Greenwashing Exposed: A Close Look at the Existing Case Law (Part 3)

In 2022, The Harris Poll conducted a survey of 1,491 executives at global companies across 16 countries for Google Cloud, asking about existing environmental issues and relevant actions. 58% of the respondents admitted their companies have overstated their sustainability efforts and engaged in greenwashing, which jumped to 72% for companies based in North America. A more recent study from RepRisk suggests that greenwashing tactics are evolving and becoming more complex, ranging from misleading statements to pledges, certifications, and commitments. False, misleading, deceiving or exaggerated statements are largely prohibited in different jurisdictions under domestic laws and standards that regulate consumer protection and advertising, and these norms have been used by the judicial and non-judicial bodies to address and assess various forms of greenwashing.

1. Vague and Ambiguous Language

One of the most common tactics companies employ is using broad terms like ‘eco-friendly’, ‘green’, ‘climate neutral’, or ‘sustainable’ without providing any clear definition or evidence to support their claims. In 2020, the European Commission commissioned a study to assess 150 environmental claims and found that 53.3% of them provide vague, misleading, or unfounded information on products’ environmental characteristics. For instance, a Vegetarian Society of Denmark commenced a legal action—claimed to be the first climate change case in Denmark—against Danish Crown, alleging that there is no evidence to support the claim that pork is ‘more climate-friendly than you think’ and the pork production is ‘climate-controlled’. In the UK, the Advertising Standards Authority (ASA) banned a TV ad for Persil washing liquid, manufactured and marketed by Unilever, for unsubstantiated claims to be ‘kinder to the planet’.

Consumers often interpret these generic environmental claims as absolute claims that indicate a product or service has no negative environmental impact across its full lifecycle. That’s not, however, always the case. In April 2022, the ASA found that the use in the ad of the term ‘environmentally friendly’ by TIER—an electric scooter hire company—was misleading. It treated the ad as an absolute claim that electric scooters cause no environmental damage over the full lifecycle of the scheme, and TIER did not provide sufficient evidence to support such a claim.

2. Incomplete Information and Selective Disclosure

Some companies selectively disclose positive environmental initiatives or aspects of their products while omitting information about other harmful practices. In 2008, De Longhi—an importer, distributor and supplier of electrical appliances—provided a court-enforceable undertaking to the Australian Competition and Consumer Commission (ACCC) to refrain from making misleading environmental claims for its portable air conditioners. The marketing materials advertised the air conditioners as ‘environmentally friendly’ and containing ‘non-harmful gases’, which was only true for one specific model. In Italy, an oil and gas company, Eni, was fined EUR5 million for deceiving customers over ‘green’ diesel. The Italian Competition Authority found that the advertising campaign induced consumers to believe that the ‘green’ diesel positively impacts the environment. In contrast, the term ‘green’ only applied to one product component and not the fuel as a whole.

Fossil fuel companies are regularly targeted for focusing on their positive sustainability initiatives, omitting significant information about their ongoing contributions to CO2 emissions (see, for example, ASA ruling on Shell UK Ltd in June 2023). Another complaint filed with the ASA challenged Anglian Water’s history of releasing sewage into the environment. Anglian Water focused in their ads on forward-looking activities, such as increasing their pipe network, cleaning water using nature and installing tanks to collect stormwater, which intended to make an impression of an overall positive contribution of the company on the environment. The ASA found those claims were misleading because the ads omitted material information about the company’s activities that caused harm to the environment. Notably, the ASA also banned a series of HSBC’s advertisements for being misleading about its green credentials by not mentioning the bank’s financing of fossil fuel projects and links to deforestation.

