Businesses won’t be able to claim carbon neutrality within Australia’s green certification scheme under a proposed overhaul of the program that aims to stop corporate greenwashing.

Reforms unveiled by the Albanese government on Friday would make it more difficult for companies to obtain public-backed green certifications; and they would require firms to prioritise direct emission reductions and rely less on low-quality carbon offsets – that experts have panned as ineffective.

The Assistant Minister for Climate Change and Energy Jenny McAllister said businesses will need to prove they’re making changes directly aligned with government emissions targets.

“Climate Active certification should be a trusted signal to Australian consumers that a business is taking credible climate action,” McAllister said on Friday.

“Proposed changes will make it difficult for companies and organisations who are not genuinely committed to climate action to be certified under the Climate Active program.

“We are sending a clear signal to the market that climate claims must be legitimate and that consumer trust must be maintained.”

Unsubstantiated claims

The crackdown comes amid growing concerns from experts and the Australian Competition and Consumer Commission (ACCC) that businesses have been using green certification schemes like Climate Active to “green wash”.

That’s a practice where firms make dodgy claims about their climate credentials to their customers in an attempt to pass themselves off as environmentally conscious companies.

An internet sweep undertaken by the ACCC last year found more than half of 247 businesses investigated were making “concerning claims” about their environmental actions.

It was suggested that broad claims such as “environmentally friendly”, “green”, and “sustainable” were being used in connection with products.

But businesses failed to provide evidence about those claims through  reliable scientific reports, transparent supply chain information or third-party accreditations.

The ACCC has been worried that consumers aren’t being provided with enough information or context to understand what such broad claims mean in respect to specific goods and services.

In other cases, businesses use carbon offsetting to underpin their emissions reduction claims, even though experts have cast doubt over this practice.

That’s particularly the case where carbon credits are considered to be “low quality” by verifying bodies internationally.

Outspoken Australian National University Professor Andrew Macintosh has published research papers casting doubt over the veracity of many Australian carbon credits.

Macintosh has found that abatement claims have been overstated, and often there has not been genuine additional emissions reductions.

Overhaul inbound

Under the federal overhaul of Climate Active, businesses will be required to jump through new hoops to achieve and maintain certification that tells customers their products are sustainable.

And even after being certified companies won’t be able to use the label to claim “carbon neutrality”.

Businesses will be required to display “gross emission reduction targets” and demonstrate that they’re meeting them in order to stay certified under the scheme.

They will also need to measure and reduce their indirect emissions (called scope three emissions).

The use of carbon offsetting will also be tightened, with a new rolling five-year expiry requirement for international offsets and mandates that set minimum proportions of renewable energy consumption.

The government is consulting on the Climate Active changes until December 15.