Increased Greenwashing Litigation and ESG Claims Backlash: Regulatory Update, Recent Class Actions, Mitigating Risk

Description

Greenwashing litigation is significantly on the rise where plaintiffs are trying to hold companies accountable for their sustainability claims in advertising as well as in non-traditional marketing materials like corporate ESG reports, often through class actions, where these ESG claims are purported to be overstated, misleading, or false and unsubstantiated. For example, a recent class action filed against Delta Airlines is among the first major consumer cases targeting an airline's claims of carbon neutrality and is premised on the alleged overstated validity of carbon offset credits.

Federal and state regulators are also focused on greenwashing. In an effort to provide more guidance on how to engage in effective and compliant green marketing, the FTC is in the process of updating its Green Guides which have not been updated since 2012. The Green Guides provide guidance to companies making environmental marketing claims, including how consumers may interpret their claims and how those claims may be substantiated. While updating the Guides, the FTC continues enforcement actions against companies for greenwashing. Furthermore, many states premise their own fair advertising statutes on the Green Guides, making the revisions highly relevant in cases brought at the state level by litigants.

The SEC has also proposed new rules that will require publicly traded companies to include certain climate-related disclosures in their public filings and require investment advisers and funds associated with ESG to disclose how they pursue ESG strategies in their investments. These changes, along with elevated demand for sustainability performance from both consumers and shareholders, will lead to more reporting on sustainability matters but also heightened risk of overstatement of decarbonization and other corporate and investor ESG performance.

Listen as our expert panel discusses the status of federal and state greenwashing regulation and enforcement. The panel will address noteworthy greenwashing litigation and considerations for defending these claims. The panel will also provide best practices for minimizing risk while making ESG claims in advertising as well as corporate reporting.