Consumer NZ questions the legitimacy of Z Energy's sustainability claims

“We are seriously concerned Z Energy has made numerous public claims which create the impression it is making bold changes to significantly reduce its emissions and is urgently mitigating its contribution to the climate crisis. This is not the case at all,” said Jon Duffy, Consumer chief executive.

According to Z Energy, it's “moving with the times”. The fuel company’s advertising campaign states, “It's time to be part of the climate change solution and move on from fossil fuels.”

Given Z Energy is New Zealand's largest seller of fossil fuels and responsible for more than 10% of greenhouse gas emissions, it's fair to question the legitimacy of its claims. Z Energy wouldn't be the first oil company to position itself as part of the solution while fueling climate change.

In this article we look at Z Energy’s claims, how it fits with the broader issue of greenwashing, and what needs to change.

New accusations of greenwashing launched against Z Energy

Through various advertising campaigns and public statements Z Energy has created the impression it is taking urgent action to change the nature of its business and lessen its impact on the climate. Claims have included that Z Energy:

• is reducing its carbon emissions

• is getting out of the petrol business

• has built a biofuel plant

• is rapidly expanding its EV charging network.

“When we look at them closely, Z Energy’s claims don’t stack up,” said Duffy.

In 2023, Z Energy’s monthly emissions have increased. Its sales of fossil fuels have increased, as has its total share of the fuel market.

Z’s biofuel plant stopped operating in 2020.

At the time of filing with the High Court, EV chargers have been installed at only 28 of Z's retail fuel sites nationwide. Its former chief executive publicly said fast-chargers on forecourts are not a long-term transition option for Z Energy.

Consumer, ELI and LCANZI believe Z Energy is capitalising on New Zealanders’ concerns about the climate crisis for commercial gain.

“There is nothing particularly bold or urgent about Z Energy’s approach to getting out of the petrol business, putting its actions at odds with its stated intent,” said Duffy.

“We think the messaging used by Z Energy in its advertising and promotional material indicates it is a sustainable fuel choice for New Zealand consumers. We are asking the Court to rule on whether that is actually the case.”

“We understand Z’s promotional activities improved its reputation among New Zealanders, including in relation to its climate change impact.”

Not the first complaint against Z Energy’s misleading messaging

In August 2022, LCANZI made a complaint to the Commerce Commission against Z's Moving with the Times advertising campaign.

The complaint centred on the fuel retailer’s claim it was “getting out of the petrol business” and positioning itself as a part of the transition away from fossil fuels.

Z Energy claimed it was on track to achieving its carbon reduction targets, citing its biofuel manufacturing plant, roll out of electric vehicle chargers in petrol stations and move into electricity retailing as examples of it making big changes for the planet.

At the time of filing the complaint in 2022, LCANZI said the campaign was “misleading and irresponsible”.

The charity stated that Z Energy's biofuel manufacturing plant was closed, by the end of 2022 it would only have EV chargers in 14 of its 286 stations and becoming an electricity retailer wouldn’t have much of an impact on carbon emissions.

In contrast to advertising claims, Z Energy told investors that it isn’t meeting its carbon reduction targets as quickly as it would like to, and it didn't plan to reduce fuel sales in the next decade or forecast them to fall either. It also openly told investors that it plans to “optimise its core business” – which is selling fuel.

The crux of the LCANZI complaint was whether Z Energy was putting on a climate-friendly face to the public while telling investors of the risk to shareholder value by “rushing into climate action”, with the preference being to keep its options open for as long as “reasonably possible”.

The Commission acknowledged the issues in the complaint but declined to investigate.

Z Energy pares back messaging but remains vocal about ‘avoiding greenwashing’

After the Commerce Commission complaint was lodged, Z Energy softened its messaging and stopped making its more ambitious claims about “getting out of the petrol business”. Despite avoiding a brush with the regulator, Z Energy has continued to represent itself as a company acutely aware of its obligations not to mislead consumers.

Debra Blackett, general counsel for Z Energy, spoke at a greenwashing panel at the Climate Change & Businesses conference on 20 September this year.

