Greenwashing: A survey of recent litigation

Eversheds Sutherland (US) LLP
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Eversheds Sutherland (US) LLPAs climate change jurisprudence continues to evolve, an offshoot of “greenwashing” claims has generated a series of headline-grabbing lawsuits. The definitions vary but most references to greenwashing include claims challenging a company’s ESG (Environmental, Social, and Governance) disclosures.

“Greenwashing” occurs when a business represents that its practices and/or products are environmentally friendly, but have no concrete evidence to validate the representations.1  Although some representations may be partly true, companies are said to be engaging in greenwashing when their representations are exaggerated and made in an attempt to mislead environmentally-conscious consumers.2 Furthermore, no industry is immune from these claims. In just the three months prior to the date of this publication, there have been claims of greenwashing against energy, water distribution, clothing, transportation, and asset management companies.

Closely related, but not the subject of this update, is the ever-changing regulatory landscape related to ESG disclosures. The Biden Administration’s emphasis on climate change policies has spurred the call for a consistent and reliable regulatory regime.3 It is anticipated that the SEC will release a proposal soon that will address climate risk disclosures by corporate issuers and the DOL is expected to address ESG in an upcoming rule proposal.  In the meantime, the SEC continues to make examinations and enforcement of ESG practices a priority. At the center of these efforts are an SEC risk alert issued in April 2021 which highlights the SEC’s Division of Exams focus with respect to ESG. The SEC has also announced an ESG task force within its Enforcement Division. This SEC enforcement focus leaves enterprising plaintiff lawyers to pursue innovative claim theories against the array of companies who have been compelled to make public-facing comments on their sustainability efforts but whose statements might not always be matched by supporting data.

The purpose of this legal alert is to provide commentary on new and interesting developments in the greenwashing landscape. This specific alert outlines the claims made in the most recent filings for the purpose of providing guidance as to how companies can best protect themselves against the greenwashing claims that will inevitably continue to proliferate.

Nature of the beast

At their core, most greenwashing claims are nothing more than claims of misrepresentation.  The most common fact pattern involves a public statement that includes sustainability representations that are designed to appeal to environmentally conscious consumers. Such representations can be as simple as ones made by cosmetics industry giant Estée Lauder and L’Oréal claiming that they are pushing for more “clean beauty products,”4 or can be more specific like the ones made by H&M, one of the world’s largest fashion retailers, claiming it provides a “conscious” clothing line which uses “sustainable materials, such as organic cotton and recycled polyester.”5

BlueTriton Brands

In a recent case, Earth Island Institute v. BlueTriton Brands, defendant BlueTriton, a water distribution company, was accused of greenwashing because BlueTriton made affirmative statements that it was an environmentally friendly and “sustainable” company that is proactively working to prevent plastic pollution that would “continue to support the Company’s commitment to being at the forefront of sustainable water management, advancing recycling and waste reduction” and continue “a longstanding commitment to environmental leadership. . .”6

Companies typically also make a number of specific claims regarding their recycling practice and their allegedly positive impact on the environment. In BlueTriton’s case, it advertised a systematic reduction in plastic pollution: “Since 2005 we’ve reduced the amount of plastic in our 0.5 liter bottle by over 40%. What’s more – all of our bottles are 100% recyclable. Once recovered and sent to a recycler, our bottles are cleaned, dried and melted into pellets (called nurdles) and can be used for new bottles and all sorts of new, reusable things.”7

Reynolds Consumer Products

Another case involving affirmative statements about “recycling” is Hanscom v. Reynolds Consumer Products. In Reynolds, a class action, the defendant made affirmative statements that “Hefty Recycling Bags are Perfect For All Your Recycling Needs,” are “Designed to Handle All Types of Recyclables,” are “designed to handle your heaviest recycling jobs,” and that “these transparent bags make it easy to sort your recyclables and avoid the landfill.”8 Such statements were labeled as greenwashing because defendants’ use of LDPE plastic meant that “their Products [were] not recyclable and the labels claims regarding recyclability [were] therefore false.”9

Ryanair

In a story involving a European-based airline carrier, Ryanair, the carrier was accused of greenwashing by a UK advertising watchdog. The watchdog banned the carrier’s ad campaign, which claimed “Europe’s lowest fares, lowest emissions airline.”10 The ad was based on carbon dioxide emissions per passenger per kilometer flown because Ryanair had the youngest fleet with the most fuel-efficient engines and highest proportion of seats filled on flights.

The watchdog alleged that the ad was misleading after determining that the carrier’s claims were based in part on information gathered in 2011, stating that the airline had failed to substantiate its environmental claims with current data. The airline was told that, for the ads making environmental claims to run, they must have “adequate evidence to substantiate them and to ensure that the basis of those claims were made clear.”11 The airline ran its ad campaign just over five months after it became the first non-coal company to be named to the EU top 10 carbon emitters list.

