Greenwashing: The Lag and Limitations of the Law
By Alayna Payne
Published Friday, May 26, 2023
“Greenwashing” occurs when a corporation makes false, misleading, or unsubstantiated claims about the environmental impact of its practices or products. [1] Such claims can take several subtle forms. For example, a common tactic corporate marketers use is touting environmentally favorable qualities of their product without disclosing the greater harms of the product. At its core, greenwashing is both a consumer protection and environmental issue. Yet, decades after the recognition of greenwashing as a widespread phenomenon, long-existing regulatory shortcomings persist.
While there is not one clear solution to corporate greenwashing, the law cannot be expected to bear the sole burden of fixing the problem. But, by understanding and detecting greenwashing tactics, consumers have an advantage in making informed decisions about where to spend their money.
A Brief History
From the late 1960s through the 2000s, public awareness and concern for environmental issues grew exponentially among American consumers. Surveys conducted during this period suggest that most consumers were becoming not only more concerned about environmental issues, but also more willing to change their purchasing behavior to minimize the environmental harm of their purchases. [2] In response to this swell of public concern and behavioral change, companies began introducing environmentally safe or beneficial products to the public market. [3] Consumers flocked to these products and the response proved to be immensely lucrative for businesses. [4]
Increased public demand for environmentally safe products led some businesses to fundamentally change their business models in favor of more environmentally sustainable practices. Many other businesses, however, exploited the conditions created by an evolving consumer base coupled with a lack of coherent regulatory oversight. Without established standards for product labels such as “biodegradable” or “ozone friendly,” early stages in the development of environmentally conscious consumers were fertile grounds for businesses to market products using largely unsubstantiated environmental claims. [5]
Greenwashing conceals, rather than mitigates, environmental harm, and lessens the economic incentive for other businesses to strive for greater environmental responsibility. [6] Though various federal bodies have attempted to respond to these concerns, legal guidance and regulation has generally lagged in the movement against corporate greenwashing.
Limitations of Federal and State Regulations
The Federal Trade Commission (“FTC”) is the primary federal agency for consumer protection regulation. To help marketers avoid an FTC-initiated lawsuit for making potentially misleading claims to consumers, the FTC released its Green Guides (“Guides”) in 1992. [7] In the three revised editions that have since been released, the FTC includes updated consumer interpretations of common environmental claims. [8] Though the Guides themselves are not legally binding, Section 5 of the FTC Act gives the Commission the authority to bring a claim against a corporation that engages in any “unfair or deceptive acts or practices in or affecting commerce,” including misleading or false advertising. [9] Other independent agencies, like the Environmental Protection Agency and Food & Drug Administration, have similar roles in setting standards and policies for environmental marketing claims, though those standards tend to be industry-tailored, rather than broad. [10] Despite the regulatory guidance of multiple federal agencies, however, the power of the federal government to create and enforce laws against corporate greenwashing is greatly limited.
One notable reason for the federal government’s limited effectiveness in this area is due to the nature of the federal government. Specifically, the power of agencies to set and enforce standards for corporate environmental practices is largely dependent upon the priorities and political agenda of the executive branch. [11] One recent example is the Trump administration’s repeal of congressional acts that delegated considerable environmental regulation authority to some federal agencies. [12] The executive branch also makes decisions about allocations of funding to agencies, which limits the extent to which those agencies can pursue certain policy goals. [13] State law, on the other hand, while more limited in its scope of authority than the federal government, is better equipped to address local cases of greenwashing. [14]
Each state has laws that regulate Unfair and Deceptive Acts and Practices (“UDAPs”), though not all states have enacted laws specifically for deceptive environmental marketing claims.[15] Furthermore, each state’s consumer protection law (unlike FTC law) permits private citizens to file claims against corporations for violating their state’s UDAP laws.[16] However, there is significant variability between state laws and their effectiveness in using consumer action to prevent unfair or deceptive marketing claims.
