California to Require Substantiation of Carbon Neutral Claims

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Under a new California law enacted on October 7, 2023, companies selling carbon offsets or making carbon-neutral claims must now provide evidence to substantiate these measures and claims.

The law requires that businesses marketing carbon offsets disclose specific information on their websites.  This includes details on how emissions reductions were estimated, data and calculation methods to verify these estimates, whether there is third-party oversight, and the accountability measures in place if the project is not completed or proves to be less effective than advertised.  Companies that buy offsets will be required to provide an overview of each offset, including the business that sold the offset, on their websites.

In addition, the measure requires companies that claim to be carbon neutral or claim that they have made significant emissions reductions to support their claims with all available evidence.  Companies must also disclose whether there is third-party oversight of their claims or supporting data.

The law, which is reportedly the first of its kind in the US, authorizes fines of up to $500,000 per violation.  In a press release, the law’s author characterized the legislation as providing necessary transparency amid concerns about corporate greenwashing and the effectiveness of many carbon offsets.

Colgate Faces False Advertisement Suit Over Recyclable Claims

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A class action lawsuit has been filed in a California federal court against the Colgate-Palmolive Company (“Colgate”), alleging the company falsely advertises its Colgate and Tom’s of Maine branded toothpaste tubes as recyclable. The complaint alleges that Colgate’s claims are a violation of the Federal Trade Commission’s Green Guides, which prohibits a product from being called recyclable “unless there is an established recycling program, municipal or private, through which the product will be converted into, or used in, another product or package.”

The complaint also alleges California Business and Professions Code violations, which make it “unlawful for any person to make untruthful, deceptive, or misleading environmental marketing claims.”

A number of Colgate branded products, including but not limited to its popular products Colgate MaxFresh Toothpaste, Colgate Optic White Toothpaste, and Colgate Sensitive Toothpaste, feature the three-arrow recycling symbol atop the language “Recyclable Tube.” The company’s Tom’s of Maine product packaging advertises its toothpaste tubes as “The First of its Kind Recyclable Tube.” This language is used on over ten of its toothpaste products. None of the packaging of these products, Colgate or Tom’s of Maine, includes language that limits or qualifies the recyclability claims.

Additional recyclability claims are made on the brands’ websites. The Tom’s of Maine website features the following claims, which the Plaintiff alleges are misrepresentations:

  • “Recyclable Tube”
  • “Recycle Me!”
  • “Buy Smart – By reaching for this toothpaste tube you’re actively making a difference.”
  • “Recycle It – Our recyclable tube is not meant for a landfill – it gets turned into useful products.”
  • “As the leaders in the oral care industry, we wanted to create a recyclable alternative.”

While the toothpaste tubes are theoretically recyclable, a consultant at the Association of Plastic Recyclers stated, “[f]or many facilities in the US, the company’s new recyclable tubes are indistinguishable from those made from more common plastics, prompting recyclers to reject them. The old tubes could cause contamination if consumers put them in the recycling bin, so it’s easier for recycling facilities to reject toothpaste tubes across the board.”

In support of its argument, the complaint cites a recent Bloomberg article discussing the accuracy of Colgate’s claims with two solid waste management companies operating in California. (The two companies, Waste Management, Inc. and Republic Services, account for more than 40 percent of recycling services provided to consumers in California and about 25 percent of the recycling services on a national scale.) The companies highlighted that toothpaste tubes “are not in its list of acceptable items” and that there is serious concern about contamination from leftover toothpaste that remains in the tube.

According to the complaint, Colgate is fully aware that its products end up in landfills or are incinerated because recycling facilities do not accept its products. Colgate has even gone so far as to release a video on its website stating as much and explaining that the company is “continu[ing] the work beyond technically recyclable toward acceptance of tubes in recycling centers.” If recycling centers do not accept toothpaste tubes, their recyclability is irrelevant, and labeling and advertising their products as recyclable is false, misleading, and deceptive to consumers and members of the public seeking to make environmentally conscious purchasing decisions.

Plaintiffs seek an injunction on the sale of these products until such time the labeling and advertising language can be modified to remove recyclability language or alternatively to include a qualified claim that accurately states the availability of recycling programs. To be in compliance with the Green Guides’ environmental marketing requirements, a company is only permitted to make unqualified recyclable claims “[w]hen recycling facilities are available to a substantial majority of consumers or communities where the item is sold.” The Guides further clarify a substantial majority to mean at least 60 percent, and that “[w]hen recycling facilities are available to less than a substantial majority of consumers or communities where the item is sold, marketers should qualify all recyclable claims.”

Additionally, Plaintiffs are seeking compensatory and statutory damages.

