August 6, 2024

Grey areas of advertising green products: Is it really “farm-to-table” or “sustainably sourced?”

As more consumers look to make sustainable purchases – food, clothes, cleaning and personal products, or even technology—companies are increasingly using sustainability-related tag words to advertise their products. But what if sustainable advertising oversells the environmental attributes of the product? How can a company avoid the risk of greenwashing claims? Headwaters Law Group provides this panoramic view of relevant greenwashing regulations and recent litigation that may guide companies’ green marketing and other communications regarding sustainability. 

Outdated Green Guides provide limited guidance

Greenwashing is green advertising that misleads consumers by falsely claiming a product is sustainable or “green.” Beyond that commonly understood definition, there are few clear rules on what a company can or cannot say when it comes to advertising sustainable products. The FTC’s “Green Guides” provide guidance that applies to environmental marketing claims and encourages marketing that is consistent with consumers’ understanding of common “green” terms to avoid deception. For example, the Green Guides explain that for a product to be advertised as “compostable” it must break down in a “timely manner,” meaning “in approximately the same time as the materials with which it is composted.”

But the Green Guides are not enforceable rules, and they are notably out of date. The guides do not address “organic, sustainable, [or] natural claims,” leaving those claims to be regulated under a patchwork of USDA and state rules and NGO certifications. The Green Guides are supposed to be updated every 10 years, but the FTC has not published new Green Guides since 2012. The FTC published draft guidance in 2022, but, after receiving comments on the draft in April 2023, the FTC has been silent on when it expects to publish final updated guidance.

Greenwashing litigation filling the void

Unsurprisingly, an uptick in greenwashing lawsuits by governments and consumers is filling the regulatory void. These cases show that sometimes greenwashing is easy to spot—when a company calls its product one thing, and it is really another. In 2022, the FTC sued Kohl’s and Walmart under consumer protection statutes alleging that the companies claimed fabrics were made from environmentally friendly bamboo, although the products were really made from bamboo converted into rayon, a process that involves the use of toxic chemicals. Ultimately, the parties settled, and the stores agreed to pay $5.5 million in civil penalties, the FTC’s biggest ever civil penalty at the time.

Smaller companies face similar scrutiny. The Florida Attorney General’s Office sued a restaurant in 2018 for violations of consumer protection laws, alleging that although the restaurant claimed its ingredients were “farm-to-table,” the ingredients were actually purchased from a national restaurant supply chain. The restaurant paid over $300,000 in civil penalties to settle the suit.

In addition to government civil actions, class actions brought under consumer protection laws have targeted deceptive green advertising. In 2022, a consumer class action against Evian alleged that advertisements describing its water as “carbon neutral” misled consumers in violation of numerous state consumer protection laws and constituted common law fraud. The consumers alleged they were misled because Evian’s process of bottling water and sending it from production facilities in France to the United States caused carbon-dioxide to be released, and Evian had failed to show it offset those emissions. Evian argued that it did not mislead consumers because no reasonable consumer would think a product manufactured in France and sold in the United States would emit no carbon at all, no product is 100% carbon neutral, and the Evian website explained the company’s attempts to reduce its carbon output. In January 2024, a court denied Evian’s motion to dismiss, finding that the consumers pled plausible violations of state law and common law fraud. Evian’s March 2024 motion for reconsideration is pending, but the case demonstrates that relying on background information on a website (consistent with some recommendations in the Green Guides) may not be enough to combat a claim of deceptive green advertising. 

A 2023 consumer class action against Walmart alleged its “sustainable” seafood messaging was deceptive in violation of numerous state consumer protection laws and the Uniform Deceptive Trade Practices Act because the seafood was not sustainably harvested. The court inspected various Walmart labels and determined that the label “Sustainably Sourced – 100% – Sustainability” was actionable under the Illinois Consumer Fraud Act because “a reasonable consumer could interpret manufacturer’s ‘100%’ representation to mean 100% of the practices used in harvesting the seafood was sustainable.” However, the court determined “MSC Blue Tick” was not actionable because it relied on a third-party organization’s certification. The court also found a claim related to Walmart’s “back-label” statements about its corporate sustainability practices to be “corporate blather”—the statements possibly obscured the “company’s complicity in a looming environmental disaster,” but they are nonetheless not actionable. 

Recent cases expand greenwashing claims beyond easily-spotted deceptions. Advertising that uses a sustainability tag that implies certainty (like “100%” or “neutral”) when that claim cannot be backed up may be actionable under consumer protection laws. In contrast, marketing that is more subjective or descriptive or makes a factual statement that the product has achieved a certification or other verifiable metric may be less likely to mislead. 

Avoiding greenwashing is good for business.

By accurately communicating the environmental benefits of a green product and using only sustainability tag words that can be directly supported, a company can connect with its customers and other stakeholders to tell a product’s story. This approach requires a close understanding of the product’s components, uses, ultimate end-life, and other factors that go into its overall environmental impact, including how the product or service could impact or be impacted by climate change. 

Companies should also be aware of whether advertising claims align with other communications, such as securities filings, communications to employees, investment pitches, and communications to regulators. These messages could be evidence that supports or defends against a greenwashing claim. 

At Headwaters we work with companies that use innovative technologies and sustainable practices to make great products. We also work with companies offering their customers ways to offset or diminish the potential environmental impacts of purchasing those products. Combining our understanding of supply chains and Scope 3 emissions, sustainability labeling trends, and evolving case law, we can help companies confidently message the sustainability of their products.