Increasingly companies are investing in environmental sustainability, reducing their greenhouse gas emissions, making their production facilities and distribution systems more energy efficient, and otherwise conserving vital resources like water. Sometimes companies purchase “credits” to offset things like greenhouse gas emissions. And often they work with private organizations that evaluate a company’s efforts and issue a certification based on criteria the organization has developed itself.

In light of growing global calls to take actions to combat climate change, few would argue that these are bad developments. But increasingly the plaintiffs’ bar is using statements about environmental sustainability efforts as a basis for consumer fraud class actions.

They say no good deed goes unpunished. And in this particular area, “they” appear to be right.

A recent example is Dorris v. Danone Waters of America, 2024 WL 112843 (S.D.N.Y. Jan. 10, 2024). In Dorris, the defendant made bottled water whose label included a certification from an independent third party (The Carbon Trust) that the product was “carbon neutral.” Consumers from California and Massachusetts filed a class action for alleged violations of state consumer protection statutes, breaches of express and implied warranties, unjust enrichment, and fraud, alleging that they understood the term “carbon neutral” to mean that “the Product’s manufacturing did not produce CO2 or otherwise cause pollution.”

Despite the fact that the label accurately reflected The Carbon Trust’s certification, the court refused to dismiss the consumer protection claims, reasoning:

“A reasonable consumer may plausibly understand ‘carbon neutral,’ a term whose meaning varies even within its own industry, to mean ‘zero carbon emissions.’ Or such consumer could understand it to carry Defendant’s offsetting definition. Or even some third meaning. It is most appropriate for the jury, not this Court, to determine.

* * *

“’Carbon neutral’ is an ambiguous term, and evidence shows that consumers are confused by it. . . . Accordingly, the Court concludes that at this stage it cannot determine as a matter of law that a reasonable consumer could not be confused or mislead by the ‘carbon neutral’ representation.”

2024 WL 112843 at *6-*7.

Decisions like Dorris illustrate just how difficult it is for a company to speak about its environmental sustainability efforts without creating litigation risk for itself. One cannot even be assured that including a third party’s certification or symbol will be understood by a court to include the definitions and criteria the certifier spells out on its website.

Obviously, it would be impossible to include a dissertation on carbon emissions and offsets on a bottle of water—as it would on most products. Many would argue that it is not unreasonable to expect consumers with questions about a third-party certification to go to the website listed on a label to investigate further. (This is particularly true where the representation is not about the product itself—its flavor, or contents, or ingredients.)

Companies should carefully weigh the litigation risks of choosing to include representations about environmental sustainability on their products. Where they elect to include such statements, they should consider the following:

  • Accuracy and precision are key to risk avoidance. If “carbon neutrality” has been achieved by buying offsets—rather than wholly eliminating CO2 emissions—consider saying so, even if that is explained in the third-party certifier’s criteria. And if more explanation is necessary, direct the consumer to a website that provides it.
  • As much as possible, avoid absolutisms. To describe something as “all” this or “100% free” of that is a tantalizing invitation to a lawyer to find a trace amount that can prove you wrong. Is an absolutist statement really that much more compelling than a strong comparative statement that talks about a “more than x% reduction” that is evidence-based and allows for some margin of error?
  • Avoid terms that are vague or ambiguous. Law 360 recently reported on a complaint filed against a national retailer whose products state they are “100% ethically sourced.” What does that mean, exactly? A national consumer protection group filed a class action, claiming that instances of labor, human rights, and sexual abuses that have occurred in the supply chain make that statement false, and that consumers have relied on the “ethically sourced” statement to pay a higher price for the end product.

Remember that the name of the game for creative plaintiffs’ counsel is being able to survive a motion to dismiss so as to require discovery, experts, motion practice, and possibly trial. That means that all environmental sustainability claims must be drafted with the same care as representations about the product itself—so that they may form the basis of a strong motion to dismiss. Such statements should be substantiated by evidence, precise, accurate, and readily understandable. The Federal Trade Commission has Green Guides that provide important guidance to be considered as well. https://www.ftc.gov/business-guidance/advertising-marketing/environmental-marketing

One thing is for sure: 2024 will continue to see an increase in litigation over environmental sustainability claims. Are you ready?