Greenwashing is defined as “the act or practice of making a product, policy, activity, etc. appear to be more environmentally friendly or less environmentally damaging than it really is.” In simple terms, “greenwashing” refers to when a positive environmental claim lacks sufficient factual support, such that a “reasonable consumer” could be misled. Greenwashing can occur (or be alleged) at various points along the supply chain—from claims about sourcing practices, to emissions impacts from product transportation, and to the composition of a final product. Some forms of greenwashing allegations, such as those from plaintiff classes and environmental groups, have become commonplace. Two recent sets of allegations are, well, green: utilizing greenwashing claims to obtain competitive and political benefits. Companies should stay aware of old and new greenwashing trends and take practical actions to guard against such claims.
Green Guides
The “Green Guides,” found at 16 C.F.R. § 260, serve as the Federal Trade Commission’s (FTC) “current views about environmental claims.” Included in the Green Guides are several examples of what the FTC deems impermissible greenwashing related to general environmental claims, as well as specific claims such as carbon offsets, certifications, “free-of” claims, non-toxic claims, recyclability, and claims related to renewable energy and materials. Notwithstanding these examples, to date the FTC has avoided specifically opining on claims related to the life cycle of a product—the product’s “environmental impact through all the stages of its life.” The FTC only suggests marketers “may need to consider the significant environmental impacts of a product or service through its lifetime.” While the Green Guides themselves are mere “administrative interpretations of law,” many states have referenced or incorporated at least portions of the Green Guides into their respective consumer protection and advertising statutes.
Greenwashing claims as a business and political tool
Take a manufacturer of cleaning products for example, who reached a settlement with a plaintiff class alleging their products were “falsely and misleadingly” labeled as “Non-Toxic” and “Earth Friendly.” As part of the settlement, the defendant agreed to remove the “Non-Toxic” labels and add an asterisk to the “Earth Friendly” label to further qualify the claims.
These greenwashing claims follow common molds: a plaintiff class alleging deceptive environmental marketing led them to purchase a product they otherwise would not have, and an environmental group alleging a company is failing to live up to its products’ environmental claims.
But the universe of greenwashing claims may be expanding.
For starters, a manufacturer of hearing protection products filed a greenwashing suit against a competitor claiming it “intentionally misled and deceived distributors, downstream purchasing companies and end users” through “unqualified” claims about their earplugs such as that they are “eco-friendly,” “sustainable,” “bio-based,” and part of an “eco-series.” As part of its complaint, the plaintiff claims it independently tested the earplugs for “bio-based content” and found that at most, the earplugs were 40% bio-based, significantly less than the claimed 82% bio-based content. The plaintiff is seeking an injunction against the allegedly unlawful conduct, as well as an order directing the defendant to issue “corrective advertising” to address “consumer deception.”
Second, the attorney general of Montana and 15 other Republican attorneys general delivered a letter to several technology companies seeking information related to the companies’ “claim[s] they are 100% powered by renewable energy” based upon the use of renewable energy certificates. According to the letter, the companies claiming to commit to 100% renewable power places pressure on utilities “to move away from fossil-fuel-generated baseload power” to attract those companies as customers. This pressure has allegedly led to early retirements of coal and natural gas power plants, which in turn, threatens grid reliability. (While unstated, these retirements may also reduce demand for coal from Montana’s Powder River Basin.)
Rather than seeking to recover damages for purchases of a greenwashed product, or align a defendant’s environmental practices with its claims as is typical with greenwashing suits, the plaintiff is instead alleging the defendant is using “a calculated ‘greenwashing’ scheme to capture market share from competitors,” and the attorney generals’ greenwashing claims appear designed to serve as leverage to incentivize large technology companies to back away from all-renewable targets and to maintain demand for fossil fuels to support regional energy industries. Together they represent a new front in the use of greenwashing for business and political objectives.
Protecting against greenwashing claims
With these new developments in the greenwashing arena, it may seem as though greenwashing claims can come from many angles. While it is not possible to guarantee that one’s company will never find itself facing greenwashing claims, there are practical steps that can be taken to minimize the risk of liability.
· Familiarize yourself with the Green Guides. While the FTC’s materials are not binding and would not serve as the basis for a cause of action in and of itself, many states expressly or implicitly follow the Green Guides as part of their consumer protection schemes. Moreover, courts will give varying degrees of persuasive weight to the Green Guides.
· Familiarize yourself with the state laws and common laws in areas where your products are sold. From coast-to-coast and internationally, each jurisdiction will have different variations of consumer protection and false advertising laws. Companies should be aware of these differences and consider whether it makes strategic sense to ensure compliance with the most stringent applicable laws, regardless of jurisdiction.
· Integrate legal review of advertising and marketing team claims regarding sourcing, transportation, and manufacturing practices. At its simplest, greenwashing allegations arise from a mismatch between what is claimed and what is done in practice. To help avoid such a mismatch, legal teams need to make advertising and marketing teams aware of the existence and types of greenwashing claims to assess whether consumer messaging aligns with those standards. A best practice is to evaluate environmental claims in light of the Green Guides and “reasonable consumer” standard, to determine whether they need to be scaled back or qualified to more accurately match on-the-ground practices.