Factors affecting private citizens' abilities to pursue legal action against a business engaging in greenwashing vary widely between states. For instance, only half of state legislatures grant state agencies the authority to enact substantive rules against emerging UDAPs. [17] Giving state agencies this rulemaking authority allows them to adopt bright-line laws that prohibit new forms of unfair business practices. [18] Other common weaknesses of states' UDAP laws include narrowly limiting the remedies that can be invoked by the consumer and the Attorney General, limiting the law’s applicability to a narrow range of businesses, and prohibiting deceptive practices but not unfair ones. [19] These weaknesses make pursuing legal action against businesses burdensome and discouraging for consumers — along with the state itself.
Moving Forward
To empower consumers against deceptive marketing tactics, environmental activists and legal scholars have long studied the subtle greenwashing tactics used by corporate marketers. [20] Research in the field of psychology has shown that having a basic understanding of these manipulation tactics, and how they are used, can make people less likely to be misled. [21] While applied knowledge may seem like a weak defense against deceptive business practices, it is a tried-and-true form of resistance against even the shrewdest manipulation schemes. By applying one’s understanding of greenwashing tactics, consumers can begin to make more informed decisions about which businesses to give their money.
The legal system has some inherent qualities that limit its ability to respond effectively to certain issues. At the same time, many corporations present resistance by pushing the boundaries of compliance with the law. As a result, the legal system appears to be in a perpetual state of lagging behind effective reform on particular issues. It follows that, with the (sometimes) inevitable forces that limit the ability of the legal system to minimize certain harms, the responsibility falls on the consumer to proactively make informed decisions about where to exercise its purchasing power. Only then, can consumers be in a position to force corporations not only to be truthful about their business practices, but also to employ a business model that fundamentally values environmentally sustainable practices.
[1] Nick Feinstein, Learning from Past Mistakes: Future Regulation to Prevent Greenwashing, 40 B.C. Envtl. Aff. L. Rev. 229 (2013).
[2] Kashmanian, Ph.D., Richard M. “Assessing the Environmental Consumer Market.” Nepis.Epa.Gov. U.S. Environmental Protection Agency, April 1991. (Appendix pp. 1-4)
[3] Id. at 2.
[4] Id. at 23.
[5] Id. at 22-23; Miriam A. Cherry, The Law and Economics of Corporate Social Responsibility and Greenwashing, 14 U.C. Davis Bus. L.J. 281, 285 (2014).
[6] Cherry, supra note 5, at 301-02.
[7] Greenwashing: What Your Clients Should Avoid, AMERICAN BAR ASSOCIATION, https://perma.cc/G69Y-ECHJ (Apr. 5, 2019).
[8] Claire Fischer, Is Twitter the New FTC and EPA? Publicized Private Action as the Anti-Greenwashing Mechanism in Modern Society, 33 Geo. Envtl. L. Rev. 315, 320 (2021).
[9] 15 USCS §45 (Lexis, Current through Public Law 117-362, approved Jan. 5, 2023.)
[10] Fischer, supra note 8, at 320-22.
[11] Id. at 326-27.
[12] Id.
[13] Kirti Datla & Richard L. Revesz, Deconstructing Independent Agencies (and Executive Agencies), 98 Cornell L. Rev. 769, 805-06 (2013).
[14] Fischer, supra note 8, at 323.
[15] Id. at 323.
[16] Id.
[17] Consumer Protection in the States, NAT'L CONSUMER LAW CENTER (2018) at 2.
[18] Id. at 16.
[19] Id. at 15.
[20] How Can Consumers Find Out If a Corporation Is "Greenwashing" Environmentally Unsavory Practices?, SCIENTIFIC AMERICAN, https://www.scientificamerican.com/article/greenwashing/ (June 29, 2013).
[21] Daisy Yuhas, There’s a Psychological ‘Vaccine’ against Misinformation, SCIENTIFIC AMERICAN, https://www.scientificamerican.com/article/theres-a-psychological-vaccine-against-misinformation/ (Mar. 13, 2023)