Greenwashing Mitigation Team

Holland & Knight's recently formed multidisciplinary Greenwashing Mitigation Team assists clients with mitigating liability across the life cycle of potential risks related to marketing products and services that are increasingly claimed to be more sustainable, recyclable or renewable, able to reduce greenhouse gases or waste in landfills, or are otherwise environmentally friendly.

Our Greenwashing Mitigation Team evaluates and develops "green" marketing materials that comply with the Federal Trade Commission's (FTC) Guides for the Use of Environmental Marketing Claims (Green Guides) and state marketing laws; defends against litigation and enforcement challenges advanced by the FTC, state attorney general investigations, the U.S. Securities and Exchange Commission (SEC), Commodities and Futures Trading Commission (CFTC) and citizen suits; advances comments or speaks with critical government contacts; and advises on the intersection of marketing and developing environmental, social and governance (ESG)-related disclosure, financing and supply chain management efforts.

Background and Overview

Many consumers are interested in buying products and investing in companies that are taking steps toward being more sustainable, reducing greenhouse gases and reducing waste in landfills. As our clients transition their products and services to be more green to meet consumer demand, they face risks related to the words and images that they use in their marketing and advertising materials. In particular, according to the FTC, "sometimes what companies think their green claims mean and what consumers really understand are two different things." Accordingly, the FTC in 1992 issued its Green Guides, which were revised in 1996, 1998 and 2002, to provide general principles to apply to environmental marketing claims, how consumers are likely to interpret the Green Guides and how companies and marketers can qualify their claims to avoid claims of deceptive marketing regarding:

• carbon offsets
• net zero, carbon-neutral and low-carbon claims
• energy-efficient claims
• recyclable claims
• having recycled content
• compostable claims
• degradable claims
• ozone-safe claims
• organic claims

When businesses present their products or services using one of these terms without concrete evidence, data or verification, even if the statement is true or correct to some degree, the business may be accused of being engaged in what is characterized as "greenwashing." Under FTC guidance, it is not enough for a claim to be true under one reasonable interpretation. To avoid a charge of greenwashing, claims must withstand the interpretation of any reasonable consumer in the group at which the advertisement is targeted. Any claim that discloses the basis of the claim, however, will not be considered greenwashing.

For example, if a product is advertised to the general public as "recyclable" on the basis that it can be recycled by advanced techniques that are not widely available, but that basis is not disclosed in the advertisement, the claim may be considered greenwashing. Many members of the general public believe that "recyclable" means that a product can be recycled by traditional methods that are widely available. Issues may also arise regarding "recyclable" claims given that recycling infrastructure across the country varies significantly. Though the product may be recyclable, it does not guarantee it will be able to be recycled in all areas. Similarly, if a business claims that it uses 100 percent renewable energy on the basis of renewable energy certificates (RECs) sourced from various types of energy, that claim may be considered greenwashing if it is not qualified by specifying the use of RECs and the underlying energy sources. This is because many members of the general public dispute the validity of RECs and disagree about which sources of energy should count as "renewable."

Holland & Knight's multidisciplinary Greenwashing Mitigation Team can help marketers mitigate liability across the life cycle of potential risks. Please see below for a more detailed look at our capabilities.

Policy and Regulatory

Holland & Knight's Public Policy & Regulation, Environmental, West Coast Land Use and Environment and Renewable Energy teams have been active in advising clients regarding the requirements of the Green Guides for many years. The teams are analyzing the more than 7,000 comments that have been filed on the proposed changes to the Guides and are available to discuss trends that are being observed in the over 1,000 publicly available comments to advise businesses on steps they can take to ensure compliance and any adjustments in marketing materials that may be needed.

Compliance and Strategy

Holland & Knight's Environmental, Renewable Energy and Consumer Protection Defense and Compliance teams have advised companies across sectors on how to maximize the value of their marketing, social media and sustainability efforts while remaining compliant with FTC and state requirements for environmental marketing claims. Holland & Knight practitioners have extensive knowledge of the technical issues underlying sustainability claims and have helped craft marketing claims that accurately represent a product or business' environmental benefit. Our attorneys also understand the market for environmentally friendly products and have helped businesses select the best outlets for their products – for example, generating a tradeable environmental attribute instrument or pursuing environmental marketing.

FTC, DOJ and State Attorneys General Litigation and Investigations

Holland & Knight's Consumer Protection Defense and Compliance Team has extensive experience and success in defending clients in every industry sector in FTC and state attorney general investigations, as well as citizen suits regarding claims of deceptive advertising and marketing practices. To the extent that any claims of greenwashing are advanced, Holland & Knight is well suited to represent you. Our litigation team works closely with our compliance team to evaluate marketing materials prior to being presented to consumers to assist with mitigating risks.

CFTC Investigations

Holland & Knight's Derivatives and Energy teams advise clients with respect to CFTC compliance and defense, including the CFTC's recent focus on carbon offset market regulation. Our teams are well suited to help buyers and sellers of carbon offsets or any other commodity comply with commodities laws.

ESG Enforcement and Management

Holland & Knight's Environmental, Social and Governance (ESG) Practice helps clients develop, organize and execute strategies that increase ESG scores, protect directors, satisfy activist and institutional shareholders, mitigate regulatory compliance risk, increase market capitalization and answer the ever-increasing demands for clients to respond to calls for environmental and social change. Our ESG team frequently advises on enforcement inquiries from state attorneys general and the FTC, defends against allegations of greenwashing and misleading marketing, and helps develop ESG-related disclosure, financing and supply chain management efforts.

Securities Enforcement Defense

Holland & Knight's Securities Enforcement Defense Team has substantial experience representing public and privately held companies, broker-dealers, investment banks, accounting firms and other market participants – along with their officers, directors and managers – in the full range of civil and criminal enforcement investigations before the SEC. In April 2022, the SEC proposed its first significant environmental disclosure rule, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires registrants to include certain climate-related information in their registration statements, periodic reports and audited financial statements. In that same month, the SEC brought its first enforcement action regarding misleading ESG claims and disclosures, followed quickly by a second enforcement action. SEC enforcement regarding greenwashing ESG claims is expected to pick up. Our Securities Enforcement Defense Team frequently advises as to how to mitigate greenwashing claims to avoid SEC scrutiny and is available to harness its experience in any defense actions that may be advanced.

Energy Tax Credits

Holland & Knight's Renewable and Alternative Energy Tax Team assists clients in developing strategies that maximize the value of tax credits available for clean energy projects, while satisfying tax credit provisions regarding paying prevailing wages, utilizing apprenticeship labor, and investing in low-income and other similar areas. Our team also works with clients to ensure that their investments in clean energy projects to utilize tax credit aligns with their public statements to avoid greenwashing claims.

Additional Team Members

Tiffani G. Lee | Dianne R. Phillips | Chris DeLacey | Susan G. Lafferty | Ram Sunkara | Jessica B. Magee | Joshua L. Belcher | Da'Morus A. Cohen | Brian J. Goodrich | Benjamin A. Genn | Alexandra E. Ward | Amy O'Brien | Halley I. Townsend | Joe O'Brien | Amish Shah | Mary Kate Nicholson | Marne Sussman | Emily Lieban