The Albanese government is reviewing Australia’s carbon credit system, with a report due in December on needed reforms to improve the integrity of carbon offsets.

Research by Australian National University’s Professor Andrew Macintosh has outlined issues with credits handed out to Australian businesses and approved by the federal government.

He has identified “systemic flaws” with the way regulators are handing out carbon credits, calling the system a “fraud on the environment”.

Amid growing concerns many carbon credits handed out to large businesses are dodgy, the Australian Competition and Consumer Commission deputy commissioner Delia Rickard said she feared companies were claiming they’re cleaning up the environment without actually proving it.

“Unfortunately, the ACCC is hearing growing concerns that some businesses are falsely promoting environmental or green credentials (greenwashing) to capitalise on changing consumer preferences,” she said in a speech.

“Broad terms like ‘environmentally friendly’, ‘green’, or ‘sustainable’ have limited value and may mislead consumers, as they rarely provide enough information about what that exactly means in terms of the product or service consumers are considering purchasing.

“The ACCC is actively monitoring green claims in the market and will be considering what steps can be taken to improve their integrity.

“In looking at claims we are concerned about what the ordinary consumer will understand the claim to mean.”

Corporate greenwashing has become a hot topic as evidence continues to emerge that carbon-neutrality claims and the offsets used to achieve them are riddled with flaws, both locally and overseas.

Richie Merzian, climate program director at The Australia Institute, said it was good the ACCC was cracking down on greenwashing, but warned broader action on the integrity of climate markets was sorely needed.

“This is a much bigger issue. The government is backing these offsets, including through its climate active certification.”

‘Tricky’ claims

Businesses large and small have transformed their claims about their environmental action into advertising, including commitments to net-zero emissions by 2050 or that their business is carbon neutral.

It’s one big effort to assuage growing public concern about the climate crisis and broader environmental degradation.

But Ms Rickard said on Tuesday that consumers weren’t well-equipped to understand what broad terms like ‘carbon neutrality’ and ‘net zero’ meant – and whether businesses were doing enough.

“We recognise that businesses should be able to promote the steps they are taking in this transition,” she said.

“But claims made in this area can be tricky. Businesses may look to use short and snappy slogans and claims, rather than lengthy explanations of measures under way.

“It is important to convey accurate information to consumers.”

The ACCC is preparing to sweep the internet for businesses that are making dodgy environmental claims, after a similar review by the International Consumer Protection and Enforcement Network in 2020 found up to 40 per cent of such claims were potentially misleading to consumers.

Ms Rickard cited recent enforcement action by regulators in the Netherlands against global retailers H&M and Decathlon, saying those businesses had since amended misleading sustainability claims.

“The action in the Netherlands will hopefully see a flow-on benefit for Australian consumers.”