Lawsuits and Greenwashing Regulations Highlight the Challenges and Best Practices for Product Environmental Claims and Sustainability Programs
A recent greenwashing lawsuit against Apple’s carbon neutral product claims is making headlines. Interestingly, Apple’s product offering reduced 75% of the carbon emissions associated with the production and transport of its watches. However, the company claimed neutrality via use of offsets for the remaining 25% of emissions. The case specifically called out the integrity risks for the type of carbon offset projects used to back the claim (McCroskey, 2025).
The lawsuit has had a polarizing response, with some comments highlighting the need for integrity in carbon offset projects, and others defending the brand’s significant sustainability efforts, including the reduction of Scope 1 and 2 emissions to produce and transport its products. Advocates for the brand make a compelling point: If entities that make meaningful reductions to the environmental footprint of their products are still sued for greenwashing, (making overstated or deceptive environmental claims), companies may opt to drop sustainability initiatives altogether. The trend, called greenhushing, is on the rise. The term greenhushing refers to companies silencing or abandoning sustainability efforts to avoid the risk of litigation.
According to data from RepRisk, complainants filed 1,600 greenwashing lawsuits in 2023 (RepRisk, 2023). The suits span a variety of environmental claims, including plastic packaging and recyclability in addition to carbon neutrality.
Since 2021, internationally, several major regulatory initiatives have either been adopted or will begin enforcement in the next 18 months. These regulatory efforts include:
- The UK Competition and Markets Authority (CMA) Green Claims Code (enacted 2021), and bolstered by the Digital Markets, Competition, and Consumers Act (DMCC). DMCC takes effect in 2025 and enables the CMA to assess fines of up to 10% of global revenues (or £300,000, whichever is higher) for greenwashing. DMCC is applicable to any businesses selling online in the UK.
- Canada’s Anti-Greenwashing Bill, C-59, is an update to the Competition Act, and was enacted June 2024.
- The EU Green Claims Directive is due to be finalized and enacted in 2026.
ESG Dive stated that the number greenwashing suits globally dropped by 12% in 2024. However, the number of cases filed in the US increased, while numbers in the EU decreased (Johnson, 2024). The analysis cited two reasons for the EU decrease: the increased regulatory oversight in the UK and EU and greenhushing.
For companies that are willing to take on sustainability initiatives, the reward can be worth the risk. Studies suggest that most consumers want sustainable products and are willing to pay more for them (PwC, 2023; Martins, 2024). To access this market, companies that sell products to the UK, EU, and Canada as well as those wanting to pursue sustainability initiatives should be applying the new standards in both their marketing and in their program design. As greenwashing standards take effect globally, US companies can reduce risk of greenwashing lawsuits by adhering to the same levels of transparency and verification required by the EU, UK, and Canada.
Fortunately, there are common themes across all the regulations that simplify compliance. The guidance also aligns with the best practices for the design of a sustainability program.
Reliable, Comparable, and Verifiable
The core tenet of the EU Green Claims Directive (GCD) seeks to reduce consumer confusion by standardizing the 230 different sustainable labels currently in use. As the EU analysis identified, most of these claims are not audited, verified, or regulated (European Commission, 2022). There are a few exceptions such as the USDA organic label. In the UK, fraudulent organic claims will be subject to both organic regulations and the Green Claims Code.
The abundance of claims and variation in accuracy, verification, and transparency erodes consumer trust, reducing the effectiveness of sustainability efforts for brands and companies that are trying to do the right thing. Without guidelines, companies that are undertaking the costs and burdens of sustainability measures must compete with those making unsubstantiated claims without the added costs.
The standardized label proposed for the EU, the Ecolabel, is currently applicable to product categories other than food such as household and personal care products, accommodations, clothing, and durable goods. Reducing the myriad of labels into a concise, defined, and verified standard may help consumers better compare and trust product claims.
Notably, the GCD requires all sustainability claims to be verified, with exemptions for businesses with fewer than 10 employees and with sales that do not exceed EUR 2 million (European Commission, 2023). The EU Commission examined verification and certification aspects for over 230 ecolabels in use. The commission concluded that almost half of the labels’ verification was either weak or not carried out. Consumers lack information on the difference between labels governed by third party certification schemes and those based on “self-certification” (European Commission, 2022).
The EU Commission surveyed stakeholders and consumers in the development of the GCD. In the surveys, consumers indicated a preference for claims to be backed by independent certification or verification by accredited organizations.
Transparency and Completeness
According to the EU Commission analysis, half of green claims on websites for products and services are vague, misleading, or unfounded and 40% have no supporting evidence. The Consumer Protection Cooperation (CPC) authorities conducted a similar analysis of 344 sustainability claims in 2020 (European Commission, 2022). CPC authorities determined that over half the claims lacked sufficient information for consumers to assess accuracy. This facet of the regulations affects not only the tiny label real estate but also requires complete information to be available to support the claim. Compliance may include QR codes or website links on product labeling.
The EU GCD directs that consumers should be able to make product choices based on transparent and reliable information. This information includes the sustainability, durability, repairability, and carbon footprint of a product.
The EU GCD, the UK Green Claims Code, and Canada’s Anti-Greenwashing Bill require companies to provide complete information supporting sustainability claims (European Commission, 2023; UK CMA, 2021; Government of Canada, 2024). By “complete” the guidance identifies the following:
- Claims about future goals should only be used for marketing purposes if the business has a clear and verifiable strategy to deliver them. These goals must provide a specific timeline for the stated reduction.
