On February 28, 2024, the New York Attorney General filed suit against one of the world’s largest beef processing companies (the “Company”), alleging that the Company engaged in deceptive business practices and false advertising by misleading the public about its environmental impact. The People of the State of NY v. JBS USA Food Co., et al., (N.Y. Sup. Ct., N.Y. Cnty. Feb. 28, 2024). Of particular note, the complaint focuses not on statements by the Company about its current environmental impact, or presently measurable facts—instead, the complaint focuses on statements by the Company about its future plans and ambitions that the Attorney General claims were not realistic and not supportable. For instance, the complaint alleges that the Company claimed that it would reach “net zero” by 2040 when, in fact, it had not yet measured its emissions or made plans for how it would do so. While not the first “greenwashing” complaint to be brought, it could be one of the most significant, and could shape expectations for companies going forward.
The Company operates in an industry, animal agriculture, that the Attorney General claims accounts for approximately 14.5% of global greenhouse gas emissions annually, with beef production companies emitting the largest share. As concerns over climate change increased, the Company began making statements about efforts to reduce its environmental footprint. For example, in April 2021, the Company ran a full-page advertisement in The New York Times stating: “Agriculture can be part of the climate solution. Bacon, chicken wings, and steak with net zero emissions. It’s possible.” In the same advertisement, the Company made a public commitment to reach “net zero” by 2040. In support of that, it stated that it would fund its science-based targets with $1 billion in capital to eliminate approximately 30% of its emissions by 2030, while reducing its deforestation in the Amazon within five years (of 2021).
However, according to the Attorney General, such robust commitments and representations were misleading statements made in a deceptive effort to target climate-conscious consumers and remain competitive. For example, the Attorney General contends that, while making these statements, the Company failed to implement or further any concrete plan or apparatus to achieve its net zero commitment and had no way to even assess its ability to reduce emissions to net zero by 2040.
The case may thus turn, in part, on whether it was reasonable for the Company to believe that its claims were achievable, and whether they were made in good faith. For example, according to the complaint, the Company has offered that its net zero goals are achievable through, among other things, utilizing regenerative agricultural techniques to offset its carbon emissions. But the Attorney General claims that scientific studies have found that regenerative agriculture does not offer more than a “small net storage of carbon,” which will not be enough to offset the Company’s substantial emissions—especially considering the Company’s own plan to increase production.
Before such issues get decided on the facts though, the Company will likely seek to file a motion to dismiss, claiming that the misstatements here (many of which are explicitly statements of ambition) are not plausibly alleged as false. Ultimately, even if the Attorney General is able to sustain its claims, the appropriate relief will surely be hotly contested. The Attorney General seeks a cease-and-desist order against the allegedly false advertising, as well as disgorgement of all allegedly ill-gotten profits traceable to the advertising practices at issue and penalties of at least $5,000 per violation. The Attorney General also seeks to require the Company to be subject to independent audits of its advertising practice six and 12 months after judgment.
The Company operates in an industry that has been at the center of environmental criticism, and where sustainability will be especially challenging. Nevertheless, the claims brought by the New York Attorney General may be equally applicable to many other companies and industries. Indeed, as many companies face increasing shareholder and public pressure to announce sustainability goals, this is another reminder to take care that any such goals can be backed up and supported, just like any other public statement to investors.
Links & Downloads -
The People of the State of NY v. JBS USA Food Co., et al.
[View source.]
