The consumer watchdog published draft guidelines on Friday in a bid to improve confidence in environmental standards claimed by companies.
The Australian Competition and Consumer Commission announced a crackdown in 2022 on businesses greenwashing, which involves making false claims to deceive consumers into believing a product or service is environmentally friendly.
An internet sweep found 57 per cent of businesses reviewed were making potentially misleading environmental claims.
ACCC chair Gina Cass-Gottlieb said businesses needed to be honest and transparent when making claims so they didn't undermine consumer confidence.
"Our draft guidance sets out what the ACCC considers to be good practice when businesses make environmental claims about their products and services, as well as making them aware of their obligations under the Australian Consumer Law," she said.
"Businesses that are taking genuine steps to adopt sustainable practices are put at a competitive disadvantage by businesses that engage in 'greenwashing' without incurring the same costs."
Ms Cass-Gottlieb said the ACCC is seeking feedback from businesses and other stakeholders on the proposal.
"We would like to hear from businesses on whether our draft guidance improves their confidence in making legitimate environmental and sustainability claims, as well as if they have seen concerning green claims made by other businesses," she said.
Consultation closes mid-September.
10°C