On Wednesday, August 27, Ropes & Gray Litigation & Enforcement partner Alexander Simkin and associate Eileen Falk joined Sami Grover, Sustainability Communications Director at thinkPARALLAX, to discuss the intersection between the legal implications of anti-greenwashing legislation—and related pressures—and the continued need to communicate effectively. The webinar, "What to say and how to effectively say it: The legal and practical implications of greenwashing legislation", was recorded and is available here. The key takeaways are:
- Green claims are facing unprecedented scrutiny. Green claims are any statement that suggests a product, service, or company is environmentally friendly. Greenwashing is any claim or representation that products or services are more environmentally sustainable than they are. Avoiding accusations of greenwashing is not just about avoiding outright lies—regulators and litigators are increasingly focusing on any representation that could mislead consumers, including implied claims, omissions, or statements that lack sufficient evidence. Even technically true claims can be risky if they create a gap between the truth of "green" claims and consumer understanding of those claims.
- The legal landscape is evolving rapidly. New laws and enforcement actions are emerging globally, such as the UK's Digital Markets, Competition and Consumers Act, which expanded the UK Competition and Markets Authority's power to investigate and penalize misleading claims. However, not all regions are moving at the same pace. Some efforts, like the EU's Green Claims Directive, have stalled due to concerns about complexity and burden on companies. Federal enforcement in the US appears currently deprioritized, with agencies like the FTC and EPA experiencing staffing decreases and delayed guidance updates. For example, FTC Green Guide updates were expected last year, but have been delayed indefinitely. At the same time, state-level enforcement is increasing, with California and New York leading the way in creating legal frameworks to challenge greenwashing.
- Several factors are driving this increased attention. In part, increased scrutiny is driven by the public's increasing desire to engage in consumption and investment practices that are not harmful to the environment. Consumers want sustainable products and are increasingly educated about how to think about environmental claims. Activist groups are similarly raising awareness. At the same time, regulators are using AI to proactively scan the internet for problematic claims, which means companies can be targeted for enforcement even without consumer complaints.
- Litigations are targeting not only false statements but also misleading omissions, inadequate disclosure, and unsupported claims—even if technically true. While some recent high-profile cases have been dismissed, often due to lack of actionable claims or insufficient proof of consumer harm, the risk of running afoul of greenwashing regulations remains significant.
- What are the risks? We see settlements and judgments in the millions to tens of millions of dollars. If a problematic statement was made to enough people in connection with a sufficiently valuable product or service, there is no reason under the law why the damages couldn't be hundreds of millions or more. And some laws have treble damages provisions that allows plaintiffs to recover three times their actual damages or statutory damages that can allow meaningful damages even in the face of minimal actual injury. Companies may also face bans on further problematic claims and requirements to substantiate future statements. Civil suits can also trigger regulatory investigations and vice versa, amplifying risk. Once a company has been found to have engaged in greenwashing, it can be very hard to escape that overhang from a legal—and reputational—standpoint.
- AI is increasingly used for both marketing and enforcement. More and more, regulators are using AI to scan the internet for violations, leading to faster and more proactive enforcement—even without consumer complaints or high-profile marketing campaigns.
- To manage risk, companies should consult legal counsel before making green claims, keep thorough documentation, and train marketing and executive teams on the evolving regulations. It is critical to ensure claims are supported by independent verification or objective evidence and that companies maintain accurate records of such support, even for statements made years ago. Companies should also avoid making ambitious promises without a clear, realistic, and documented plan. Communicate carefully: fact-check statements, retract or qualify as needed, and ensure coordination between departments. The bottom line is that claims must be clear, specific, and substantiated. Proactive diligence is essential, as the regulatory environment is complex and changing.
- Looking ahead, expect more focus on broad climate statements and increased use of AI in both marketing and enforcement. While federal enforcement may be slow, state and private actions are on the rise. It's much easier—and less costly—to avoid greenwashing accusations than to defend against them after the fact.
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