3. Reliance on Emissions Offsetting Schemes

Carbon offset schemes allow companies to invest in environmental projects worldwide to balance the negative impact of their activities. These projects—reforestation, new wind farms, building renewable energy, waste and landfill management—are usually designed to reduce future emissions. Research by the ASA identified consumers’ confusion about the concept of ‘carbon offsetting’. Companies frequently make absolute claims about carbon neutrality of a particular product or service, which rely on emissions offsetting schemes without taking any further action to reduce companies’ own emissions. There is a consistent line of greenwashing cases challenging overreliance on or lack of transparency around carbon offset schemes. In the US, Danone, the manufacturer and seller of Evian water, faced a class-action lawsuit that the ‘carbon-neutral’ claim on bottled water labels was false and misleading. It is alleged that Danone has purchased credits to offset Evian’s greenhouse gas (GHG) emissions, but any offsets will not happen for decades. In Australia, similar practices have been challenged for over 15 years now. In 2008, the Australian Competition and Consumer Commission accepted a court-enforceable undertaking from V8 Supercars that any ‘green’ claims offset by reforestation must include an explanation about the time before GHG emissions will be offset. In the Netherlands, the Advertising Code Committee (Reclame Code Commissie) found that Shell’s campaign, ‘Make a difference. Drive CO2 neutral’, was misleading. Shell did not demonstrate that offsetting measures completely compensated the harm caused by CO2 emissions.

4. Aspirational Statements

A significant group of greenwashing cases to emerge in recent years challenges the credibility of corporate climate pledges. Companies increasingly commit to setting net-zero targets and making aspirational statements which are not always accompanied by a clear implementation plan. A first-of-its-kind lawsuit against Santos over the credibility of its plan for net zero emissions by 2040 is pursued in Australia, while in France, environmental activists filed a request to obtain an injunction and compensation against TotalEnergies SE in relation to its claims of aiming for ‘net zero’ by 2050, becoming a major player in the energy transition and the environmental virtues and transition role of gas and biofuels. In the non-judicial space, Greenpeace alleged that Toyota’s net zero ambitions are contravened by its current car production plans, which do not include a rapid enough transition to electric vehicles. The Pathways Alliance, a coalition of six of Canada’s largest oil sands producers, is facing a claim that its net zero plan fails to incorporate the lifecycle of its oil products and does not account for more than 80% of their GHG emissions.

5. False representation of the product

Courts and local authorities are familiar with enforcing the rules against making false representations about the product or a service. In the US, a class-action lawsuit was filed against a producer of the Hefty trash bags over a claim that they were recyclable. Claimants alleged that the trash bags are not recyclable at many solid waste disposal facilities, and they also contaminate waste that would otherwise have been recyclable. The defendant has not admitted to the wrongdoing, but agreed to a settlement of USD 3 million to resolve the claims. In a similar case, Keurig Green Mountain agreed to pay USD 10 million to settle the claims about (non)recyclable plastic coffee pods.

6. Misuse of Certifications

A few cases highlight instances where certifications have been misused or abused, undermining their credibility. The Australian Competition and Consumer Commission brought a legal action against Prime Carbon Pty. Ltd., a company that sells carbon credits, for falsely claiming that it was certified by the National Stock Exchange of Australia. In Germany, proceedings were launched against a company which distributed cleaning products to professional customers nationwide. The cleaning products were certified by an external company as ‘climate neutral’, but no information was provided about the basis on which the certification has occurred.

Greenwashing cases have emerged from a widespread controversy surrounding the illegal use of software in certain diesel vehicles by car manufacturers. In 2015, the US Environmental Protection Agency discovered that certain diesel vehicles manufactured by Volkswagen (VW) were emitting higher levels of nitrogen oxides than allowed by law. The ‘Dieselgate’ or ‘Emissionsgate’ scandal has led to VW facing litigation in several countries, civil suits for damages suffered as a result of unfair commercial practices and use of misleading or false ‘green’ claims. In Australia, class action proceeding have commenced against Hino Motors Ltd and Mercedez-Benz in relation to misreporting and misrepresenting the fuel efficiency and emissions performance of certain diesel vehicles. 

Looking Forward

In September 2023, the EU Parliament and Council reached a provisional agreement on new rules to ban misleading advertisements. If enacted, the proposed Directive will explicitly prohibit different forms of greenwashing including the ones discussed in this blog. Greenwashing disputes are on the rise, and we are likely to see the trend continue if the new sanctions are introduced.

This is the third blog post in a three-part series about greenwashing litigation (see Part 1 here and Part 2 here).

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