Danone has failed in its initial bid to squash a proposed class action lawsuit accusing it of misleading shoppers with a ‘carbon neutral’ claim on Evian bottled water after a judge determined the claim “may plausibly deceive and mislead” consumers.
Regulatory affairs experts are closely watching the lawsuit* — filed vs Danone Waters of America in New York in 2022 — amid growing scrutiny of ‘green’ claims, while some large CPG players including Nestlé are reportedly souring on the term.
In this case, the ‘carbon neutral’ claim at issue was certified by a high-profile third party: The Carbon Trust.
According to the plaintiffs, reasonable consumers “would understand and believe that the term ‘carbon neutral’ means the manufacturing of the product, from materials used, to production, to transportation, is sustainable and does not leave a carbon footprint.”
Danone Waters America: Lawsuit ‘defies science and common sense’
Danone fired back in court filings, arguing that this “subjective interpretation” is “manifestly unreasonable” and that “no reasonable consumer would interpret carbon neutral to mean that the product does not emit any carbon dioxide whatsoever during its entire life cycle.”
It added: “One wonders how the plaintiffs think the product magically arrived from the French Alps to their homes without the emission of even a molecule of carbon dioxide.”
In any event, said Danone, evian’s packaging comports with the Federal Trade Commission’s Green Guides, which urge marketers to make specific, rather than more nebulous generic ‘green’ claims. “The [‘carbon neutral’] claim communicates a specific environmental benefit—carbon neutrality—and is supported by third-party certification to the only internationally recognized standard for carbon neutrality.”
Judge: Term carbon neutral could have ‘multiple meanings’
US district judge Nelson S. Román, however, was not persuaded by Danone’s arguments.
In a January 10 order refusing Danone’s motion to dismiss most of the claims in the lawsuit, Román said it was “plausible that the ambiguous term ‘carbon neutral,’ a technical word not within an average consumer’s common parlance and carrying multiple meanings, could mislead a reasonable consumer.”
He added: “A reasonable consumer may plausibly understand ‘carbon neutral,’ a term whose meaning varies even within its own industry, to mean ‘zero carbon emissions.’ Or such a consumer could understand it to carry Danone’s offsetting definition. Or even some third meaning.”
As a result, he said, “It is most appropriate for the jury, not this court, to determine.”
Addressing fraud claims in the complaint, he said: “In alleging Defendant intentionally relied on the misleading ‘carbon neutral’ representation to induce consumers to purchase the product at a higher price, plaintiffs have plausibly pled a fraud claim.”
Danone Waters of America did not respond to a request for comment.
David Kwasniewski, a partner at law firm BraunHagey & Borden, told food trade publication FoodNavigator-USA in a recent interview that lawsuits alleging greenwashing were on the rise, and that carbon neutral claims—while in this case underpinned by a specific third-party standard—were still risky.
“Judges and lawyers can construct all manner of arguments about what is and is not carbon neutral, and what would be reasonable in the eyes of any consumer seeing that phrase. Unless and until there is an actual regulatory definition, there is always going to be some risk with making a carbon neutral claim.”
You could also argue that any company packaging and shipping water in bottles (whatever they’re made out of) when consumers can simply turn on the faucet and drink municipal water instead, probably shouldn’t win any prizes for saving the planet, even if their claims are accurate, he said.
No legal definition of carbon neutral in the US
So what does ‘carbon neutral’ mean?
According to a Morning Consult survey conducted in 2022, most Americans don’t know. There is no legal definition of the term, and while the FTC’s Green Guides offer some guidance on carbon offsets, they do not specifically define the terms ‘carbon neutral,’ ‘carbon negative,’ ‘climate-positive,’ or ‘net zero.’
The Guides, which are not legally binding, are nevertheless frequently cited in ‘greenwashing’ lawsuits, while some states have adopted them into state law, creating a confusing environment for manufacturers that operate in multiple states.
Against this backdrop, the FTC is currently determining whether to “retain, modify, or rescind” the guides, which were last updated in 2012, soliciting comments from industry, nonprofits and other stakeholders.
In a public comment to the FTC, HowGood—a research company and SaaS data platform claiming to have built the world’s largest database on food product sustainability—argued that carbon neutral claims should not be permitted if based “entirely on offsets.”
The World Wildlife Fund added: “Claims that products or entities are carbon neutral, carbon negative, climate neutral, climate negative or net zero can mislead consumers into thinking that the product or entity has eliminated all of their emissions. Failing to address these misleading claims allows both of the following hypothetical companies to claim carbon neutrality:
Company A: Reduces 99% of scope 1, 2, and 3 emissions. Buys carbon credits in a volume equal to the remaining 1% of emissions.
Company B: Reduces 0% of scope 1, 2, and 3 emissions. Buys carbon credits in a volume equal to their total emissions.”
‘Aspirational’ claims or greenwashing?
Industry self-regulatory body the National Advertising Division (NAD), in turn, told the FTC that firms making claims about their plans to reach ‘net zero’ must be able to show a clear roadmap demonstrating how they intend to achieve this status.
“NAD has seen an uptick in the use of aspirational environmental benefit claims in recent cases [such as that against meat giant JBS over its ‘net zero by 2040’ claims]. Advertisers should demonstrate that their goals and aspirations are not merely illusory and provide evidence to support their commitments.”
It added: “When aspirational claims are tied to measurable outcomes, NAD has concluded that an advertiser must be able to demonstrate that it has a plan in place that could allow it to achieve the stated goal.”
*The case is Stephanie Dorris et al vs Danone Waters Of America, filed in the southern district of New York. Case 7:22-cv-08717
Further reading:
FTC urged to tackle rampant greenwashing; set criteria for ‘carbon neutral,’ ‘net zero’ claims
Lawsuit challenging Evian’s ‘carbon neutral’ claims ‘defies science and common sense,’ says Danone
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