David McIlroy and Iain Shipley’s recent article on ESG and Greenwashing. This article highlights the problem of greenwashing and why the common law, at present, will struggle to prevent it.

Introduction

1. Greenwashing occurs where a “business makes claims about its products, services, processes, brands or its operations as a whole, or omits or hides information, to give the impression they are less harmful or more beneficial to the environment than they really are.”[1]
2. Greenwashing may occur via express statements, but it might also be implied through the use of symbols, emblems, logos, graphics, colours, and product brand names.[2]  And it may be in relation to:
   1. A specific product or service, eg labelling a product as ‘eco-friendly’ or ‘recycled’ or ‘natural’ when these descriptions are untrue, exaggerated, or misleading (even if only because they are ambiguous and have no regulated or commonly accepted definition); or
   1. The values and business practices of a company more generally, eg where a company that derives the majority of its revenue from oil and gas rebrands itself and gives the impression that renewable energy accounts for a substantial portion of its operations.
3. Greenwashing forms part of a broader public emphasis on environmental, social, and governance (“ESG”) issues and considerations.

1. In the legal market, ‘greenwashing’ is not a term of art.  It is also very much a developing area of law, and (certainly in the UK) there do not appear to be any reported cases in which a claim has been expressly advanced using the term.  Nonetheless, there are a number of different sorts of legal actions that might be available where a company engages in greenwashing.  This article highlights some of the sorts of claims that could be considered when advising clients, as well as some of the key issues to be addressed for each type.
2. It is convenient to begin by considering the issue from the perspective of the various sorts of people who might be affected by an act of greenwashing.  Thereafter, some of the main regulators are discussed, as it may be beneficial to consider involving a regulator at least initially rather than proceeding directly to litigation.

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