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GRC Professional : GRC Autumn 2013
11 La st yea r the ACCC rejected a Certification Trade Mark by the Australian Egg Corporation Ltd (AECL) because its proposed standard for 'free range' was not consistent with consumer expectation. Concerns were centred on stocking densities: the CTP specified a maximum of 20,000 hens per hectare which was "well above the m aximu m stocking densities of the existing Model Code of Practice, state legislation and other standards, which generally prescribe a maximum stocking densities of 1,500 birds per hectare", the ACCC said in its assessment. When oils ain't oils When the ACCC went through the process of regulating and expanding novel food sub-categories involving credence claims with extra-virgin olive oil some years ago, it provided consumers with quality assurance and now the local industry competes in established European markets. FSANZ has been active in developing numerous national standards for each stage of food production and supply cycle in the Australia New Zealand Food Standards Code. "There are four chapters to the Code that cover labelling, composition and contaminants, products, hygiene and safety, primary production and processing," said Dean Stockwell, FSANZ General Manager Food Standards. "The Sta nda rds a re developed according to risk and a process set out in legislation. It includes public com ment and consultation with stakeholders." Complaints about possible breaches of standards go to state and territory and NZ food authorities for enforcement," Stockwell said. Hence compliance with standards concerning hygiene and safety are prescriptive and may be seen as rules-based, while credence claims' compliance with consumer values is principle based. "The Code takes a horizontal view of regulation. A standard prescribing the composition of an egg or a chicken leg would be vertical and you would end up with a very large code," said Stockwell. And while it is quite specific about food Free range, vegetarian, RSPCA- approved, organic, barn-laid, cage-free -- the descriptors have literally outrun their definitions. labelling, composition and safety type matters, more general claims and representations about food have to meet the requirements of Australia n Consumer Law and not be untruthful or misleading. ACI SAYS: Breaches like this not only hurt businesses concerned but do longer term damage more widely in the industry, where other organisations may be making similar product claims, but have invested the time and resources to be able to substantiate them. The increasing incidences of these kinds of breaches pose more fundamental problems for GRC professionals who, from a risk management perspective, need to be thinking proactively about the pressures on business from complex consumer tastes and tight competition in the marketplace, which may encourage higher risk strategies. A basic risk assessment would include asking: • What the organisation means by its claims. • Can they be substantiated? If not, what changes must take place and how much would they cost? • Is there an ROI that balances the risks and benefts? • Would consumers have the same understanding of the claims as those working in the industry or the organisation? Ways to mitigate potential risks include: • Market research to ﬂesh out defnitions of terms and refining the choice of wording if regulatory guidance is not adequate. This research should be conducted possibly independently and of a reasonable data sample size to bear scrutiny. • Engage early with the appropriate regulator or regulators before making substantial investments. • Change business practices to meet understood expectations. • Train staff, test adherence to new business practices and document activities undertaken to substantiate any claims made. • Conduct clear engagement strategies with consumers, the market and regulators as you promote the product with the new claims. •••
GRC Summer 2013