PFAS Class Action Brought Against Sports Drink Company

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A consumer class action lawsuit has been filed against Biosteel Sports Nutrition, Inc. in the Eastern District of New York, alleging that the company’s BioSteel Blue Raspberry flavored sports drink contains per- and polyfluoroalkyl substances (“PFAS”). Defendant’s products are marketed as healthy sports drinks, using language such as “clean, quality ingredients,” “designed with sustainability in mind,” “no artificial flavors/colors,” and “good for you and the environment.” The product packaging additionally claims that the product is “highly regarded for its premium ingredients and zero sugar formula.”

Plaintiffs claim that based on this language, they believed the product to be a healthy sports drink, but the presence of PFAS directly contradicts Biosteel Sports Nutrition’s marketing claims. The suit alleges violations of the New York General Business Law § 349, et seq., which prohibits deceptive acts and practices in business, violations of New York General Business Law § 350, et seq. prohibiting false advertising, breach of express warranty, fraud, constructive fraud, and unjust enrichment.

On August 4, 2023, the company filed a motion to dismiss, claiming that Plaintiff’s testing of its product was insufficient to demonstrate that PFAS substances are present in its products. The motion claims the testing allegations are “devoid of any details regarding the methodology or sample used.” Additionally, according to Biosteel Sports Nutrition, this information was not within the complaint or the amended complaint.

Better Business Bureau Challenge Results in Clarifying Disclosure in Antimicrobial Toilet Seat Advertising

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Business Bureau (BBB) National Programs develops self-regulatory industry programs and resolves disputes on issues including advertising and privacy.  According to BBB National Programs, National Advertising Division (NAD) case decisions “represent the single largest body of advertising law in the country.”

A recent NAD case concerned antimicrobial claims made by Ginsey Industries, Inc. (“Ginsey”) on its Clorox-branded toilet seats.  Bemis Manufacturing Company challenged elements of these claims (though not the product’s antimicrobial efficacy).  During the challenge, Ginsey voluntarily committed to add a disclosure acknowledging that the product does not protect uses against bacteria and remove an “antimicrobial checkmark image inside the Clorox chevron logo.”

NAD additionally recommended that Ginsey modify its website to display the disclosure statement more conspicuously and work with retailers to do the same with their websites.  In response, the company stated that while it disagrees that “further modifications to its online product listings are necessary to protect consumers,” it would comply with NAD’s decision.

Walmart and Reynolds Sued Over Recyclable Plastic Bag Marketing Claim

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The State Attorney General of Minnesota has filed a lawsuit against Walmart Inc. and Reynolds Consumer Products Inc. (the owner of the trash bag trademark “Hefty”) for falsely marketing their plastic bags as recyclable. The Complaint alleges violations of Minnesota’s Prevention of Consumer Fraud Protection Act, Deceptive Trade Practices Act, False Statement in Advertising Act, and deceptive environmental marketing claim regulations.

These statutes utilize language explicitly prohibiting the use and dissemination of false, deceptive, or misleading statements. For example, Minnesota’s False Statement in Advertising Act strictly prohibits advertising that contains any material assertion, representation, or statement of fact that is untrue, deceptive, or misleading. Minnesota’s Deceptive Trade Practices Act further states:

“A person engages in a deceptive trade practice when …the person … represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have….” (emphasis added).

Defendants, through their product labeling, advertised their products as recyclable, which was false.  In addition, their actions disqualified the recyclable contents of the plastic bags from being recycled. In Minnesota, when recyclable materials or products are placed in non-recyclable bags on the curb, waste management will render the contents of the entire bag unrecyclable, leading both the bag and its contents to end up in landfills.

Additionally, the Complaint alleges deceptive environmental marketing claims by Walmart, citing the Federal Trade Commission’s (“FTCs”) Guides for the Use of Environmental Marketing Claims (also referred to as the “Green Guides”). The Green Guides state, “it is deceptive to misrepresent, directly or by implication, that a product or package is recyclable. A product or package should not be marketed as recyclable unless it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.” Minnesota recycling facilities cannot process the Hefty brand plastic trash bags labeled as recyclable); in fact, they can cause machine malfunctions and even serious damage.

The Complaint asked the court to order a stop on the sale of these products as marketed. Further, the Complaint requests that the court order the defendants to fund a program to educate Minnesota residents about recyclable materials.

This is not the only lawsuit related to Hefty’s recycling bags. Last year Connecticut’s Attorney General filed a lawsuit against the manufacturer, Reynolds, alleging the company has falsely and deceptively marketed the same Hefty recycling at issue in the Minnesota case. The Complaint states that Reynolds has marketed and sold these bags “despite full knowledge that their bags were incompatible with recycling facilities in Connecticut.” This case is still being litigated.

