By boasting about "climate-neutral" products or vague plans to become "net-zero", companies are exposing themselves to legal risks as activists sue them for misleading consumers with dubious climate promises. Judges in several countries will soon hear a series of landmark cases concerning climate "greenwashing", based on consumer protection legislation. While activists hope that the courts will take a firm stand against companies, others warn that these cases may backfire and even delay corporate climate action. The immediate impact of the rulings may not be equivalent to the famous climate cases against governments based on human rights, but as experts point out, they will shape the future of corporate climate communications and the role of consumers in the fight against climate change.
Major fossil fuel producers Shell, BP, Exxon and TotalEnergies, as well as airline KLM and Nivea manufacturer Beiersdorf are among the prominent companies that will soon have to defend in court the legality of their allegedly "climate-neutral" products and net-zero targets, as climate activists have sued them for misleading consumers.
As consumer protection law dictates that companies are forbidden from misleading the public, climate lawyers are now applying this law to company claims regarding their efforts to combat climate change. Campaigners stress that the dubious climate promises of some companies are not victimless crimes, but have a real impact on the fight against climate change.
“Communication influences people's behaviour,” notes Jonathan White (Jonathan White), a lawyer specialising in climate accountability at the NGO “ClientEarth”, which focuses on using legislation to drive environmental action. “Therefore, we believe these cases are very much about climate action and unregulated green advertising practices, which are a systemic obstacle to achieving climate goals.”
The “Wild West” of climate claims
Due to a lack of stricter regulatory oversight regarding corporate climate commitments, a confusing array of corporate claims has emerged. Consequently, activists are now turning to the courts to enforce legal accountability for companies.
“Corporate claims have been like the Wild West,” says Rasmus Valanko of the non-profit We Mean Business Coalition, which works with companies to take action on climate. “There are many different terms – 'zero CO2', 'net zero', 'neutrality', 'climate positive' – and as a consumer, you have no real understanding of what they all mean.” Products marketed as "climate-neutral" also mislead consumers, as most people do not understand what the claim means, according to surveys. However, R. Valanko believes that only a small proportion of companies deliberately mislead consumers. Companies feel immense pressure to tell a "positive, engaging story about their efforts" even if that story does not match reality, he told Clean Energy Wire.
Even companies that want to attract customers with robust sustainability programmes struggle to communicate them responsibly, says John Newton of Carbon Trust, a consultancy organisation on “net-zero” issues. “The problem is that these are often multi-year projects, which limits communication opportunities in the first few years until sustainability progress is achieved. Not all companies are prepared to wait that long. Some may use shorter timeframes or exaggerate their achievements to maximise communication opportunities in a shorter period,” Newton pointed out to Clean Energy Wire.
In the short term, claims about climate change – whether substantiated or not – can be economically advantageous, as many consumers want to be “green”, even if it costs a little more. In a recent survey of more than 10,000 people in 17 countries, a third of respondents indicated they were willing to pay more for sustainable products. In addition to consumer demand, other stakeholders such as investors and employees also drive pressure on companies to make exaggerated claims about their climate action. A recent analysis by NewClimate Institute and Carbon Market Watch found that the “net zero” and “carbon neutral” pledges of 25 of the world's largest companies mean, on average, only a 40% reduction in emissions, rather than 100% as implied by the term “net zero”.
High chance of success, indirect impact
Campaigners are optimistic that the upcoming consumer protection cases against climate greenwashing, with the first rulings expected in 2023 or 2024, have a high chance of success. However, they argue that the direct impact will be much smaller than in landmark climate cases based on duty of care and human rights, such as the Urgenda case, which forced the Dutch government to cut emissions more sharply, or the Friends of the Earth Netherlands (Milieudefensie) v. Royal Dutch Shell case, which extended this to a private company.