Shades of Green: Navigating the Legality of Environmental Marketing

A majority of Americans are concerned about climate change.¹ This fear seems to be a driver of consumer spending decisions. According to a study by PDI Technologies, 68% of Americans are willing to spend more on environmentally sustainable products than their competitors that are not sustainable.² This number has steadily grown over the past two years.³ This figure is even greater for key marketing demographics. 77% of Gen Z, 72% of millennials, and 76% of parents would be willing to do so. Because of this, companies have increasingly sought to position and market themselves as green companies.

The surge in conscious consumers, where individuals prioritize purchasing choices due to environmental, social, or economic effects, has led to companies promoting their products with terms such as “sustainable,” “green,” “cruelty-free,” “organic,” “recyclable,” and others. But what happens when a company uses these terms for their products when they aren’t actually made using these methods? The phrase used to describe this practice is “greenwashing,” which is defined as “the process of conveying a false impression or misleading information about how a company’s products are environmentally sound. Greenwashing involves making an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly or have a greater positive environmental impact than they actually do.”⁴

False advertising class action lawsuits have increased in tandem with the rise in green advertising.⁵ Courts have routinely dismissed claims against defendants when a corporation made statements that were general and broad. For example, in Earth Island Institute v. Coca-Cola⁶, the court found that statements made by Coke about sustainability initiatives were “aspirational in nature,” and that statements regarding “corporate ethos, hopes, and philosophies” in corporate communications could not be considered “part of the product itself” and therefore could not serve as the basis for claims.⁷

Similarly, in Dwyer v. Allbirds, Inc.,⁸ the plaintiff alleged that its advertisements were misleading as they did not do enough to ensure that the sheep the manufacturer used were “liv[ing] the good life.” The court rejected this argument, deeming living the good life too vague to form the basis of a legally actionable claim.

Courts have not been as forgiving when statements made by companies are more concrete. For instance, in Smith v. Keurig Green Mountain, Inc., plaintiff Smith filed an Unfair Competition Law claim against Keurig for advertising their coffee pods as “recyclable.”⁹ Ultimately, the case reached a settlement amounting to around $10 million, with allegations that the company’s assertions regarding certain products’ recyclability were inaccurate.¹⁰

In Lee v. Canada Goose US, Inc., the plaintiff alleged that the company’s claim of sourcing fur ethically was misleading and deceptive due to their use of inhumane trapping methods.¹¹ The court found that Canada Goose’s assurances of using ethical, responsible, and sustainable sources were misleading and that the statements regarding the sourcing methods were material.¹²

While Canada Goose claimed that Lee’s claims were “subjective views” on what ethical fur sourcing is, the court disagreed.¹³ It found “that reasonable consumers consider ‘animal welfare’ to be an important factor in whether a product is ‘ethically produced,’ and that consumer-perception research indicates that terms such as ‘sustainably produced’ are perceived as signaling compliance with ‘higher animal welfare standards.’”¹⁴ “[Their allegations of inhumane treatment] are enough to establish at the pleading stage” that unsophisticated customers might be persuaded to act on the basis of the company’s statements.¹⁵ When it became clear that the plaintiff didn’t rely on the representation at the time of purchase, the court voluntarily dismissed the case, even though the plaintiff’s complaint met the standard for false advertising.¹⁶

These cases will likely only increase in abundance as companies continue to use green language for their products. Government agencies, aware of this issue, have pending policies to combat false green statements and help give guidance to companies as they create marketing campaigns.

In late 2022, the FTC announced it would be reviewing its Green Guides. These guides articulate the FTC’s present perspectives, suggestions, and directives concerning environmental assertions in marketing and advertising. They serve to assist companies in sidestepping environmental marketing claims that might be deemed unjust or misleading under Section 5 of the FTC Act, 15 U.S.C. § 45.¹⁷ While adherence (or lack thereof) to the Green Guides is not determinative, they are still frequently used as evidence to prove or disprove false advertising claims.¹⁸ The FTC’s guides have not been updated since 2012, and their updates should help companies know where the line is, and help consumers know when they have been legally wronged.

In March of this year, the SEC announced new regulations adopting rules to enhance and standardize climate-related disclosures by public companies. These companies will be forced to disclose scope one and scope two emissions.¹⁹ Scope one emissions cover emissions from sources the organization owns or controls directly, while scope two emissions are those caused indirectly and come from where the energy it purchases and uses is produced.²⁰ These disclosures should help consumers challenge a company’s false claim of their carbon footprint or that they are “net zero.” While the SEC debated requiring scope three emissions, which the state of California will be requiring, they decided against it.²¹ Scope three encompasses emissions that are not produced by the company itself and are not the result of activities from assets owned or controlled by them, but by those that it’s indirectly responsible for up and down its value chain. By not including Scope three emissions in public filings, litigants will have less available evidence of the downstream carbon impact of a company’s products.

Greenwashing, a relatively recent phenomenon, appears poised to persist in the foreseeable future. With increasing consumer interest in environmentally friendly products, companies are motivated to continue seeking avenues to target this demographic. Recent legal proceedings underscore the diverse interpretations of deceptive advertising, signaling the necessity for companies to exercise caution in their product claims. While some assertions may be dismissed as aspirational or minor embellishments lacking legal repercussions, those making concrete claims face potential liability. As litigation mounts and legal precedent crystallizes, the boundary for companies navigating false advertising claims will become clearer.

David Zack is a Second Year Law Student at the Benjamin N. Cardozo School of Law and a Staff Editor at the Cardozo Arts & Entertainment Law Journal. David is interested in labor, constitutional, and corporate law.