Canada Goose

Some industries are publically shamed more than others. For example, in the fashion and apparel industry, Canada Goose, a Canadian winter apparel company, has been coming under fire for claiming that it is dedicated to “ethical, responsible, and sustainable sourcing and use of real fur.”12 The plaintiffs in a suit against Canada Goose argued that Canada Goose’s representations are misleading because they suggest that the fur-sourcing practices used by Canada Goose trappers “prevent the infliction of extreme pain or distress on animals trapped for their fur products” when they do not.13

Allbirds 

Another example is Allbirds, a sneaker company endorsed by various celebrities – coined as making “Silicon Valley’s favorite shoes,” – who was featured on a Fashion Blog for being one of the three worst greenwashers in the fashion industry.14 Following such public attention, a class of plaintiffs sued Allbirds, claiming that the brand was not living up to its sustainability-centric marketing statements, including statements about the “carbon footprint” of its products and its “sustainable” and “responsible” manufacturing practices.15

In Dwyer v. Allbirds, Inc., the plaintiffs’ complaint was in response to Allbirds affirmative statements regarding their product’s “Carbon footprint” – claiming that “the average footprint of [Allbirds’] products is 7.6 kg CO2e.”16 Plaintiffs further argue that Allbirds knew that “consumers are increasingly influenced by the business practices of companies they choose to engage with, [and that] factors important to consumers include whether a company acts in way that protects the environment, labor practices and animal welfare.”17 The brand’s “marketing is based on all these factors, which has helped it become worth over one billion dollars.”18 

Energy-Focused Claims

More notable, a recent case filed by the City of New York against major oil companies illustrates the severity of making unverified and generalized public statements. On April 22, 2021, Earth Day, the City of New York sued Exxon, BP, and others, alleging that the defendants utilized false advertising and deceptive trade practices by making untrue claims about the benefits of using their products.19

More specifically, NYC claimed that the defendants “deceive[d]… consumers by misrepresenting the climate impacts of various gasoline products sold at their branded service stations” and through “advertisements, social media posts, and other promotional material…” the defendants “falsely present[ed] themselves as corporate leaders in the fight against climate change,” knowing that they would be able to sell more products if they were viewed as environmentally responsible.20 Additionally, the suit claimed that the defendants “worked tirelessly to greenwash their corporate brands and reputations” by exaggerating their “overall investment in non-fossil fuel energy resources” and by misrepresenting “the climate benefits associated with their investments in … ‘alternative energy sources.’”21 

The lawsuit cited various advertisements made by the defendants as evidence of misleading information and outright misrepresentation. For example, the complaint cited to specific affirmative statements Exxon made advertising in favor of Synergy Diesel Efficient Fuel such as saying the fuel was a  “breakthrough formulation” that helped consumers “[r]educe emissions and burn cleaner,” that it “was created to let [consumers] drive cleaner, smarter and longer” and a gasoline that was “engineered for” “[l]ower emissions”—but then explains in smaller print that it “[h]elps remove deposits, which can lead to fewer emissions.”22

Another example of misrepresentation cited by the plaintiff was a social media post, which said that: “we can all agree we need strong climate solutions, and with natural gas as a dominant energy source, US carbon emissions are the lowest levels in a generation.”23 This statement was criticized in the lawsuit as being deceptive because it “falsely paint[ed] the fossil fuel industry as a leader on climate change action while omitting key information about the role of fossil fuels in causing the climate crisis.”24 

Other representations cited as misleading in the lawsuit were statements from certain defendants that its fuel “produce fewer emissions” and not using their product could lead to “higher emissions,”25 and BP’s advertisement that its fuels included “a growing number of lower-carbon and carbon-neutral products,” without disclosing “the key role” that fossil fuels play in causing these climate change.26

Contrast with specific data

After documenting a company’s affirmative sustainability claims, plaintiffs then typically detail the ways in which the company has failed to live up to the advertised conduct.  Again, in the BlueTriton case, plaintiffs alleged that “BlueTriton committed in 2008 to doubling recycling targets for PET bottles to 60% by 2018” and “[b]y that deadline, its recycling rate was only 28.9% -- less than half of its goal.”27 In BlueTriton, the plaintiffs also detailed in their complaint the industry data related to recycling to demonstrate that the overall recycling rate is much lower than has ever been advertised by BlueTriton or others in the water distribution business. Plaintiffs’ complaint in BlueTriton concludes that “BlueTriton’s false and misleading representations about the degree to which its business is sustainable are material to consumers.”28

Another common avenue of attack, as seen in the Reynolds case, is the dissecting of generalized statements regarding sustainability and being environmentally friendly. In the complaint, the plaintiffs cite to the definition of “recycling” as defined under the Cal. Pub. Res. Code § 40180, arguing that Hefty’s bags are not recyclable because their use of LDPE take them outside the definition of “recycling,” and that such practices may even “prevent recycling of otherwise recyclable materials.”29 

