Consumers are increasingly conscious of how the products they buy impact the environment. Due to this heightened focus on environmental issues, consumer-facing companies frequently highlight the environmentally friendly attributes of their goods and services in advertising and on product labels. Unfortunately, leading companies are facing a wave of “greenwashing” class action lawsuits challenging these environmental claims. The Federal Trade Commission’s Green Guides provide some direction for companies seeking to avoid problematic environmental claims. However, the Green Guides are currently nonbinding and they do not preempt state law. The plaintiffs’ bar has seized upon this ambiguity and many preeminent companies have faced greenwashing class actions alleging claims under state consumer fraud statutes and related common law theories of liability. The FTC has also filed lawsuits against several companies. Consumer-facing companies should take immediate action to assess whether they are complying with the Green Guides and to review their exposure to greenwashing claims.
This article provides a high-level overview of the FTC’s Green Guides, analyzes the recent wave of greenwashing class actions and identifies practical strategies that companies can use to mitigate the risk of greenwashing litigation.