“Carbon-Neutral” Advertising May Lead to Litigation

Key Takeaway:

• “Carbon-neutral” and “net-zero emissions” false and misleading advertising litigation continue to be on the rise. Companies making carbon-offset marketing claims should consult the FTC’s “Green Guides,” which are poised to be updated in 2023, and ensure their claims are adequately substantiated. 

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As we start the new year, 2023 brings with it the promise that additional consumers, advocacy groups, and government agencies will file suit over carbon-neutral or net-zero emissions advertising claims. Lawsuits attacking environmental marketing claims are not new, and it appears that companies that disclose and can reliably support their claims may be well situated to defend against these lawsuits.  

European courts and ethics panels saw their share of carbon-neutral advertising complaints in 2022. For example, a complaint was filed against fossil fuel company TotalEnergies for its “net zero” marketing, the airline KLM was sued over its “Be a Hero, Fly CO2 Zero” campaign, and a lawsuit alleged that Beiersdorf’s Nivea Naturally Good face care products and Nivea shower gel falsely advertised the products as “100% climate neutralized by offsetting CO2 emissions with certified reforestation projects.”^[1] FIFA was sued in France and Belgium in November and December 2022, respectively, regarding whether its advertising of the 2022 World Cup in Qatar as “carbon neutral” was false and misleading.^[2]   

Similar claims have come ashore in the United States.  A lawsuit was filed against Danone Waters of North America over its carbon-neutral claim on packaging and labels for its Evian water brand. See Dorris v. Danone Waters of Am., No. 7:22-cv-08717 (S.D.N.Y.). There, plaintiffs allege that reasonable consumers viewing Evian’s “carbon-neutral” representation “would believe the manufacturing of the Product is sustainable and does not leave a carbon footprint,” but the manufacturing process “still causes carbon dioxide (‘CO2’) to be released into the atmosphere,” and, therefore, the carbon-neutral claim is false and misleading. See Dkt. No. 8, ¶ 7.  

In a case against Allbirds, which sells “sustainable” wool shoes, a consumer alleges that Allbirds’s shoes were misleadingly labeled as having a low carbon footprint because, in part, the life cycle assessment tool that Allbirds used to estimate its products’ carbon footprint “only measures the carbon footprint of each product, meaning that it doesn’t assess any other environmental impact of wool production, including on water, eutrophication, or land occupation.”  See Dwyer v. Allbirds, Inc., No. 7:21-cv-05238, 2022 WL 1136799, at *2 (S.D.N.Y. Apr. 18, 2022). The court granted Allbirds’s motion to dismiss in full, finding, among other things, that Allbirds disclosed its low carbon certification methodology on its website and that a reasonable consumer would not expect non-atmospheric inputs from the production of raw materials to be included. See id. at *6. 

If a company is considering making environmental claims, it would be well served to consult the Federal Trade Commission (“FTC”) Green Guides for the Use of Environmental Claims, which are designed to help companies avoid misleading consumers. The Green Guides were last updated in 2012, but in 2022, the FTC announced that it is seeking public comments until February 21, 2023, for updates and changes to the Green Guides.^[3] With respect to carbon offset claims, the FTC currently recommends: 

• Marketers should have competent and reliable scientific evidence to support carbon-offset claims. They should use appropriate accounting methods to ensure they measure emission reductions properly and don’t sell them more than once.
• Marketers should disclose whether the offset purchase pays for emission reductions that won’t occur for at least two years.
• Marketers should not advertise a carbon offset if the law already requires the activity that is the basis of the offset. 

Although businesses are facing increasing pressure to demonstrate corporate responsibility by addressing climate change, “carbon-neutral” advertising campaigns should be adequately substantiated or qualified and should not imply a greater benefit than what the business has achieved, in order to avoid potential liability. Winston will continue to follow this trend in 2023.  

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^{[1] Sutton, Isabel, Company climate claims in court: Pending cases will shape future of ‘net zero’ pledges, Clean Energy Wire, https://www.cleanenergywire.org/factsheets/company-climate-claims-court-pending-cases-will-shape-future-net-zero-pledges (last visited Jan. 17. 2023) (discussing Greenpeace France et al. v. TotalEnergies; Fossielvrij NL v. KLM; Env’t Action Germany (DUH) v. TotalEnergies).}

^{[2] See http://climatecasechart.com/non-us-case/notre-affaire-a-tous-v-fifa/ (last visited Jan. 17, 2023) (discussing Notre Affaire à tous v. FIFA, and attaching complaint filed on Nov. 2, 2022 with the French advertisement ethics self-regulatory); http://climatecasechart.com/non-us-case/carbon-market-watch-v-fifa/ (last visited Jan. 17, 2023) (discussing Carbon Market Watch v. FIFA, and attaching complaint filed on Dec. 1, 2022 with the Belgium advertising ethics panel).}

^{[3] FTC Seeks Public Comment on Potential Updates to its ‘Green Guides’ for the Use of Environmental Marketing Claims, Federal Trade Commission, Dec. 14, 2022, https://www.ftc.gov/news-events/news/press-releases/2022/12/ftc-seeks-public-comment-potential-updates-its-green-guides-use-environmental-marketing-claims (last visited Jan. 17, 2023); Fair, Lesley, FTC Environmental Marketing Guides: Is it time for a change of green-ery?, FTC Business Blog, Dec. 28, 2022, https://www.ftc.gov/business-guidance/blog/2022/12/ftc-environmental-marketing-guides-it-time-change-green-ery (last visited Jan. 17, 2023).}