The DC Appellate Court’s recent decision against Coca-Cola calling even aspirational claims by companies as “greenwashing” is one for businesses to consider seriously.

The case was decided under the District of Columbia’s Consumer Protection Procedures Act (CPPA) and not under securities laws, but it could indicate a trend towards a more rigorous enforcement against green claims by all regulators.

Misled consumers

In June 2021, the Earth Island Institute sued Coca-Cola, alleging that Coca-Cola’s marketing misled consumers into thinking that its business is or is becoming environmentally sustainable despite Coca-Cola’s reliance on single-use plastics and relying on recycling as a solution.

The superior court dismissed these claims, finding that Earth Island had failed to state a claim on which relief could be granted because:

• Coca-Cola’s statements were “aspirational in nature” and therefore not in violation of the CPPA;
• Statements regarding “corporate ethos, hopes, and philosophies” in corporate communications could not be considered “part of the product itself” and therefore could not serve as the basis for claims under CPPA; and
• “Even taken together,” Coca-Cola’s statements were “aspirational, limited, and vague such that, as a matter of law, such statements cannot be misleading.

The DC Court of Appeals recently reversed this decision, calling Earth Island’s complaint a “greenwashing” claim and holding that a company’s aspirational statements could deceive consumers about its sustainability efforts and thereby be a predicate for a deceptive marketing claim.

But still actionable

The appellate court said Earth Island’s claims were plausible because Coca-Cola’s suggestive statements that it is a sustainable company would be misleading if its recycling efforts cannot actually offset the greater environmental harm from mass producing single-use plastics.

The court cited Earth Island’s arguments that under 10% of recyclable plastics are actually recycled and most single-use plastic end up as waste. In addition, the court noted that Coca-Cola’s stated environmental goals of achieving 100% recyclable packaging by 2025 and 50% recycled materials in packaging by 2030 could deceive if Coca-Cola had not attempted to progress towards achieving these benchmarks.

Even ambiguous aspirational statements, such as Coca-Cola’s remarks about creating a ‘more sustainable and better shared future,’ can be actionable, the appeals court said.

And another potentially misleading statement included that the company was taking a “leadership position” on the “interconnected global challenges of packaging waste and climate change.”

The Court of Appeals also agreed with Earth Institute that Coca-Cola’s claims regarding plastic packaging were “very much statements about its ‘goods and services’” for purposes of the CPPA.

Failed to meet sustainability goals

In overturning the trial court, the appellate court held that aspirational statements on a company’s website or Twitter (now X) feed can be considered in the aggregate to support a claim that a company has made a misleading statement and be actionable under DC’s consumer protection law.

The appellate court warned that “businesses cannot insulate themselves from suit simply by avoiding concrete claims.” Thus, according to the court, even ambiguous aspirational statements, such as Coca-Cola’s remarks about creating a “more sustainable and better shared future,” can be actionable.

Analyzing the specific statements at issue, the court found that Coca-Cola’s statements were not mere puffery; they were “representations that could lead a reasonable consumer to believe that Coca-Cola will meaningfully improve its environmental sustainability.”

The court signaled in its decision that failing to meet some stated sustainability goals does not necessarily portend an actionable claim under the CPPA – but never intending to meet these goals could support a viable misrepresentation claim.

As a result of the decision, companies should review their sustainability pronouncements, goals, and programs to analyze whether they may be problematic in the same manner and subject to similar claims under consumer protection laws.

Any representations made in a public forum stating that your business is working toward meaningfully improving its environmental sustainability should be analyzed carefully as to whether those representations give consumers a false impression of your business’s current and anticipated environmental impact.