Delta Airlines Sued for Greenwashing Making Carbon Neutral Claims

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Delta Airlines is the latest company to face a greenwashing class action lawsuit. The complaint alleges that the company has misled its customers by making carbon neutral claims. According to the complaint, Delta advertises that it has been carbon-neutral since March 2020; however, because Delta is using carbon offsets to achieve this, the complaint alleges that the company is making representations that are “manifestly and provably false.”

While on paper the purchase of carbon offsets should account for Delta’s global emissions, the complaint claims that issues exist with the accuracy and reliability of offsets issued by a voluntary carbon offset market. The complaint alleges that the voluntary offset market is comprised of “a loose arrangement of companies and NGOs that facilitate investment in green projects such as renewable energy and prevention of deforestation,” but that these carbon neutral projects have foundational issues such as inaccurate and speculative accounting of true carbon offsets, and the fact that many of these projects were scheduled and would have occurred regardless of participating carbon offset programs. Therefore, Delta’s claims “hinge[] on an underlying set of representations” that Plaintiff asserts are “manifestly and provably false.”

The complaint purports that “both scientists and government regulators have specifically identified [Delta] as one of many companies who have grossly misstated the actual carbon reduction produced by their carbon offset portfolio.” If these allegations are true, this would mean that, in reality, Delta is not fully carbon neutral, as the offsets it purchases are not accurately measured.

The Plaintiff alleges the carbon neutral claims are false and misleading and that consumers would not have purchased tickets on Delta flights at all or would have paid substantially less for them had they been aware the claims were false. This assertion is consistent with the increasing trend of consumers paying market premiums for greener products and services, i.e., products and services that have a smaller carbon footprint than competitors or no carbon footprint.

This complaint was brought pursuant to California’s Consumers Legal Remedies Act and California’s False Advertising, Business and Professions Code, which prohibits improper representations regarding the sale and source, sponsorship, approval, or certification of the services sold.

Keurig Reaches $10M Settlement in False Advertising “Recyclable” Class Action

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Keurig has reached a $10 million settlement in a class action lawsuit. The case filed in 2018, Smith v. Keurig Green Mountain, Inc., alleged the company falsely advertised its K-Cups as recyclable. The lawsuit claimed violations of the California Consumer Legal Remedies Act, the fraudulent, unlawful, and unfair prongs of the California Unfair Competition Law, breach of express warranty, and unjust enrichment.

The Complaint states that Keurig marketed the K-Cups in an untruthful or deceptive manner, misleading the “reasonable consumer” to believe the product was recyclable. Members of the Class claim that they relied upon Keurig’s false representations and followed Keurig’s recycling instructions, and, had they known the K-Cups were not recyclable, they would not have purchased them or paid the amount they did. Keurig presented the K-Cups as recyclable, yet there were unmentioned caveats that prevented the product from being recycled even when customers placed the products into the recycling stream, including:

  • Many communities do not accept the plastic used in K-Cups (polypropylene), into recycling.
  • Keurig’s instructions prevent recyclability by advising users that they do not need to remove the K-Cup’s paper filter, although not doing so makes the product ineligible for recycling.
  • The K-Cup design hinders recyclability because the foil lids are difficult to remove, but without doing so, the product is ineligible for recycling.

Consumers who purchased Keurig’s K-Cups between June 8, 2016, and August 8, 2022, are eligible for an award of up to $36. If any money remains in the settlement fund after these payments, 75 percent of the remaining funds will be given to Ocean Conservancy, an environmental non-profit organization that formulates ocean policy and the national and state levels; the remaining 25 percent will go to Consumer Reports, a non-profit organization that conducts independent product testing and consumer advocacy.

Coca-Cola Wins Greenwashing Case

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The DC Superior Court has granted Coca-Cola Company’s motion to dismiss a 2021 lawsuit filed against it for false and deceptive marketing practices. Plaintiffs argued that the company had falsely represented itself as a sustainable and environmentally friendly company. The 2021 Complaint alleged that Coca-Cola’s representations violate the District of Columbia Consumer Protection Procedures Act (“DC CPPA”) because its marketing and advertising “tend to mislead and are deceptive about the true nature and quality of its products and business.”

The Complaint stated that the marketing is false and deceptive because the company “portrays itself as ‘sustainable’ and committed to reducing plastic pollution while polluting more than any other beverage company and actively working to prevent effective recycling measures in the U.S.” The Complaint cites numerous examples, including:

  • A statement on the Coca-Cola website stating, “Our planet matters. We act in ways to create a more sustainable and better shared future. To make a difference in people’s lives, communities and our planet by doing business the right way.”
  • A statement on the company website stating, “Make 100% of our packaging recyclable globally by 2025. [And] [u]se at least 50% recycled material in our packaging by 2030.”
  • A statement on the company’s Twitter account stating, “Scaling sustainability solutions and partnering with others is a focus of ours.” “Make 100% of our packaging recyclable globally by 2025. [And] [u]se at least 50% recycled material in our packaging by 2030.”

