13 March 2023
The investor-led boom in green products and services presents opportunities for growth. However, whether claims of green, climate-friendly, sustainability or support for biodiversity are borne out in practice is increasingly questioned. Regulators are turning their attention to investigating and regulating firms which may be ‘greenwashing’ – a term which generally refers to unsubstantiated, misleading or incomplete assertions, statements or claims regarding a company’s environmental performance, processes or products. Meanwhile, legislators are introducing laws to curb greenwashing and incorporate climate-focused requirements on corporates to promote environmental sustainability.
Absent clearly defined regulatory frameworks, there is a significant risk of complaints, litigation or enforcement action and investigations associated with promoting products and services as green. Greenwashing is being challenged before national civil courts and non-judicial fora, using a range of laws and standards including consumer protection laws, advertising standards, securities regulations, fraud, and misrepresentation statutes. The stakeholders represented in these actions range from NGOs seeking corporate accountability for claims of environmental good deeds, to corporate competitors who are challenging their peers on the basis that another company’s green claims could be seen as an act of unfair competition.
The outcome of litigation, investigations and complaints can include damages claims for monetary compensation as well as fines. Irrespective of the type of action brought, or the forum employed, greenwashing can generate significant reputational risk.
In this briefing we focus on greenwashing complaints, investigations and complaints in respect of two areas: advertising, and financial products and services. In both areas statements, disclosures and claims made that products and services are ‘green’ are challenged by stakeholders both in the courts and in non-judicial fora. We outline some tips for avoiding greenwashing. We then provide an overview of the types of complaints, litigation and investigations we are seeing in several jurisdictions around the world.