplastics to be generated during the degradation of PLA products, which could be harmful to soil health.
And, with the small number of composting sites in New Zealand, only cups used on domestic flights inbound to Auckland are composted. The rest go to landfill, where they will not be in the conditions needed to biodegrade.
