Businesses are increasingly using environmental claims as a way to differentiate themselves and their products from their competitors and to build a "greener" profile in the market.

Environmentally aware customers are more and more using these claims when buying products and services. The popular terms biodegradation, degradable materials and compostable however, are often misused, sometimes deliberately; and are widely misunderstood.

Compostable

Compostable means that a material or substance will break down into substances which are not toxic and which can support plant life, often described as ‘hummus’. Compostable "plastics" are the greenest form of plastic and made from plant materials such as corn, potato, cellulose, soy and sugar; as such they are not plastics in the truest sense. According to the American Society for Testing & Materials, for plastic to be considered as compostable, it must be able to break down into carbon dioxide, water and biomass at the same rate as paper. Australia does not yet have a similar standard. Compostable plastic is very rare and is more likely to be degradable than truly compostable.

Degradable Plastic

Degradable plastics are oil based and break down through chemical reactions rather than the activity of micro-organisms, so they can degrade in an anaerobic environment into water, CO2, biomass and trace elements. Degradable or oxy-degradable describe where the traditional plastics, such as polyethylene are treated with additives, usually consisting of calcium carbonate and heavy metals which causes the material to disintegrate over a number of years. Degradable bags do not ‘compost’ when degrading, and will contaminate the end compost reducing its value or limiting its use.

Biodegradable

Biodegradable products break down through the action of a naturally occurring micro-organism, such as bacteria, over a period of time. These products are usually made from plant or animal sources. Examples of biodegradable include paper, vegetable scraps and some forms of plastics made from ingredients such as corn starch. Biodegradable simply means an object naturally falls apart into its base components. These base components however are not necessarily "green" or compostable and may contain toxins or even heavy metals in harmful amounts. The terms biodegradable and degradable are commonly conflated in Australia, however they do describe two distinct processes.

Standards

Australia has no mandatory standard on biodegradability or degradability. However, the voluntary Australian Standard (AS) 4736–2006, "Biodegradable plastics—Biodegradable plastics suitable for composting and other microbial treatment" has stringent requirements for: the time frame in which a product must break down in a commercial composting environment, its toxicity, and the amount of organic material it contains.

Many plastics companies have gone so far even to say that their plastics are compostable, typically listing corn starch as an ingredient. However, these claims are questionable because the plastics industry operates under its own definition of compostable. Any plastic or similar substance contained in your compost will – at best – eventually need to be removed and – at worst – may harm your garden. Biodegradable and compostable have entirely distinct meanings in both physical and even legal terms. Something can be biodegradable but not necessarily compostable, however something that is compostable is always biodegradable.