When plaintiffs file greenwashing litigation, a business is accused of making false statements about its environmental, social, and governance practices in order to appeal to consumers’ interest in eco-friendliness. Specific causes of action vary from case to case, but include claims of fraud, false advertising and unfair and deceptive trade practices.

Greenwashing, or the act of misleading consumers about a company’s environmental practices, is a growing concern. While some companies may genuinely be trying to go green, others may be using misleading tactics to make their products seem more environmentally friendly than they actually are.

ESG, or environmental, social, and governance, are the factors that plaintiffs typically consider when bringing a greenwashing suit. ESG considerations refer to a company’s environmental policies and practices, its social responsibility policies and practices, and the quality of its governance.

Greenwashing is the act of misleading consumers about a company’s environmental practices. Some companies may genuinely be trying to go green, but others may be using misleading tactics to make their products seem more environmentally friendly than they actually are. The Federal Trade Community (FTC) has released “Green Guides” to help companies avoid greenwashing litigation when marketing products and services.

According to the FTC, its latest set of “Green Guides” details best practices for companies to avoid greenwashing litigation when marketing products and services.

Green Guides are resources that help consumers identify and avoid greenwashing. They typically include a list of tips on how to determine if a company is being truthful about its environmental practices, as well as what to do if you believe you’ve been misled.

Despite the FTC not taking enforcement actions against companies for unsupported claims, other plaintiffs, including consumers and advocacy groups, have.

A greenwashing claim against Walmart for greenwashing was filed in April 2017. Under the Penalty Offense Authority, the Federal Trade Commission held Kohl’s, Inc. and Walmart, Inc. accountable for falsely marketing rayon textile products as bamboo. Aside from making deceptive environmental claims, both companies claimed that bamboo textiles were made using eco-friendly processes, on the contrary, the process of turning bamboo into rayon uses toxic chemicals and causes hazardous emissions.

Despite settling, Kohl’s and Walmart are accused of making false or unsubstantiated claims under Section 5 of the FTC Act. FTC ruled that the products were misrepresented as bamboo-made and as providing environmental benefits when, in fact, rayon manufacturing uses toxic chemicals and emits hazardous pollutants. Additionally, the Textile Act and Rules are alleged to have been violated.

Kohl’s and Walmart’s proposed settlements include combined penalties of $5.5 million along with an injunction that will alter their future textile representations and bamboo-related environmental claims.

The FTC’s Green Guides are not enforceable, but other plaintiffs, including consumers and advocacy groups, have filed lawsuits against companies for greenwashing. Some of these lawsuits allege that the defendants made false or misleading claims about their environmental practices. Others allege that the defendants engaged in unfair or deceptive trade practices by misrepresenting their environmental practices.

Companies are no longer able to rely solely on the Federal Trade Commission’s Green Guides to comply with consumer protection laws. Due to the rise in greenwashing litigation, companies should proceed with caution and precision when claiming sustainability and environmental benefits.

Here at Rushing & Guice we have extensive experience counseling clients through the maze of complex laws and regulations governing environmental preservation. Most environmental law is intended to preserve natural resources—air, water, land, and wildlife—and protect these resources and residents from toxic activities.

Our lawyers can help our clients set up the internal procedures needed to comply with environmental laws, guide their expansion when the environment might be impacted, and defend them and their companies against charges of environmental violations. Call us today at (228) 374-2313 or contact us through our website.