Coca-Cola filed a motion to dismiss in response. The DC Superior Court found that Coca-Cola’s statements were aspirational in nature and, therefore, not a violation of the DC CPPA. The Court stated that Earth Island Institute had not alleged that any statement made by Coca-Cola was provably false or plausibly misleading or that the company misled consumers as to its products’ characteristics. The Court acknowledged that Coca-Cola may have failed to meet advertised environmental goals in the past, but that does not impede its ability to set future environmental goals publicly.  In addition, the Court held that Coca-Cola’s statements were not tied to a “product or service” as required by DC CPPA. None of the statements were included on the bottle of any product or in the marketing of any product. Furthermore, the Court determined that Coca-Cola’s statements are not sufficient to create a misleading “general impression” or a “mosaic of representations” to a reasonable DC consumer as a matter of law under the DC CPPA.

The Court further stated that the Complaint could not prevail because it was based on how Coca-Cola has branded itself, and the DC CPPA does not have any controlling authority on how a brand cultivates its image. Coca-Cola made no specific environmental commitments, which further made it difficult for the Court to take any action. The Court stated that in other similar cases, companies made claims such as “100% recycled and recyclable bottles,” which is concrete and indicative of a promise to customers, as opposed to vague aspirational statements from Coca-Cola, such as the recyclable packaging by 2025.

PFAS Class Action Lawsuit Filed Against Colgate-Palmolive and Tom’s of Maine

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A class action lawsuit has been filed against the Colgate-Palmolive Company and Tom’s of Maine after Plaintiffs discovered that Tom’s Wicked Fresh! Mouthwash contains PFAS. (Tom’s of Maine is a majority-owned subsidiary of Colgate-Palmolive.) The complaint alleges that the companies are violating California’s False Advertising Law, California’s Unfair Competition Law, and the Illinois Consumer Fraud and Deceptive Business Practices Act. The complaint also alleges breach of express warranty, fraud, constructive fraud, and unjust enrichment.

Tom’s Wicked Fresh! Mouthwash is marketed as a “natural” mouthwash.  However, the complaint asserts that independent, third-party testing revealed multiple PFAS substances are present at material levels in the product. The complaint argues that the representation of the product as “natural” implies that it is free from unnatural and artificial ingredients. The complaint notes that the presence of PFAS and other synthetic ingredients is not disclosed on the product label. It also argues that consumers are willing to pay a premium for natural products. Plaintiffs assert that the “natural” claims are false statements, misleading representation, and material omissions.  In addition, they argue that customers would not be willing to pay a premium for the product or would not purchase it at all if they knew that the product contained PFAS and artificial ingredients. The complaint asks the court to award restitution on the basis of unjust enrichment.

Shell Company Greenwashing Complaint Filed with SEC

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On February 1, 2023, Global Witness, an environmental justice-focused non-profit organization and a Shell shareholder, filed a complaint with the SEC’s Climate and ESG Task Force requesting the Agency investigate claims Shell has made regarding its renewable energy sources. The complaint alleges that Shell has materially misstated its financial commitment to renewable resources of energy by inflating the content of its new report,  “Renewables and Energy Solutions” (“RES”), reporting segment regarding fossil fuel activities.

Global Witness believes statements in the RES exaggerate the extent to which Shell is reducing its reliance on fossil fuels and investing in renewable energy sources. The non-profit states that while Shell claims to spend 12% ($2.4 billion) of its annual expenditure ($19.7 billion) on “Renewables and Energy Solutions,” actually, the company spends only 1.5% ($288 million) of its annual expenditure on true renewables (e.g., solar and wind power generation).  The complaint asserts that much of the RES designation is actually being diverted to investments in natural gas, which is neither renewable nor an energy solution.

In its complaint, Global Witness requests an SEC investigation into the following:

  • Whether the activities included in the RES segment have been properly reported under relevant accounting standards.
  • Whether including natural gas in RES without reporting how much spending Shell directs to gas has caused Shell to omit material facts necessary to its investors’ clear understanding of Shell’s purported energy transition.
  • Whether Shell’s reported capex on RES includes so much natural gas spending that labeling the segment “Renewables and Energy Solutions” constitutes a materially misleading misstatement.
  • Whether Shell is adequately disclosing its renewable energy investments in accordance with Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which make it unlawful to issue materially misleading statements or omissions in connection with the purchase or sale of any security.

Global Witness further requests that if SEC finds that Shell is misstating or omitting material facts in its financial filings, the Commission issue appropriate enforcement action to ensure that Shell’s investors have access to the clear and comprehensive information they rely upon to inform their investment decisions.