Buying “green” or sustainable purchasing is a growing trend around the world. Young people want to know that their clothing, snacks, and other purchases are made in ways that cause the least damage to the earth, or at least less damage than traditional ways. Brands that label their products as better for the environment will reap the benefits of higher sales and a better reputation.
Imagine shopping for jeans for your teen. You have two pairs before you. The first is a regular pair of jeans for a regular price. The second promises “greener and better” for a slightly higher price. Which do you buy? What does your teen say about it? What do you expect?
Today (although who knows about tomorrow) they would be happy you bought the “green” jeans. They and you would expect that these jeans were more sustainable or caused less environmental harm than the pair of regular jeans.
What Is Greenwashing?
If you bought the “green” jeans, you would (rightly) expect some benefit to the environment. You might buy that brand again. You might tell a friend about it. You might even post about it on Instagram. That’s the kind of advertising that companies want more than any other.
If there was actually no benefit given, that’s greenwashing. According to Bloomberg Law, greenwashing is the “practice of misrepresenting the sustainability or eco-friendliness of a company’s products or services.”
Lots of terms can imply an environmental benefit. Here are some:
- Sustainable
- Eco-friendly
- Green
- Net zero carbon
- Reusable
- Recyclable
- Clean
Twenty years ago, greenwashing claims were in the Wild West. Only a few terms (like Organic and Fair Trade) were regulated. Other than that, you could write anything on your product (Clean! Green!) and it didn’t matter. Luckily, those days are over. The Federal Trade Commission (FTC) along with many states regulate environmental claims made at the sales point. The government enforces these claims through fraud and other laws.
H&M Prevails in Greenwashing Suit
Abraham Lizama purchased a sweater from H&M’s Conscious Choice collection. He believed he was buying an environmental and sustainable sweater. However, after he checked out his purchase, he discovered it did not meet his standard. He sued under the Missouri Merchandising Practices Act, charging unjust enrichment, negligent misrepresentation, and fraud.
First, all the class-action members outside of Missouri were dismissed. Lizama was planning to join with other H&M shoppers in California and around the country in a class-action suit. Alone, each person’s damages would have been small; to a class of everyone who had purchased Conscious Choice products, the company might owe a lot of money. The court did not have personal jurisdiction between class members and the defendant. Lizama was suing under Missouri law, which would not work for anyone outside of Missouri.
The court then dismissed the rest for failure to state a claim. Here the court assumed that all the facts that Lizama, the plaintiff, stated were true. They then held those facts up to the law to see if there was a chance that H&M, the defendant, would be found guilty. They found no chance and dismissed the lawsuit. Here’s what the decision says about greenwashing.
Consumer Ideas of Sustainability Versus Company Ideas
Lizama believed the sweater was “more sustainable and environmentally friendly.” He saw this as claiming to be sustainable and environmentally friendly. H&M saw, and the court agreed, that the actual claim was to be more sustainable and environmentally friendly than the chain’s other sweaters, which it was.
At their core, there are often differences between consumer expectations and company claims. A soda brand may claim “now with more organic sugar” when they increase the organic sugar in their products by 3%. A consumer may think that 3% is too little to make a difference. A manufacturer may look at the hundreds of thousands of drinks made and see a large total purchase of organic sugar and think otherwise.
In the Lizama case, the customer thought that using some recycled fibers in the sweater was less environmentally friendly and sustainable than using those same fibers to recycle as plastic bottles. As bottles, they can recycle almost indefinitely. As a sweater, they are likely thrown away when done. Therefore, the sweater wasn’t “more sustainable” than bottles.
H&M (and the court) said they were measuring against the wrong bar. A sweater with some recycled fiber was more sustainable than a sweater with no recycled fiber, their regular product. They were living up to all the promises they made.
Exact Claims Made
The Lizama case hinged on the exact wording of the claims made. The court relied greatly on the exact wording that the company used both on the product and in supplemental materials on its website. The plaintiff relied on the same materials, so the only dispute was in the meaning.
What Did the Labeling/Website Say?
The labeling on and around the product, and the text on the website, made certain claims about the environmental effects and sustainability of their Conscious Choice sweater. The ones in dispute in this case are:
- “The shortcut to more sustainable shopping.”
- “You can identify our most environmentally sustainable products by looking out for our green Conscious hangtags.”
