The lawsuit against meat packer JBS Foods concerns the company’s advertisements that it would be “Net Zero by 2040” and is one in a growing number of claims arising from allegedly deceptive environmental marketing claims. It comes months after the National Advertising Review Board recommended discontinuation of related claims.

New York Attorney General Letitia James (NY AG) filed suit in New York Supreme Court against JBS USA Food Company and JBS USA Food Company Holdings (collectively, JBS), alleging that JBS’s advertisements stating that it will be “Net Zero by 2040” are unfair and deceptive under state consumer protection laws.[1]

The lawsuit, brought only weeks after the Southern District of New York allowed similar claims to move forward against Danone Waters and months after the National Advertising Review Board (NARB) recommended JBS’s discontinuation of certain “net-zero” claims, serves as yet another illustration of the heightened risk associated with sustainability and environmental marketing claims—and a reminder that scrutiny of such claims may come from many directions—including federal and state regulators, self-regulatory bodies, competitors, consumers, and investors.

ALLEGED VIOLATIONS OF STATE CONSUMER PROTECTION LAWS

The NY AG alleges that JBS’s claims that it will be “Net Zero by 2040” violated New York State consumer protection laws barring unfair and deceptive trade practices, including New York General Business Law (GBL) Sections 349 and 350.

The crux of the complaint is that JBS’s “sweeping representations to consumers about its commitment to reducing its greenhouse gas emissions—including its claim that it will be ‘Net Zero by 2040’”—are deceptive. According to the complaint, the company has not developed a suitable plan to support this claim and, moreover, any such plan itself would be ineffective, because “there are no proven agricultural practices to reduce its greenhouse gas emissions to net zero at the JBS Group’s current scale, and offsetting those emissions would be a costly undertaking of an unprecedented degree.”

The complaint argues that, because consumers are willing to pay more for environmentally sustainable products, including net-zero products and products manufactured or distributed by a company with an environmentally friendly reputation, and because of the difficulty in verifying environmental marketing claims, consumers must rely on companies’ truthfulness. As a result, consumers are allegedly harmed when a company’s claims are misleading or deceptive. Here, the NY AG argues that JBS’s marketing claims are misleading because JBS’s industrial agriculture business has a significant environmental footprint linked to large-scale deforestation, which would be difficult to mitigate entirely by 2040.

The NY AG seeks an order awarding civil penalties for JBS’s statutory violations, disgorgement of all profits and ill-gotten gains JBS allegedly realized, and a third-party audit of JBS’s compliance with New York’s consumer protection statutes.

THE BIGGER PICTURE: SCRUTINY FROM ALL ANGLES

The NY AG’s lawsuit comes on the heels of NARB’s June 2023 recommendation that JBS discontinue certain claims relating to its goal of achieving net-zero emissions by 2040. NARB, the appellate advertising body of BBB National Programs, took up the issue on appeal following the National Advertising Division’s (NAD) February 2023 decision to recommend JBS’s discontinuance of certain express claims, including the following:

• “JBS is committing to be net zero by 2040”
• “Global Commitment to Achieve Net-Zero Greenhouse Emissions by 2040”
• “Bacon, chicken wings and steak with net zero emissions. It’s possible”
• “Leading change across the food industry and achieving our goal of net zero by 2040 will be a challenge. Anything less is not an option”
• “The SBTi recognized the net zero commitment of JBS”

This case underscores the overlap in jurisdiction over environmental marketing claims among self-regulatory bodies like NAD and state regulators like the NY AG. The US Federal Trade Commission’s (FTC) authority in this area (and its imminent updates to the Guides for the Use of Environmental Marketing Claims or “Green Guides”), coupled with increasing scrutiny from consumers, the plaintiffs’ bar, and investors, means higher stakes—and greater consequences—for companies engaged in sustainability and environmental marketing. Further, regulatory or enforcement actions can trigger private class actions and vice versa.

KEY TAKEAWAYS

Legal Exposure: ‘Net Zero’ Claims

As we discussed in our LawFlash on the recent decision in Danone Waters, companies claiming a product is “carbon neutral” or has “net zero” emissions—or that make similar environmental claims—face heightened scrutiny. In light of this action and others, companies and marketers should heed the importance of substantiation when engaging in sustainability and environmental marketing efforts.

Shifting Legal and Regulatory Landscape

With updated Green Guides on the horizon and efforts by state regulators to pass wide-ranging laws relating to sustainability and environmental marketing, the current landscape is nowhere near settled. Of note, California recently imposed a trifecta of laws imposing sweeping new greenhouse gas emissions disclosures.

One of those laws, the Voluntary Carbon Markets Disclosures Act, requires any company doing business in California, and that makes any claim about achieving net-zero emissions or carbon neutrality, to make extensive new disclosures. For more information on the new California laws, please see our thought leadership California Requires Companies to Disclose Climate Change Risks, GHG Emissions and 5 Things to Know About California’s New Climate Disclosure Law.

[1] See State of New York v. JBS USA Food Company and JBS USA Food Company Holdings, No. 450682/2024 (N.Y. Sup. Ct. Feb. 28, 2024).

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