Green is Not the New Black: The Rise in Challenges Against “Greenwashing” Claims
In recent years, green has been touted as the new black. Companies and brands across all sectors are increasingly promoting sustainability to high priority status.[1]
A longstanding critique of the fashion industry relates to the negative environmental impact caused by production and the encouragement of wasteful consumer habits.[2] In response, brands are releasing products and services claiming to be more sustainable in parallel with their regular, non- or less sustainable, offerings. Consumers have expressed a willingness to pay more for products manifesting these environmentally conscious values. For example, research from McKinsey & Co. has shown that the group of consumers concerned about sustainability-related issues are “willing to pay 15 percent more for sustainable options.”[3] Another example is that “the clean beauty market is estimated to reach $22 billion (on a global basis) by 2024, making it one of the fastest growing categories within the cosmetics industry.”[4]
As such, today’s advertising is replete with claims of “eco-friendly,” “sustainable,” “natural,” “conscious,” “reusable,” “organic,” and the like.[5]
What is Greenwashing?
Greenwashing refers to unjustified and misleading claims from brands that their policies or products are better for the environment than they are in actuality.[6] This may be achieved through deception, advertising, or unsupported claims in marketing.[7]
“Why so serious?”
Brands often do not make it easy for consumers seeking eco-conscious products or services to investigate and find support for its green claims. Consumers are thus left to rely on a brand or retailer’s own website as well as any product identifiers, such as tags or brochures, or other certifications during individual evaluations of sustainability.[8] Among other issues, “[n]o shared understanding exists among consumers (or brands) about what exactly ‘sustainability’ means, which features matter most, …where to find about a particular brand’s sustainability commitment[,…or] to find independent sources that help distinguish between authentic sustainability claims and greenwashing” plague conscious consumers[9] Because there is no uniform standard for sustainability in fashion, consumers may become frustrated in their quests for a greener consumer lifestyle.
Most, if not all, of the complaints reveal that consumers are upset that a brand’s allegedly misleading claims result in costly purchases at the consumer’s expense. Consumers particularly take issue with the price premium at which products claiming to be more sustainable and/or clean come.[10] In other words, but for a brand’s purported greenwashing claims, the consumer would have paid, or would have been willing to pay, less for the same product. Consequently, plaintiffs in such suits typically claim to have suffered economic damages.[11]
“Conscious” at H&M
A class action was brought against H&M in July 2022 by plaintiff Chelsea Commodore, targeting the fast fashion brand’s “Conscious Collection.” The complaint alleges that “H&M’s labeling, marketing, and advertising that is designed to mislead consumers about its products’ environmental attributes, through the use of false and misleading ‘environmental scorecards’ for its products called ‘Sustainability Profiles.’”[12] H&M is accused of greenwashing its products in an “extensive marketing scheme” by using “in-store signage, tags, and online information, among other sources of information” and “publishing environmental score cards, called ‘Higg Sustainability Profiles,’ or the “Sustainability Profiles,’ which are prominently incorporated into H&M’s website.”[13] This is problematic because such profiles allegedly “contain falsified information” using “inaccurate and misleading data”, which H&M uses to support its misrepresentations that its products are “better for the environment than comparable garments, when they are not.”[14] The complaint specifically cites an independent investigation from Quartz published on June 28, 2022, which revealed, for example, that “a dress used 20% less water to manufacture, when its actual water score indicated that it used 20% more water to manufacture.”[15] Plaintiff note that information was misrepresented because “‘more’ was misrepresented as ‘less.’”[16]
The complaint was later amended, in which Commodore maintains the false advertising claims previously established while adding additional allegations as well as a new named plaintiff, Rakeedha Scarlett (collectively to be referred to as the “Plaintiffs”).[17] Plaintiffs allege that false advertising was “not isolated to [the aforementioned] water usage alone” and that H&M similarly misrepresents data for its sole benefit for each category of its Sustainability Profile.[18]
In addition, Plaintiffs challenges H&M’s Garment Collecting program (i.e., its product recyclability program) by asserting that the program’s stated aims are misleading.[19] According to an expert, “less than one per cent of material used to produce clothing is recycled to make new clothing, representing enormous losses and leading to obscene amounts of waste.”[20]
Plaintiffs allege that the fashion giant has engaged in deceptive acts or practices under New York General Business Law sections 349 and 350, which prohibit deceptive acts or practices in the conduct of business, and false advertising, respectively.[21] The complaint also alleges unjust enrichment on the part of H&M.[22] In particular, Plaintiffs call out the significant price premium at which the “Conscious Collection” products are charged versus other similar products without the alleged greenwashing claims, and so Plaintiffs would have been able to purchase comparable items for less at another brand or even at H&M.[23]
At present, the court could treat the plaintiff’s claims in a myriad of different ways and the litigation is still in its early stages, but the fashion industry will certainly be taking note.