- Wider environmental goals of the business should also be clearly distinguished from product-specific claims.
- Claims cannot convey only the positive environmental aspects of a product, service, process, brand, or business. Related increases in negative impacts must be transparent as well.
- Claims must be made based on the full life cycle of the product.
Beyond Business as Usual
Under the EU GCD and the UK Green Claims Code, businesses cannot convey marketing claims for product attributes that are already required by regulations. This guidance is similar in intent to additionality requirements for carbon credits, for which a given reduction or avoidance must occur because of actions that are beyond “business as usual.”
Carbon Claims
There is no universal standard for “carbon neutral.” However, the EU GCD includes requirements for how companies convey climate related claims, including the use of offsets (European Commission, 2023). The GCD requires:
- Greenhouse gas (GHG) emissions offset use should be reported separately from other GHG accounting and reporting, including product environmental footprint claims.
- Companies must specify whether these offsets relate to emission reductions or removals.
- The offsets must be of “high integrity and accounted for correctly,” and based on recognized standards and measurements with verification.
- Businesses must also provide information on the offset scheme used.
Notably, Apple followed much of the above disclosure guidance, including identifying the carbon offset projects used. The claim at the heart of the Apple watch lawsuit addressed the amount of offsets used, 25% of the product footprint, and the integrity of the specific avoided deforestation projects (McCroskey, 2025).
Stronger and Broader Enforcement
The EU GCD and the UK Green Claims Code include requirements for retailers and wholesalers to ensure the products they sell are compliant with the regulations. The regulatory guidance also includes any claims the retailer may make of being an environmentally friendly marketplace.
Under the DMCC, which takes effect in 2025, in addition to the UK Green Claims Code, retailers are also subject to the fines which can be up to 10% of global revenues (or £300,000, whichever is higher). To comply, retailers should audit claims made by their suppliers. This liability includes both brick and mortar stores and online retailers.
Recommendations
The wave of current greenwashing lawsuits and new regulations have obvious implications for all companies that sell products to the UK, EU, and Canadian markets. However, even product manufacturers and US retailers who want to reduce the risk of greenwashing lawsuits can benefit from preventative measures that provide transparency and build consumer trust.
- Businesses that sell to the EU, UK, and Canadian markets should be working toward compliance with the new regulations.
- US businesses should consider auditing their suppliers and their current sustainability claims, including online content, to reduce the risk of greenwashing suits.
- Retailers that ship products outside the US should conduct audits for environmental claims on the products they market, especially organic claims which have additional regulations. In addition, they should examine their own environmental claims and how their online stores are represented.
- Manufacturers that want to continue to use environmental label claims should consider aligning with the regulatory requirements, even for US-sold products. This can include conducting life cycle assessments for products and developing transparent and complete online content.
- Sustainability initiatives should incorporate best practices for program development, including auditable standards, legally defensible and documented activities, and verification requirements.
About SES
SES, Inc.’s experience in conducting organic complaint investigations for the USDA’s National Organic Program has given us unique experience in compliance and enforcement for sustainability marketing claims. We develop legally-defensible, measurable, and compliant sustainability programs. This work included developing Good Environmental Livestock Production Practices that were accepted by American National Standards Institute (ANSI) requirements. SES was the first entity to standardize environmental BMPs for livestock on a national level.
We can help you with a variety of compliance and sustainability program development services, including supplier outreach and audits, standards education, and life cycle assessment. Contact us at info@ses-corp.com or visit our Sustainability and Consulting page to learn more.
Resources
EUROPEAN COMMISSION. (2022). COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information. In COMMISSION STAFF WORKING DOCUMENT [Report]. https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52022SC0085
European Commission. (2023, March 22). Proposal for a Directive on green claims. Environment. https://environment.ec.europa.eu/publications/proposal-directive-green-claims_en
Government of Canada, Innovation, Science and Economic Development Canada, Office of the Deputy Minister, Competition Bureau Canada & Competition Bureau Canada. (2024, September 11). The Deceptive Marketing Practices Digest — Volume 7. https://competition-bureau.canada.ca/en/how-we-foster-competition/education-and-outreach/deceptive-marketing-practices-digest-volume-7
Johnson, L. (2024, October 10). Greenwashing cases fall for first time in 6 years, but high-severity filings surge: report. ESG Dive. https://www.esgdive.com/news/greenwashing-decreases-report-rep-risk-severity-increases-2024/729511/
Martins, A. (2024, March 28). Most consumers want sustainable products and packaging. Business News Daily. https://www.businessnewsdaily.com/15087-consumers-want-sustainable-products.html
McCroskey, K. (2025, March 11). Apple Watch lawsuit alleges ‘Carbon neutral’ claims are overstated. ClassAction.org. https://www.classaction.org/news/apple-watch-lawsuit-alleges-carbon-neutral-claims-are-overstated
PricewaterhouseCoopers. (2024). Consumers willing to pay 9.7% sustainability premium, even as cost-of-living and inflationary concerns weigh: PwC 2024 Voice of the Consumer Survey. PwC. https://www.pwc.com/gx/en/news-room/press-releases/2024/pwc-2024-voice-of-consumer-survey.html
RepRisk | On the rise: navigating the wave of greenwashing and social washing. (October 2023). https://www.reprisk.com/research-insights/reports/on-the-rise-navigating-the-wave-of-greenwashing-and-social-washing
UK CMA (2021, September 20). Making environmental claims on goods and services. GOV.UK. https://www.gov.uk/government/publications/green-claims-code-making-environmental-claims/environmental-claims-on-goods-and-services#principles