ASIC greenwashing fine a wake-up call for Australian agribusiness
- Written by Marg. Will
The Australian Securities and Investment Commission (ASIC) penalty issued to Tlou Energy for greenwashing last week should serve as a wake-up call for Australian businesses.
Tlou Energy, which was fined $53,000 for making false and misleading claims to the Australian Stock Exchange that it could produce carbon-neutral electricity, is the first Australian company to be fined for greenwashing. If regulatory warnings are any indication, they will not be the last.
In March 2022, outgoing Australian Competition & Consumer Commission (ACCC) chief, Rod Sims, warned businesses that it would take a “tough approach” to greenwashing. The ACCC works with ASIC on investigations, and Sims’ speech—which identifies the manufacturing and energy sectors as key initial targets—reflects a chorus of calls from global regulators, investors, and consumers for businesses to reduce greenwashing and make real and verifiable reductions to their greenhouse gas emissions.
Not responding to this call will become increasingly risky for business. Last month, the food giant Danone faced a class action over its claim that Evian water bottles are carbon neutral. The lawsuit rests on the assertion that consumers have no way of knowing that Danone’s claims are purely based on purchasing carbon credits, not on real and verifiable CO2 reductions.
With manufacturing a target of ASIC and the ACCC, Australian agribusiness companies, especially food and beverage manufacturers, will likely find themselves in regulators’ sights. Many rely primarily on purchasing carbon credits to meet their ESG targets rather than making measurable operational changes to reduce real emissions.
In this new climate of scrutiny, manufacturers are exposing themselves to the growing legal, financial and reputational risks of greenwashing.
Well-researched and credible carbon credits can be a useful first step for food processors to meet their emissions-reduction targets. But businesses must also commit to real on-the-ground changes if they are to credibly claim to be low-emission or sustainable.
At a recent symposium hosted by The United Nations Economic Commission for Europe (UNECE) in Geneva, I spoke about the need for businesses to take a whole-of-lifecycle approach to ESG—directly reducing emissions as well as addressing other elements of the ‘E’ and ‘S.’
In Australia’s agribusiness sector, this means a focus on improving soil health, biodiversity and natural capital. It means fair employment, community investment and strong animal welfare. And, critically, it means assessing climate risk across the value chain. Through a combination of technology and elements of natural farming methods, we have seen that producers can significantly reduce the amount of fertiliser they use. This can result in a genuine and scientifically verifiable reduction in on-farm emissions, not simply window dressing through the purchase of carbon credits.
This approach, which incorporates some of the elements of so-called regenerative agriculture, will become increasingly important as investors and regulators sharpen their focus on scope two and three emissions. Food and beverage processors need not just to transform their operations but also work with growers and primary producers to reduce emissions up their supply chains.
Fortunately, the Australian agribusiness sector is in a strong position to make this transition.
Wholegrain Milling, a family-owned NSW business and one of Australia's largest suppliers of artisan and speciality flours, uses Certified Sustainable grains sourced from farmers who focus on improving soil health and providing nutrient-dense grain. Rocky Ridge brewery in Western Australia takes a two-pronged approach, purchasing carbon credits to help it reach its emissions reduction targets in the short-term while also investing in long-term process changes that will result in real, verifiable emissions reductions along its supply chain. These process changes include using Certified Sustainable combined with the brewery’s approach to continual improvement on social and environmental elements.
ASIC’s penalty to Tlou Energy may be the first fine handed out for greenwashing, but it won’t be the last. Future fines are likely to be larger, as Tlou Energy is a small company that made a loss in the 2021/2022 financial year. Companies have been given a clear warning from regulators to change, and these crackdowns are only just beginning. The lesson for business: you might be able to buy your way to carbon neutrality through offsets, but it is not a sustainable strategy.
Marg Will is CEO of Organic Systems & Solutions and sits on the standards board of Certified Sustainable, a not-for-profit standards body that helps growers, makers, and providers validate and verify their sustainable practices and outcomes.
Daily Bulletin
