The Commerce Commission has previously looked into the fashion sector's claims and given advice on complying with the Fair Trading Act. Photo: 123RF
The consumer watchdog is counting on businesses to monitor each other when it comes to environmental or other sustainable development claims about products or services.
Consumer NZ had called on the Commerce Commission to launch a targeted investigation into such claims, but commission Fair Trading branch general manager Kirsten Mannix said it was not a task for the commission alone.
"Consumers are entitled to rely on the trust of claims being made about the product and service. And this is where we think the obligation really lies with businesses to have reasonable grounds for the claims they make," Mannix said.
"We shouldn't be relying on consumers to spot unsubstantiated and false claims or to report them to us. This is because environmental claims are often complex."
While the commission also counted on consumers to alert it to questionable claims, Mannix said consumers could not easily tell which claims were genuine, and had neither the time nor resources to check their accuracy.
She said the Fair Trading division also collaborated with its overseas counterparts to keep abreast of latest developments.
Closer to home, the Financial Markets Authority was responsible for monitoring environmental or sustainable development claims made by any public or private businesses looking to raise investment dollars, while NZRegCo also had responsibility for the conduct and disclosures made by listed public companies.
In addition, the External Reporting Board was responsible for developing and issuing reporting standards on accounting, audit and assurance, and new climate reporting requirements, for all private, public, and not-for profit entities.
Disclosures about climate change initiatives will become mandatory for New Zealand's biggest companies (known as Climate Reporting Entities or CREs) next year, with the first round of reports to be published in April.
The FMA will be responsible for monitoring reports by CREs, which include large listed issuers of equities and debt securities in excess of $60 million.
Other CREs include the largest banks, credit unions, building societies, licensed insurers and fund managers.
Mannix said it was on businesses to educate themselves about the law, read regulatory guidance and ensure they were being truthful and accurate.
"We will investigate matters and take compliance and enforcement action where it's appropriate," she said.
"But we can't do all of the claims and we really need businesses to hold each other to account and to step up in this area too."
Mannix said there had been an increase in such claims, which were becoming more influential in consumers' behaviour.