- “[P]ieces created with a little extra consideration for the planet. Each Conscious Choice product contains at least 50% of more sustainable materials – like organic cotton or recycled polyester – but many contain a lot more than that. The only exception is recycled cotton, where we accept a level of at least 20%.”
- “With new technological solutions and innovations, we’re continually working to make our range even more sustainable.”
The court looked at what the company said – and did not say. H&M never claimed that the items in its collection were sustainable or environmentally friendly. In fact, in another place, H&M tells customers to re-wear and take care of existing garments. The court said this would lead a savvy shopper to believe that no new garments were sustainable.
The court said the claim of “more sustainable” could only mean more sustainable than the other garments that H&M sold. Even a low level of recycled polyester could count if the other choice contained no recycled polyester.
FTC Green Guides
The Federal Trade Commission has stepped into the role of guidance and enforcement. Green Guides are working plans for businesses to follow to keep their environmental and sustainability claims in line with their practices. The guides were written from 1992 to 2012. The FTC is now developing a new set of Green Guides. Businessthatwho match their actions to the plans in the guides should be safe from lawsuits. Here, the judge noted the defendant was following the appropriate Green Guide.
Future
In the future, we are likely to see more companies held liable for the environmental and sustainability claims they make about their products. The law has several places that are being used for these claims, that will likely be used more in the future. The First Amendment may set a limit on these claims, but it is not likely to be a strong one.
Securities Claims
The FTC continues to update their Green Guides and step up their enforcement of greenwashing claims. More environmental or sustainability claims are likely to be made as part of securities litigation. The Green Guides are more likely to be used as a defense. The FTC is currently working to cut back on unsubstantiated environmental claims in their latest version.
Consumer Fraud
Consumer protection is the other area of law that is likely to cover greenwashing cases. These claims will allow state courts and state laws to get involved and for states to set their own policies. In many states, we see a deregulatory trend. As this progresses, and greenwashing becomes deregulated in some states, the FTC Green Guides may become the regulatory floor.
First Amendment
The First Amendment is likely to provide some, but not much, of a free speech limit to greenwashing cases. Under commercial speech doctrines, businesses do have broad rights of free speech. However, customers are unable to research these claims themselves and rely on the business being truthful. Agencies and courts are likely to encourage regulation for truthful speech in greenwashing cases.
Greenwashing is telling lies about the environmental benefits of a product or service. In this case, the court found no greenwashing. H&M made true claims about the environmental values of its sweater. Perhaps this was because its actual claims were very narrow. Perhaps this was because what the business said and the consumer heard were two different things. Here, the plaintiff/consumer did not state a claim, and the court dismissed the case.
In the future, we will likely see more greenwashing claims, especially under the FTC’s Green Guides and consumer protection. There will be some First Amendment free speech limitations, perhaps limited to truthful speech.
SOURCES:
Barton, Roger E., Greenwashing Wave Hits Securities Litigation. Reuters. (September 22, 2022) https://www.reuters.com/legal/legalindustry/greenwashing-wave-hits-securities-litigation-2022-09-22/
Borochoff-Porte, Alison and John Cooper. Applying Consumer Protection Basics to Greenwashing “Recyclability” Cases. 47 Harvard Environmental Law Review 1, 1. (April 10, 2023) https://harvardelr.com/wp-content/uploads/sites/12/2023/04/HELR-Vol.-47-Recyclability.pdf
Collins, Shawn and Lisa M. Northrup. The Legal Risks of Greenwashing Are Real. Bloomberg Law. (July 25, 2022.) https://news.bloomberglaw.com/environment-and-energy/the-legal-risks-of-greenwashing-are-real
Federal Trade Commission. Green Guides. (2023) https://www.ftc.gov/news-events/topics/truth-advertising/green-guides
Kelley, Dreye, and Warren, LLP. H&M Wins Dismissal in Greenwashing Suit. JDSupra. (May 22, 2023) https://www.jdsupra.com/legalnews/h-m-wins-dismissal-in-greenwashing-suit-3660050/
Lizama v. H&M Hennes & Mauritz LP, 4:22 CV 1170 RWS, 2 (E.D. Mo. May 12, 2023)
https://casetext.com/case/lizama-v-hm-hennes-mauritz-lp-2
Shanor, Amanda and Sarah E. Light. Essay: Greenwashing and the First Amendment. 122 Columbia Law Review 7, 2033 (2023) https://columbialawreview.org/wp-content/uploads/2022/11/Shanor-Light-Greenwashing_and_the_First_Amendment.pdf
