Greenwashing Exposed: A Close Look at the Existing Case Law (Part 2)

Greenwashing litigation is happening in different forums. In some jurisdictions, for instance, in Germany, as seen above, greenwashing cases are primarily filed with the domestic courts. At the same time, in other countries, greenwashing is subject to increasing regulatory activity of the local authorities. In Australia, both the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) have been particularly active in detecting and enforcing greenwashing conduct. In March 2023, the ACCC announced that it would be investigating several companies for potential greenwashing following an internet sweep which commenced in October 2022. The initial survey of 247 businesses revealed that 57% had promoted concerning claims about environmental credentials.

In the UK, the Competition and Markets Authority (CMA) and the ASA tightened up their position about problematic ad claims in recent years. In January 2022, the CMA commenced a review of environmental claims in the fashion retail sector. Later, in July, it announced an investigation into three brands—ASOS, Boohoo and ASDA—to scrutinise their green claims. In January 2023, the CMA further announced a review of environmental claims made by brands in relation to fast-moving consumer goods (food, toiletries, cleaning products, and personal care items). The ASA is also actively enforcing the advertising rules concerning environmental claims.

Aside from actions in the domestic judicial and non-judicial bodies, complaints have also been filed with the National Contact Points (NCP) established under the OECD for Multinational Enterprises on Responsible Business Conduct (Guidelines). ClientEarth filed a complaint against BP with the UK NCP that BP’s global corporate advertising misled the public in the way that it presented BP’s low-carbon energy activities, including their scale relative to the company’s fossil fuel extraction business. The ad campaign in question was eventually withdrawn, and the UK NCP rejected the complaint. Another complaint filed at the UK NCP against power generator Drax Group plc alleges that the company is misleading consumers by portraying itself as generating carbon-neutral electricity while actively damaging the climate and forests. In 2022, the complaint was accepted for further consideration.

In June 2023, the Guidelines were updated, and climate change is now explicitly addressed in the text. Paragraph 97 in the chapter about consumer interests asserts that ‘environmental or social claims that enterprises make should be based on adequate evidence and, as applicable, proper tests and verification’. Following the Guidelines’ update, the number of climate-related complaints referred to NCPs is likely to increase, and we might see new types of allegations within the scope of the expanded Guidelines, including about greenwashing tactics.

Who are the claimants?

A vast majority of greenwashing claims are brought by civil society organisations, which is hardly surprising because environmental activists generally initiate or support much climate-related litigation in the Global North and Global South. Other actors are, nevertheless, present. In Australia, a legal complaint against Glencore was launched with the ACCA and ASIC on behalf of The Plains Clan of the Wonnarua People and Lock the Gate Alliance. The allegations concern the company’s misleading claims about climate impact and its behaviour towards Traditional Owners. Another interesting case in Australia was commenced by the charity representing Australian parents, who sued EnergyAustralia for falsely claiming its products primarily generated by burning fossil fuels are carbon neutral. Notably, greenwashing claims are also pursued by the competitor companies (see, for instance, examples from Italy, Germany and the UK).

Who are the defendants?

Greenwashing cases target companies in an increasingly diverse range of sectors. Historically, the so-called Carbon Majors—major carbon emitters in the energy, utilities, and mining sectors—faced the biggest hit from climate change litigation. By contrast, allegations of greenwashing span various industries, including agriculture, transport, fast fashion, finances and investment, cosmetics, plastic, renewable energy, and automotive industries. In June 2023, the Swiss advertising regulator ruled that FIFA misled consumers by claiming the Qatar World Cup in 2022 was the first ‘fully carbon neutral’ such event. Five similar complaints have been filed by a coalition of civil society organisations in Belgium, France, the Netherlands and the United Kingdom, and Switzerland later announced it would examine all of them. Claimants alleged that the carbon neutrality claims made by FIFA were based on a considerable underestimation of the GHG emissions generated by the organisation of the World Cup, and the carbon footprint of the event was ‘greened’ by using ‘carbon offsetting’ mechanisms that are not in line with international standards.

Two trends are apparent. The first one is a growing number of complaints targeting the aviation industry (see, for instance, judicial proceedings in the Netherlands against KLM over its ‘Fly Responsibly’ campaign; investigation by ASA in the UK of Ryanair’s claims to be Europe’s ‘lowest emissions airline’; and a complaint to the Competition Bureau of Canada challenging the Pathways Alliance’s ‘Let’s clear the air’ advertising campaign). One of the most recent examples is an ASA ruling against Etihad Airways, concluding that the company’s absolute green claim about ‘sustainable aviation’ was not adequately substantiated.

Another trend is the emergence of greenwashing complaints against a wide range of financial services providers, including banks, investment funds and insurance companies. Earlier this year, the European Banking Authority flagged greenwashing risks for banks. In October 2023, RepRisk, the world’s largest ESG data science company, published the results of the study, finding that the banking and financial services sectors saw a 70% increase in the number of climate-related greenwashing incidents in the last twelve months. Some examples are proceedings commenced by the ASIC against corporate pension fund Mercer Superannuation and investment management firm Vanguard Investments Australia Ltd; a claim in Germany against an investment fund, Commerz Real Fund Management S.à.r.l.; and complaints filed against HSBC in Australia and the UK.

This is the second blog post in a three-part series about greenwashing litigation (see Part 1 here and Part 3 here). 

Dr Ekaterina Aristova is the Leverhulme Early Career Fellow at the Bonavero Institute of Human Rights, University of Oxford.