Business firms and other private actors are confronting the reality that urgent action to address climate change is required, not only through public regulation but also through private environmental governance.
To date, more than 1,500 firms globally have announced their intention to reduce their greenhouse gas emissions to net zero by 2050 in accordance with the goals of the Paris Climate Agreement.
Many firms have publicly stated their intentions to reach “net zero” or “carbon neutral” goals with respect to their own operations and purchased electricity.
Others have gone farther, promising to reach net zero with respect to the emissions arising out of their lending portfolios, upstream supply chains, or downstream consumption of their products.
These climate pledges have come from a wide variety of firms, including the six largest banks in the United States;
managers of more than $9 trillion in assets;
technology firms like Google
consumer-facing firms like McDonald’s;
oil and gas majors like BP
the largest producer of aluminum in the United States, Alcoa;
and even a NASCAR racing team.
Firms have formed or joined coalitions, like the Glasgow Financial Alliance for Net Zero, pursuant to which “over $130 trillion of private capital is committed to transforming the economy for net zero” comprising commitments by more than 450 firms in forty-five countries.
One of the boldest claims in this regard is Occidental Petroleum’s recent statement that it has delivered the “world’s first shipment of ‘carbon-neutral’ oil.”
There has been an explosion in the growth of investment funds marketed as “green” or otherwise socially responsible.
These public statements are not limited to climate pledges but include promises to improve environmental performance along other dimensions, such as with respect to water use; reducing waste, the use of toxic chemicals, and deforestation; and preserving biodiversity.
This exponential growth in environmental marketing claims has raised concerns about their truthfulness. Critics argue (or at least question whether) such claims constitute greenwashing.
Greenwashing generally refers to a set of deceptive marketing practices in which an entity publicly misrepresents or exaggerates the positive environmental impact or attributes of a product or service to create a favorable impression that is not supported by evidence (product-level claims), or in which an entity misrepresents the entity’s overall impact on the environment (firm-level claims).
Importantly, the term “greenwashing” is a broad descriptor, not a legal term of art like “fraud” or “negligence.” Whether different types of claims about environmental performance or intentions that might be described as greenwashing are “false” or “misleading” has significant First Amendment implications—implications that bear on whether such claims are protected speech or can be legally regulated for truthfulness.
Accusations of greenwashing have bedeviled firms with respect to their marketing of specific products, with some claims rising to the level of legal action.
Procter & Gamble faced claims of greenwashing when it advertised a brand of paper towel as containing recycled material when in fact only the inner cardboard tube contained recycled fibers.
Firms have faced class action lawsuits under state consumer protection laws, such as one suit against a cookware company based on its claims that its pots and pans were “toxin free” and “good for the environment” when they allegedly contained “compounds that are known to be toxic.”
Others have faced lawsuits alleging false and deceptive advertising based on advertisements that cleaning products were “non-toxic” and “earth friendly” when they allegedly contained ingredients that were harmful to people, animals, and the environment.
And greenwashing claims surrounded the infamous Keurig coffee pods, based on Keurig’s claims that the pods were recyclable when a substantial number of nationwide recycling facilities would not actually accept them for recycling.
Despite greenwashing’s broad definition, which encompasses both product- and firm-level claims, much of the focus to date—at least when it comes to litigation—has been on product-level claims.
The issue of greenwashing is taking a broader turn, however, with much higher stakes. In March 2021, three environmental organizations filed a complaint with the Federal Trade Commission (the FTC or the “Commission”), the federal agency charged with enforcing laws that prohibit false and deceptive claims in advertising.
The complaint contends that the fossil fuel firm Chevron has engaged in greenwashing by overstating and misrepresenting the firm’s overall efforts to reduce emissions of greenhouse gases and increase its investments in renewable energy.
This is the first complaint filed with the Commission invoking the Commission’s “Green Guides” to claim that a firm has misled consumers about how it markets its overall climate strategy and the environmental impact of its operations, rather than merely a complaint about the marketing of a specific product or service.
Why does this matter? At a basic level, whether the law can regulate firms’ green marketing claims for truthfulness has material implications for whether, collectively, humanity can keep global emissions below a threshold to avoid the worst impacts of climate change. Misleading and deceptive claims about emissions reductions and climate-friendly business strategies can muddy the waters of what firms are actually doing to address climate change. Consumers and investors, who are often information dependent upon firms to shed light on their practices and strategies, may be misled into taking actions within the marketplace that are inconsistent with achieving either personal or societal climate goals. And they may not demand the political action they might, were they to know more clearly what the private sector is (or is not) doing to mitigate climate change. The primary motivating question of this Essay is therefore the extent to which the First Amendment permits regulation of firms’ environmental claims for truthfulness.
