Posted: 12/01/2024
Legal claims relating to sustainability and environmental damage are on the rise globally. This pattern of litigation is directly linked to the heightened pressure that organisations face in light of the climate crisis.
The US is a hotbed for such disputes. For example, claims were brought in California earlier this year against oil giants including ExxonMobil, Shell and BP for alleged deceit surrounding the risks posed by fossil fuels. Elsewhere, a seminal court ruling was handed down in Montana in August 2023 which declared that the state had violated the rights of 16 youths in light of laws that promoted the use of fossil fuels. Claims have also recently been brought in Connecticut and Minnesota following allegations that products have mistakenly been labelled as recyclable.
One of the most recent high-profile case in this arena is the claim issued by the state of New York against PepsiCo in November 2023.
The backdrop to the litigation is the Buffalo River in New York state, formerly one of the most polluted rivers in America. From the 1980s concerted clean-up efforts were made which resulted in the river and its shoreline improving greatly. The attorney-general of New York claims, however, that plastic pollution threatens to derail the progress made so far.
The state decided to try and tackle the problem at source by conducing survey of plastic waste collected from the Buffalo River. Over 17% of items with identifiable branding were found to have been produced by PepsiCo (the world’s second-largest food company). The next higher offender was McDonald’s, which accounted for 5.7% of items.
It is this statistic which brought PepsiCo into the attorney-general’s crosshairs.
It is claimed that PepsiCo is contributing significantly to the plastic waste found in the Buffalo River; this is despite the organisation itself not being directly responsible for the pollution. The state argues that microplastics and nanoplastics created following the breakdown of PepsiCo’s plastic packaging cause harm to both humans and wildlife. This pollution, it is said, has created or contributed a substantial interference with the rights of people living in the City of Buffalo so as to cause a public nuisance.
The attorney-general also avers that PepsiCo fails to warn consumers of the risks associated with single-use plastics. This is despite PepsiCo supposedly recognising that consumers’ perception of the environmental impact of plastic packaging affects their behaviour. The state argues that, if PepsiCo’s products carried a warning about the risk of their packaging potentially contributing to plastic pollution, this would likely affect consumer behaviour to reduce that risk.
Finally, and arguably most damningly, it is alleged that PepsiCo has engaged in deceptive practices. The company is accused of misleadingly portraying that some or all of the plastics used in its packaging are infinitely recyclable, and making statements that give a misleading impression of its progress toward reducing its contribution to plastic production.
The term for accusations of this nature is greenwashing, a phrase which is becoming increasingly prevalent in the media.
Greenwashing occurs when an organisation makes false, misleading or exaggerated claims about the environmental impact of their products or services.
Claims of greenwashing are mounting in a world where sustainability and the environmental impact of a business’s operations are becoming ever more important to customers. Consequently, the risk of companies intentionally or accidentally overstating their eco-credentials in an effort to woo consumers rises – a 2022 survey revealed that 58% of chief executives admitted that their organisation had committed greenwashing.
In the UK (unlike the US), action resulting from greenwashing is not typically dealt with in the courts. Instead, it falls to regulators such as the Competition and Markets Authority (CMA) and the Advertising Standards Authority (ASA) to intervene and protect consumers who have been, or may be at risk of being, duped by a company’s eco-claims. Both regulators have an arsenal of powers at their disposal if greenwashing is found to have been committed.
In recent times the CMA has announced investigations into a range of businesses, including fashion brands and producers of fast-moving consumer goods. Likewise, the ASA has also been cracking down on misleading environmental adverts. Interestingly, one instance of greenwashing recently identified by the ASA relates to Lipton Ice Tea, which was found to falsely imply that their bottles were 100% recyclable. Lipton Ice Tea is partially owned by PepsiCo.
On the continent, a complaint has recently been filed with the European Commission against food and drinks giants Coca-Cola, Danone and Nestle by environmental charity ClientEarth. In a striking resemblance to the claims levelled at PepsiCo and Lipton, it is alleged that these companies misleadingly claim that their single-use plastic water bottles are either 100% recycled or 100% recyclable. If this complaint is made good, the European Commission can refer the matter to national consumer authorities for them to take action against the offenders.
It remains to be seen if further complaints or litigation are on the horizon for PepsiCo. In the US it may be that other potential claimants are waiting in the wings for the outcome of the New York proceedings. If PepsiCo is found to have contributed to a public nuisance and/or to have committed greenwashing, then others may be confident enough to pounce.
In the UK we have seen how PepsiCo has already been stung for misleading advertising in relation to Lipton’s Ice Tea. Further allegations of greenwashing are perfectly possible given the current climate. As for a claim in public nuisance, that would depend upon a successful link being established between PepsiCo and plastic pollution. Succeeding with such a claim, whilst not impossible, would be far from straightforward.
The increase in accusations of greenwashing means that all companies would be well advised to carefully consider any claims they intend to make regarding their environmental impact. As we have seen, regulators, state bodies and activists across the world are intensifying their efforts to hold ‘greenwashers’ and polluters accountable. This can have a range of consequences, including financial loss (PepsiCo’s share price fell by $0.86 the day the claim against it was filed) and significant reputational damage.
This article was originally published on the website of SG Voice on 4 December 2023 and can be accessed here.
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