FTC and the Green Guides
While there is no uniform standard for use of sustainability claims in marketing, this does not mean that it is a free-for-all. Enter the FTC.
The Federal Trade Commission (“FTC”) regulates advertising under the FTC Act and often acts against false advertising.[24] The FTC has provided interpretive guidance to relevant industries by setting forth “1) general principles that apply to all environmental marketing claims; 2) how consumers are likely to interpret particular claims and how marketers can substantiate these claims; and 3) how marketers can qualify their claims to avoid deceiving consumers” in the form of its Green Guides since 1992, and have since been revised in 1996, 1998, and 2012.[25]
In December 2022, the FTC announced it was seeking public comment for potential updates to the guides after a 4-0 Commission vote for approving the publication of a notice in the Federal Register.[26] The public comment period has now been extended until April 24, 2023 due to popular request.[27]
The Green Guides themselves are not independently enforceable: instead, the Commission must prove that the challenged claim is an unfair or deceptive practice under Section 5 of the FTC Act in order to win.[28] However, the Green Guides are influential, and they have been incorporated by reference by some states into state law, such as Maine, Rhode Island, and Michigan.[29] Thus, any updates to the Green Guides could significantly impact the advertising and marketing strategies of businesses moving forward.
As Commodore moves forward in litigation, its timeline could potentially intersect with the upcoming Green Guides updates. The fashion industry will certainly be keen to watch how one influence, if at all, the other.
There’s more where that came from: other similar lawsuits
H&M is only one of several fashion brands challenged for sustainability or clean claims in their business practices and products. Two recent examples of other similar class actions lawsuits in the fashion industry include:
- A June 2021 class action complaint against Allbirds, alleging that the company misled consumers with claims directed towards its animal welfare and low carbon footprint claims.[30] In particular, the plaintiff took issue with Allbirds’ definition of “carbon footprint,” alleging that the company understated the environmental impact of using wool in its running sneakers by using narrow calculations resulting in figures allowing Allbirds to make “more significant environmental claims.”[31]
The complaint also detailed Allbirds numerous animal welfare claims centered around treatment of the sheep supplying wool used in the company’s products.[32] Allbirds’ marketing campaign claims that their “Sheep Live The Good Life” and that they work with leading organizations “to ensure [the] wool is held to high standards of farming, land management, and animal welfare.”[33] However, the plaintiff alleges that Allbirds’ claimed practices are “neither sustainable or humane.”[34]
The court rejected the plaintiff’s arguments, instead granting Allbirds’ motion and dismissed the case with prejudice.[35] - A May 2022 class action complaint against Thinx, a brand primarily known for period underwear, alleging that the company advertised products as sustainable when they contain per- and polyfluoroalkyl substances (PFAS), chemicals harmful to human health and the environment.[36] A settlement for $5 million was approved in June 2022, a part of which Thinx has pledged to review its manufacturing and products and to ensure no PFAS are “intentionally” added to its products.[37]
The rise of challenges against such “green” claims is unlikely to go away as companies continue to view sustainability as a core priority for their businesses. But perhaps this is not a terrible thing for the affected industries. As more such cases are litigated, the eventual hope is that increased clarity of guidance from agencies and the court system may result to help brands assert their “green” claims in less risky ways.
Footnotes
