Why is your local burger joint in trouble with the ACCC?

The ACCC has accused Grill’d of greenwashing, alleging the burger chain misled customers about donations made to an environmental cause.

The investigation of the burger chain, which operates across the North Shore, is just one example of government regulators increasingly focusing on the environmental claims of some of the country’s biggest businesses.

What happened: Grill’d operates in Crows Nest, Lane Cove, Ryde and Neutral Bay on Sydney’s North Shore. The focus of this recent investigation is a marketing campaign between 2021 and 2024 called “Tree Day Tuesday”, promising $1 from every burger purchased to fund tree planting. 

• The ACCC claims the full details of this promotion were not adequately disclosed: that for the purchase to qualify, customers had to be part of a loyalty program, the purchase had to be dine-in, not takeaway, and that orders had to be placed at the front counter.

What next: The case was lodged in the Federal Court of Australia on Monday, June 15. It has yet to be assigned a hearing. 

Greenwashing: what is it? The Australian Competition & Consumer Commission (ACCC) defines greenwashing as “a term used to describe false or misleading environmental claims” which can make a business “appear more environmentally beneficial than they really are”.

• Looking at the bigger picture, some business and policy experts suggest that allegedly misleading marketing campaigns are a drop in the ocean of greenwashing, where larger offenders can go unpunished.

Cops on the beat: The two government agencies charged with regulating and policing environmental claims are the ACCC and the Australian Securities and Investments Commission (ASIC). 

Dr Megan Evans — a senior lecturer at the UNSW School of Business — told the Lorikeet these agencies are severely limited in what they can prosecute. 

“ASIC and ACCC always have limited resources… they can’t possibly engage in compliance action, like taking someone to court, with everyone who does something wrong. What they choose is to make an example”, she said. 

“It’s a bit of a pantomime, because the business community knows that the regulators have limited resources”. 

Beyond regulators: In recent years, one of the most prolific cases of greenwashing wasn’t brought by either of these agencies. It was pursued through a civil case, where Parents for Climate sued EnergyAustralia for marketing some of their fossil fuel products as “carbon neutral”. 

This case was settled out of court and Energy Australia was forced to apologise to its consumers.

Finding the limit: The limitations of ACCC and ASIC was something brought up at the Australian senate inquiry into climate misinformation.

In the inquiry's final report, the third recommendation was to “ensure the adequacy of resourcing” for ACCC and ASIC to “combat and expose corporate greenwashing”. 

Bigger issues: Lacking the resourcing to prosecute bad actors in the corporate world is just one problem faced by regulators. Evans suggested they also lack the ability to pursue greenwashing when it is carried out by governments. 

• As a recent example, Evans pointed to Shell’s offshore gas facility in Western Australia, which over the last two years has been awarded $90 million in carbon offset credits despite the fact the project's total emissions increased over that period. 

Dr Mona Mashhadi Rajabi, an expert in climate finance, suggests the issue is more complicated.

“Governments are accountable through different mechanisms, such as parliamentary scrutiny, Senate inquiries, independent reviews … and ultimately through the electoral process”, she told the Lorikeet.

“These mechanisms are different from the regulatory enforcement that applies to corporations, but they are still important forms of public accountability”.

While under Australian commercial advertising law, misleading or deceptive claims are prohibited, no such rule exists for federal political actors in Australia. 

• The exception is South Australia and the ACT, where it is an offence to publish electoral advertisements that are materially inaccurate and misleading.