Under this Essay’s analysis, a broader set of green marketing claims can be constitutionally regulated for truthfulness and a broader set of statements by business firms should be treated with relaxed constitutional scrutiny than current doctrine arguably envisions. This is for two reasons. First, many forms of greenwashing—namely those that are false or misleading, or which provide information that informs consumers’ political choices—are subject to either no First Amendment coverage or the reduced scrutiny of the commercial speech doctrine under current law. Since the 1990s, however, established law has been increasingly undermined and contested, as litigants have sought to—and some courts have agreed to—transform the First Amendment into an all-purpose deregulatory tool in what many have described as First Amendment Lochnerism or New Lochnerism.
This Essay pushes back against that deregulatory effort. Second, both pre-New Lochnerism commercial speech law and the deregulatory view that now challenges it fail to offer a coherent view of the freedom of speech or the forms of democracy it advances. This Essay thus breaks new ground in offering a new theory of the purposes of the freedom of speech in economic life.
In making this argument, this Essay begins by explaining that courts addressing speech rights in these contexts have, to date, produced notoriously confusing and inconsistent First Amendment case law. The root of that confusion is that speech at the juncture of politics, markets, and science also sits at the intersection of three quite disparate First Amendment doctrines: the First Amendment principles that apply to speech in public discourse (politics), the commercial speech doctrine and related doctrines that generally apply to expression in economic life (markets), and free speech doctrines around expertise and knowledge production (science).
These contrasting doctrines reflect distinct constitutional values, constitutionally relevant institutional differences, and varying approaches to the production of information, individual choice, and truth and falsity.
Ultimately, this Essay does not simply apply existing First Amendment speech doctrine to green marketing claims. Instead, it evaluates and reconceives the purposes of the First Amendment regarding expression at the juncture of politics and markets. It argues that the values underlying the freedom of speech are to protect decisional and participatory liberty in both political and economic life. The purpose of the First Amendment in both settings, it contends, is to advance a deep form of participatory democracy. This theory provides needed explanatory support for First Amendment doctrine that predates the New Lochnerism and goes beyond it to advance a holistic understanding of the purposes of the freedom of speech at this intersection.
While seeds of this understanding of the First Amendment are present both in canonical commercial speech cases and in the broader pattern of First Amendment coverage,
the notion that the freedom of speech does and should advance democratic norms in economic life has been largely ignored. The principal self-government theories of the First Amendment understand democracy as voice in government. This Essay argues that this conception of governance unduly limits the scope of democracy and depends on a questionable division between the political and the commercial. Instead, it adopts a more capacious notion of democratic participation and recognizes that there is no clear ex ante philosophical boundary between speech that is “commercial” (and thus subject to regulation for truthfulness) or “political” (and thus presumptively not subject to such regulation). It argues that by looking at the normative values animating these different doctrines and the sorts of social relationships they seek to regulate and produce, we can ask more tractable questions.
This Essay delves into the case of greenwashing because it highlights the underlying core values that the First Amendment aims to protect, which is where any assessment of First Amendment doctrine should begin. This focus on underlying values—to protect decisional and participatory liberty in both political life and the marketplace, especially in cases of informational asymmetry—yields the conclusion that more green marketing claims ought to be subject to regulation for truthfulness than are under the current doctrinal morass. This new theoretical lens will not only clarify the First Amendment status of greenwashing (and the regulations that seek to address it) but also provide a conception of the First Amendment that advances democracy in a more thoroughgoing way.
The Essay proceeds in five parts. Part I provides the key features of greenwashing as a broad concept, and Part II elaborates the regulatory authority of government actors like the FTC and the states to address commercial speech that is false, deceptive, or misleading. Part III details the First Amendment terrain in which greenwashing is situated and provides a typology of the relevant constitutional considerations that should inform the application of differing First Amendment rules. Part IV then brings these frameworks together and offers a path forward. It advances a new theory of the First Amendment contexts, values, and considerations that should inform the application of differing constitutional rules. Part V merges these inquiries to offer implications of this analysis for the varying forms of greenwashing the Essay identifies and provides some suggestions about solutions. In so doing, this Essay offers clarity for those addressing the increasingly important constitutional questions at the intersection of politics, science, and markets.