“Avoiding greenwashing is critically important to us. The company needs to maintain its credibility if it is to succeed in making a transition,” she said.

It’s clear from these statements that Z Energy may not see its advertising as an issue.

Blackett went on to speak about the certainty of fuel volume sales declining in the future; however, in 2023 Z Energy’s fossil fuel sales and carbon emissions have increased. While envisioning a more sustainable future for the company is one thing, it’s hardly fair to assert Z is part of the climate solution based on actions that may take place in the future, particularly when its emissions continue to grow.

Referencing the complaint lodged against Z, Blackett said, "We're a lot more careful now about those sorts of claims."

According to Z,” We recognise that we’re right at the heart of the problem, but that also gives us a great opportunity to be at the heart of the solution”.

Is the Commission doing enough to avoid greenwashing?

Even though it didn’t pick up the Z Energy complaint, the Commerce Commission has been vocal about greenwashing being a priority. To date, those efforts have been dedicated to educating sectors about how to avoid greenwashing.

In New Zealand, retailers are expected to heed the Commission’s Environmental Claims Guidelines to make sure they're playing by the rules – in short, be truthful, accurate, specific, substantiate claims, and most importantly, don't exaggerate.

The time has come to question whether focusing on education is enough. New Zealand’s retail market is awash with greenwashing. Eco, biodegradable, green, planet conscious, earth-friendly – there’s no shortage of products on the shelves spouting environmental claims. Investigations from Consumer have found you only need to step into your local shops to find a sea of green claims that lack substance and potentially mislead.

Internationally, new rules have been introduced to clamp down on greenwashing. For example, the EU has tentatively agreed to pass a law that will ban terms like “natural”, “climate neutral”, “eco-friendly”, “green”, “conscious” and “carbon-friendly” as well as proposing fines for companies making unsubstantiated environmental claims.

In Australia, the government recently announced A$4.3 million in funding for 2023-24 to continue greenwashing surveillance and enforcement work.

Regulators in the EU, UK and Australia have conducted multi-industry-wide studies to understand the extent of false green claims in the market. These studies found that 40% to 57% of environmental claims are false.

In New Zealand, the research is limited. Our regulators rely on potential greenwashing claims reported by the public or businesses. This approach has a weakness – many shoppers are confused about what constitutes legitimate claims about sustainability and what might be greenwashing. It took Consumer investigators hours of research to determine the legitimacy of various green claims, with many falling into the misleading bucket.

Furthermore, when complaints have been presented to the Commission, few have been picked up by the regulator for prosecution. Consistent with its education focus, the Commission has favoured issuing warning letters, whereas overseas regulators favour prosecution and stronger penalties. As an example, in Australia, Volkswagen was hit with a A$125 million penalty by the ACCC for misleading regulators and customers about the emissions performance of its vehicles. In New Zealand, the Commission issued Volkswagen’s representative a compliance letter.

The role of polluters and their sustainability claims

An international consumer survey published in November looked at consumer perceptions of green claims. That survey found three out of four European respondents think very polluting companies should not be allowed to use any green claims at all. Close to 40% of European respondents think fossil fuel companies should not be allowed to do any advertising. Results were broadly similar for New Zealand survey respondents.

Accurate and truthful green claims important for New Zealanders

When it comes to green claims, many New Zealanders are confused. Our nationally representative research found nearly half the population (47%) find it difficult to tell the truthfulness of a service or product’s environmental or “green” claims to see if they are accurate. Our research also found that nine in ten New Zealanders place some importance on a product’s green claims being verified before they’re sold.

There is a high level of trust in green claims made in the market because people don’t have the ability to vet them. Three-quarters of people (73%) have never checked “green” claims to see if they are accurate.

“It’s heartening that Z Energy has such positive aspirations, but it needs to be able to substantiate any claims it makes because we know consumers will rely on them,” said Duffy.

“We think this is another example of a major company greenwashing the New Zealand public; this legal action will clarify where the line is and provide guidance to consumers and businesses alike about what is and is not acceptable,” said Duffy.

You can read the media release here and the Statement of Claim document here.

The views expressed in this article are those of Consumer NZ.