Key Regulatory and Litigation Trends Impacting Environmental Claims

Consumers are increasingly environmentally-conscious with their spending habits. A 2023 McKinsey & Company and NielsenIQ study found that products advertised as “environmentally friendly” accounted for 56% of retail sales market growth over the past five years. Companies are taking note: advertisements touting a product as “green” in some capacity abound.

The increase in “green” products has also come with increased scrutiny of “green” claims by regulatory bodies, the plaintiff’s bar, and state governments. The National Advertising Division (“NAD”) of the Better Business Bureau, while not a formal adjudicative body, serves as a good indication of the current state of advertising trends and risks. For example, a 2023 NAD case against JBS USA Food Company and JBS USA Food Company Holdings, the largest producer of beef products in the world, has significant parallels with the New York Attorney General’s current inquiry in JBS’ marketing claims, including many of the claims at issue in the NAD challenge. With the proliferation of legislation and regulations regarding “green” claims from federal agencies and state governments, comes an opportunity to identify claims that are potentially vulnerable to lawsuits. This article provides a brief overview of key regulatory, litigation and enforcement updates related to green marketing to aid companies in assessing the litigation and enforcement environment impacting environmental-benefit claims.

Regulatory & Legislative Trends

Last year initiated several legislative and regulatory proposals that warrant continued monitoring.

In early 2023, the Federal Trade Commission (“FTC”) requested comments regarding its Guides for the Use of Environmental Marketing Claims (or, as they are generally known, the “Green Guides”), as it begun the process to update the guides for the first time since 2012. Although the Green Guides are only “guidance” at the federal level, certain states, including California, Maine, and Minnesota, have incorporated the Green Guides into their own laws, thereby providing the Green Guides the force of law. The Environmental Protection Agency (“EPA”) also proposed several updates to its Safer Choice program, a voluntary program to help consumers, businesses, and purchasers find products that perform and contain ingredients that are safer for human health and the environment.

State enforcement and litigation trends related to green marketing are also evolving. California’s Senate Bill 343 may prohibit the chasing arrows symbol and other implications of recyclability on certain products, including (1) tin/steel aerosol containers; (2) single-use mixture of multiple plastic resins; (3) other (4) single-use rigids; and (5) plastic bags. Further, while currently only a few states, such as Alabama, Maryland, and Washington, have state regulations governing whether a product can be labeled as “biodegradable” or “compostable,” similar legislation is expected to expand to other states. For example, on January 1, 2024, restrictions on whether a product can be advertised as “compostable” or “biodegradable” went into effect in Colorado.

Litigation and Enforcement Trends

Consumer class action lawsuits have also proliferated over the years, frequently targeting green claims made via product packaging, advertising, and social media. In 2023, there was a particular focus on claims that products are “natural,” “clean,” “non-toxic,” “safe for use around pets/animals,” or recyclable, with an influx of litigation alleging that a product cannot be (1) “natural” or “non-toxic” if testing shows that the product contains per- and polyfluoralkyl substances (“PFAS”); (2) “clean” if the product contains “harmful” or “unwanted” ingredients, including alleged carcinogens, PFAS, and hormone disruptors; or (3) “recyclable” if less than 60% of municipal recycling facilities will actually accept the product or its packaging for processing.

The New York Attorney General also established itself as an enforcer of these environmental laws. In November 2023, New York filed a complaint against a consumer product company and its subsidiaries, alleging violations of New York’s consumer protection law and that the companies had created a public nuisance and failed to warn consumers of a substantial risk of harm because the companies’ single-use plastic packaging had allegedly resulted in pollution of the Buffalo River. Importantly, the complaint cited statements that the parent company had made about its recycling strategy, participation in a circular economy for plastic packaging, and progress toward reducing its contribution to plastic pollution as examples for how the company had misled consumers.

In late February 2024, the New York Attorney General sued JBS USA Food Company and JBS USA Food Company Holdings (“JBS”), the largest producer of beef products in the world. The complaint alleges that JBS has misled the public about “taking substantial and definitive actions to reduce their greenhouse gas emissions and mitigate the impacts of their industrial agricultural practices on the environment.” Specifically, the New York AG alleges that JBS’s claim “Net Zero by 2040” was false and misleading because the company “has had no viable plan to meet its commitment to be ‘Net Zero by 2040.’” Notably, the complaint cited a recent challenge to JBS’s net zero claim that was heard in front of the NAD, in which the NAD found the claim was unsubstantiated and misleading and recommended that JBS discontinue the claim. The decision was upheld upon appeal to the National Advertising Review Board. However, the New York AG alleges that JBS continued to make the same or similar claims, “while emitting massive amounts of greenhouse gases to the atmosphere and continuing supply chain practices with outsized climate impacts, further contributing to climate change harms.” This complaint demonstrates the importance of taking NAD challenges seriously, even if they are not traditional litigation.

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The potential risk that environmental marketing claims can pose should not discourage companies from touting the environmental benefits of their products. It should, however, serve as a reminder that all green claims should be carefully and thoughtfully crafted with consideration of the evolving regulatory and litigation framework, to best ensure that consumers are provided the information they desire without bringing undue risk to the company.