In October 2011, the State of California filed its first lawsuit against 3 companies for “greenwashing” their plastic bottles. Enso Plastics LLC, who makes the bottles, and AquaMantra Inc and Balance Water Co., who use the bottles to sell their drinks, all claimed the bottles were biodegradable without any evidence to back up their claim. The companies claim they have added a microbial additive that make the bottles biodegradable and recycle and will break down in less than five years in a landfill. However, California law prohibits labeling food and drink plastic containers as biodegradable on the grounds that plastic takes thousands of years to biodegrade and may never do so in a landfill. This practice is commonly referred to as “Greenwashing.” What does this term mean, and what do companies need to know about it?
Greenwashing is a term used for when companies deceptively promote their polices, practices, or products as environmentally friendly. Given the popular trend of “going green,” and the desire on the part of consumers to do their part by buying from and dealing with more environmentally-friendly businesses, it’s no surprise that thousands of supposedly “green” products are flooding the market. However, consumers are starting to question these products – which include everything from household cleaners to automobiles – and lawsuits are on the rise.
There are six common forms of Greenwashing:
- Making a false claim.
- Suggesting that a product is green just because one attribute of the product is environmentally friendly, without recognizing the product’s effect on other issues such as energy consumption or global warming.
- Claiming that a product is “green,” but providing no information that supports the claim. Related to this is an absence reliable third-party certification.
- Using vague or broad terms to describe the product, like saying a product is “green” without any additional information.
- Claiming a product is “green,” but ignoring the fact that the product, in and of itself is harmful. Consider, for example, cigarettes with organic tobacco.
- Claiming that a product or practice does something environmentally friendly, but failing to mention that this is the common practice in the industry, or that it is mandatory to do so as a result of local, State, or Federal law.
A study done in 2009 by TerraChoice, an environmental marketing agency, found that “green” products had increased by 79% from 2007 to 2009 and when looking at 2,219 products, over 98% had Greenwashed their products in one or more of the ways listed above.
Just as State governments, such as California, are bringing lawsuits against companies for false green claims, the Federal government is getting involved as well. The Federal Trade Commission, using the FTC Act in combination with other federal laws and rules, has brought public enforcement claims against companies for making false and misleading “green” claims about their products and practices. Consumers are taking these issues into their own hands as well. Many States have laws that deal with deceptive or misleading business practices and consumers are using these laws to bringing class actions against companies who are accused of Greenwashing. In California, consumers can bring lawsuits for Greenwashing under the Unfair Competition Law (UCL) and the Consumer Legal Remedies Act (CLRA). In a California case, Paduano v. American Honda Motor Co., Inc., the plaintiff brought a class action lawsuit against Honda for claiming that one could “drive the Hybrid like one would a conventional car and save on fuel bills” and a customer “need not do anything special to obtain terrific gas mileage.” The court allowed these claims against Honda under State law and allowed a jury trial.
The Federal Trade Commission is currently revising its “Guides for the Use of Environmental Marketing Claims,” in order to address the issue of Greenwashing. This document will provide advice on what companies that engage in eco-marking should do in terms of claims, certifications and approvals, and specificity. The idea is to help businesses find ways to avoid lawsuits and deceptive environmental advertising.
Until then, as a business, there are some things you can do to avoid a Greenwashing lawsuit, if you’re planning on promoting your products or services as environmentally-friendly:
- Double check to confirm that what you are claiming is “green” as actually environmentally helpful; look into the research and make sure your claims are truthful.
- Validate your claims with reputable third parties and make this information publically-accessible.
- Avoid vague words, such as “green” or “eco-friendly;” be as specific as you can as to why your product or service is helpful to the environment.
- Gather feedback from other stakeholders (consumers, environmental advocates) to gauge whether they believe you’re on the right track.
- Acknowledge what parts of your business are less “green” and commit to working on improving them.
Be careful about making claims of environmental friendliness, because the consequences of a false claim could include lawsuits, awards of damages, fines, and a public relations nightmare. On the other hand, don’t be afraid to make truthful claims, as long as you’re following the guidelines detailed above along with some common sense. Most consumers will not demand that a business is perfect in every way, and they will reward you for accurately communicating what you are trying to do to improve the environment.