In the Allbirds case, plaintiffs attacked Allbirds’ life cycle assessment tools – which are supposed to identify the carbon footprint of each product – as misleading because they did not factor in the environmental impact beyond the initial manufacturing of the shoes, such as the impact of “wool production, including on water, eutrophication, or land occupation,” and thus, “exclude[es] almost half of wool’s environmental impact.”30 

Furthermore, in support of the plaintiffs’ allegation that Allbirds made “misleading animal welfare claims” when promoting the “happy sheep” – more specifically, when Allbirds claims its “wool harvesting practice are sustainable [and] humane”31  –  the plaintiffs claim that: “based on investigations into more than 100 large-scale wool operations, most of which had been promoted in the same terms used by Allbirds – as ‘sustainable’ and ‘responsible’ – ‘workers beat, stomped on, cut open the skin of, and slit the throats of conscious, struggling sheep,’”32 Plaintiffs’ complaint in Allbirds concludes that, “[i]f Allbirds were required to either truthfully disclose the practices which provide the wool for its shoes, or if it refrained from representing its ‘humane’ and ‘animal-friendly’ attributes, fewer people would buy the shoes.”33 

The best defense is a good offense

It is no longer the case where companies can merely rely on the Federal Trade Commissions’ Green Guides to comply with consumer protection laws regarding greenwashing. With the rise in greenwashing litigation, companies should proceed with great care and precision when making claims about sustainability efforts and the environmental benefits of their products. 

The above-mentioned examples provide a good illustration of how companies might potentially limit their exposure to greenwashing claims. When examined closely, most of the allegations in recent complaints focus on general studies about plastic pollution or cite to news sources for generic truths about the industry in which the defendant operates, with very little specific data about the specific defendant’s sustainability efforts. 

One of the lessons to be taken from recent filings is that companies should avoid wide sweeping, broad statements about their sustainability efforts and should avoid advertisements focused solely on the end-product or service they provide. Like all claims for misrepresentation, the truth is the best defense. If a company can support concrete statements with concrete sustainability efforts and firm data, the better able they are to neutralize and defend the greenwashing claims that are now flooding the US litigation landscape.

_____

1 Deena Robinson, What is Greenwashing, EARTH.ORG, (July 23, 2021).

2 Will Kenton, Greenwashing Definition, INVESTOPEDIA, (Jan. 23, 2021).

3 On March 4, 2021, the SEC announced the creation of a Climate and ESG Task Force in the Division of Enforcement. The Task Force “will develop initiatives to proactively identify ESG-related misconduct,” including analyzing disclosures “relating to investment advisers’ and funds’ ESG strategies.” SEC Press Release 2021-42, SEC Announces Enforcement Task Force Focused on Climate and ESG Issues, U.S. SEC Commission, (2021).

4 See, e.g., Clean Beauty – The Estée Lauder Companies Inc., (elcompanies.com); We commit to your safety - L'Oréal Paris, (lorealparisusa.com).

5 H&M Press Release, Recycled and sustainably-sourced materials take centre stage in the new H&M dress collection, (hm.com), (May 19, 2020).

6 Earth Island Institute v. BlueTriton Brands, No. 2021 CA 003027B, Compl., at * ¶ 51, (Aug. 27, 2021).

7 Id. at * ¶ 60.

8 Hanscom v. Reynolds Consumer Products Inc., No. 3:21-cv-03434-SK, Compl., at * ¶ 3, (May 7, 2021).

9 Id. at * ¶ 27.

10 Mark Sweney, Ryanair accused of greenwash over carbon emissions claim, The Guardian, (Feb. 4, 2020). 

11 Id. 

12 TFL, Canada Goose is Being Sued Over Claims That its Fur Sourcing and its Products Are “Ethical and Sustainable,” The Fashion Law, (Nov. 21, 2020). 

13 Id.  

14 Kelly Madera, Fashion’s Worst Greenwashers: Everlane, Allbirds & Amour Vert, ReMake World, (Dec. 3, 2020).

15 TFL, Allbirds is One of the Latest Brands Facing a Lawsuit Over its Sustainability-Centric Advertising, The Fashion Law, (Aug. 12, 2021).

16 Dwyer v. Allbirds, Inc., No. 7:21-cv-05238, Compl., at * ¶ 9, (June 13, 2021).

17 Id. at * ¶¶ 2-3.

18 Id. at * ¶ 4.

19 City of New York v. Exxon Mobile Corp., No. 1:21-cv-04807, Compl., at * ¶¶ 4-5, (Apr. 22, 2021).

20 Id. at * ¶¶ 5-6.

21 Id. at * ¶¶ 34-36.

22 Id. at * ¶ 31.

23 Id. at * ¶ 75.

24 Id. 

25 Id. at * ¶ 32.

26 Id. at * ¶ 33. 

27 BlueTriton, Compl., at * ¶ 85.

28 Id. at * ¶ 126.

29 Reynolds, Compl., at * ¶¶ 23, 26.

30 Allbirds, Compl., at * ¶ 14.

31 Id. at * ¶¶ 21-24.

32 Id. at * ¶¶ 26-27.

33 Id. at * ¶ 22.

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