As Australians become more eco-conscious, companies are racing to market their products, services, and investments as ‘green’, ‘sustainable’, or ‘climate-friendly’. But not all green claims are created equal. Welcome to the world of greenwashing: when businesses overstate or falsely advertise their environmental credentials. In 2025, with new regulations and a more skeptical public, greenwashing is under the microscope. Here’s what you need to know to avoid being misled and make genuine eco-smart financial choices.
What Is Greenwashing and Why Is It a Problem?
Greenwashing is the practice of making misleading environmental claims to attract customers or investors. While some companies genuinely strive for sustainability, others use slick marketing to exaggerate their eco-friendly efforts, hoping to cash in on Australia’s growing demand for ethical options.
It’s a problem because:
- Consumers and investors are misled into supporting businesses that aren’t as green as they seem.
- Legitimate green businesses face unfair competition from those cutting corners.
- Environmental progress stalls when greenwashing undermines trust and slows real change.
From super funds to energy providers and fashion labels, no sector is immune.
How Greenwashing Happens: Real-World Examples in 2025
Greenwashing isn’t just a buzzword—it’s being called out across Australia. In March 2025, the ACCC (Australian Competition and Consumer Commission) ramped up enforcement with updated guidelines and heavy fines for misleading environmental claims. ASIC (Australian Securities and Investments Commission) also launched probes into sustainability-linked investment products, warning super funds and managed funds about making vague or unverifiable green promises.
Here’s how greenwashing typically plays out:
- Vague Labels: Terms like ‘eco-friendly’, ‘natural’, or ‘sustainable’ are used without clear evidence. For example, a bank advertising a ‘green loan’ for solar panels but investing in fossil fuels elsewhere.
- Selective Reporting: Companies highlight a single green project while ignoring broader environmental impacts. A fashion brand might promote recycled packaging but use unsustainable materials in its main products.
- Carbon Offsetting Claims: Businesses claim to be ‘carbon neutral’ through offsets, but the offset projects may lack transparency or fail to deliver real emissions reductions.
Case in point: In 2024, several Australian super funds were rebuked for advertising sustainable investment options that still included major holdings in coal and oil. The ACCC’s 2025 guidelines now require clear, specific, and substantiated green claims—with heavy penalties for non-compliance.
How to Spot and Avoid Greenwashing
With more money flowing into ethical investments and green products, Australians need to be savvy. Here’s how to protect your wallet and the planet:
- Look for Proof: Genuine green claims should be backed by evidence—certifications (like Climate Active or B Corp), transparent reporting, or third-party audits.
- Watch for Specifics: Be wary of broad terms. Ask: What exactly makes this product or investment ‘green’? Are there measurable targets or just feel-good slogans?
- Check for Full Disclosure: Authentic companies provide details about their entire operation, not just a single initiative. If only one aspect is highlighted, dig deeper.
- Research the Standards: Does the business follow credible Australian or international sustainability standards? ASIC’s 2025 crackdown means you can check if your super fund or investment provider is on notice.
Quick checklist:
- Are claims specific and measurable?
- Is there third-party verification?
- Does the company disclose both achievements and challenges?
- Is the green claim central to the business, or just a side project?
Why Greenwashing Matters for Your Finances
Greenwashing doesn’t just impact the environment—it can directly affect your finances. Ethical investments are booming in 2025, but funds with misleading green credentials can underperform, face regulatory fines, or damage your reputation as a consumer or investor.
Major superannuation funds have faced scrutiny for ‘green’ options that didn’t stack up. Meanwhile, consumer watchdogs are increasingly targeting brands for misleading marketing, with record penalties issued in 2025. All this means Australians need to do their homework before switching super, buying eco-products, or investing in sustainability-themed funds.
What’s Next: Regulation, Enforcement, and Smarter Choices
The ACCC’s new 2025 guidelines and ASIC’s ongoing enforcement are making greenwashing riskier for businesses. Expect more transparency, stricter standards, and higher penalties for misleading claims. For consumers and investors, this means it’s easier than ever to call out false green claims and reward genuine sustainability efforts with your money.
The upshot? By learning to spot greenwashing, you can make confident, ethical choices—whether you’re picking a power provider, shopping for a new car, or choosing where to invest your super.
