Since the Paris Agreement was signed in 2015, 1,006 climate cases have been filed, out of which 191 were commenced between 1 May 2020 to 31 May 2021. Greenwashing claims are the most recent and nascent of these cases with a gradually expanding class of potential defendants.
Claimants in greenwashing lawsuits usually challenge misalignment between corporate or governmental statements and action. Claims can deploy the law of fraud, misrepresentation and consumer protections. To date, the typical defendants have been mostly fossil fuel producers and companies in carbon-intensive industries, such as:
- Australian oil and gas company Santos in the case of Australasian Centre for Corporate Responsibility (ACCR) v. Santos. ACCR alleges that Santos’ claim that natural gas is a source of “clean energy” misrepresents the true impacts of the fuel, since it ignores methane, the most potent greenhouse gas in terms of its global warming potential, which is emitted in the production and transport of natural gas. ACCR has also challenged Santos’ plan to achieve Net Zero emissions by 2040, while relying on carbon capture and storage technology that either does not exist or has not been disclosed.
- US-based oil giants Exxon Mobil and Koch Industries Inc., together with the American Petroleum Institute in State of Minnesota v. American Petroleum Institute. The State of Minnesota alleges that the defendants engaged in a ‘campaign of deception’ by downplaying the contributions of their products to climate change and misleading the public as a result.
- UK-based oil major BP in a complaint filed under the OECD Guidelines. In their complaint, ClientEarth, a British environmental NGO, alleged that BP’s advertising campaign launched in January 2019 under the titles "Keep Advancing" and "Possibilities Everywhere" gave a false impression of the scale on which BP was in fact engaged in the renewable and low-carbon energy development, having spent only 2.3% of its capital investments on low-carbon energy sources between 2010 and 2018. This case was discontinued after BP withdrew its advertising campaign.
The momentum brought about by the international climate change conference COP26 held in Glasgow, UK in November 2021, resulted in a plethora of new corporate Net Zero commitments by a variety of corporate actors, including financial institutions and insurers. A disconnect between those commitments and action could be the source of future claims of greenwashing.
At the same time environmental activists are turning their attention to less obvious defendants who they label as “facilitators” of carbon-intensive business, a term which could include PR agencies, financiers, advisors, and insurers.
Such expansion of the category of defendant may increase the prevalence of greenwashing cases in the next few years, putting corporates on notice to employ careful scrutiny of their public statements and decarbonisation pledges and to follow commitments with action.
The Central Bank has warned investors that the growth of the sustainable finance market has increased the risk that some financial products are not as sustainable as claimed. The regulator claims such "greenwashing" can see investor demand addressed by products that are marketed as sustainable but in reality are not.