Topic: Federal Update

Federal Update

Consumer Product Greenwashing

1. Introduction

Consumer demand for sustainable products is increasing.^[1] When making a purchase, consumers may rely on the product package information to make an informed decision. According to a survey conducted by PwC in 2024, consumers are willing to pay a “premium” for products that are environmentally friendly.^[2] However, consumers who pay extra for products like “free-range” or “pasture-raised” eggs under the belief that hens are happily roaming an open farm may be in for a surprise.

To attract consumers and investors, companies sometimes advertise their product as more environmentally friendly than it really is. This practice is known as called greenwashing.^[3] In 2023, NielsenIQ and McKinsey conducted a consumer data study that identified six types of common Environmental, Social, and Governance (ESG) claims on product packages: (1) animal welfare; (2) environmental sustainability; (3) organic positioning; (4) plant based; (5) social responsibility; (6) sustainable packaging.^[4]

This article will provide updates regarding the regulations of consumer product greenwashing by various governmental agencies and will analyze recent greenwashing litigation and agency enforcement in this area. This article will also provide practical advice for both businesses and consumers to proactively identify false and deceptive ESG claims on consumer products.

2. Background and Recent Agency Regulation Updates

At the federal level, the Fair Packaging and Labeling Act of 1967 (FPLA) authorized the Food and Drug Administration (FDA) to issue regulations with respect to foods, drugs, cosmetics.^[5] FPLA also authorized the Federal Trade Commission (FTC) to issue regulations with respect to other “consumer commodities” used in the household.^[6] The FTC is also authorized under the Federal Trade Commission Act (FTCA) to regulate and prevent fraudulent, deceptive, and unfair business practices.^[7]

In 1992, the FTC issued the Guides for the Use of Environmental Marketing Claims (“Green Guides”) to help businesses avoid making unfair or deceptive environmental marketing claims.^[8] Since the last update of the Green Guides in 2012,^[9]  the FTC announced the most recent review of the Green Guides in 2022,^[10] which is expected to become effective in 2024.^[11] The new changes will address specific issues such as: claims about offsets and climate change; the use of the terms “recycled” and “recycled content”; representations about energy use and energy efficiency; and whether there is a need for more guidance on the use of words like “compostable,” “degradable,” “ozone-friendly,” “organic,” and “sustainable.”^[12]  The public comment period for the proposed Green Guides updates ended on April 24, 2023.^[13] After the public comment period closed, the FTC hosted a public Recyclability workshop in New York, discussing the proposed Green Guides updates on the “recyclable” advertising claims.^[14]

In addition to the FDA and the FTC, the U.S. Securities and Exchange Commission (SEC) also plays an important role in regulating consumer product advertising by overseeing public companies’ disclosure of their ESG efforts. On March 6, 2024, the SEC adopted new Climate Change Disclosure Rules that require public companies to include extensive and accurate information about their ESG efforts and environmental risk factors relating to climate change in their SEC filings.^[15] Under these new rules, claims about environmentally friendly products and the company’s ESG goals may come under greater scrutiny to ensure reliability.^[16] The final rules became effective on May 28, 2024.^[17]

States also have their own laws to regulate product labeling. For example, in May 2023, Texas Governor Greg Abbott signed Senate Bill 664^[18] which requires animal-free food products packages sold in the state to include a “plant-based” label^[19] . The law went into effect on September 1, 2023.^[20]

3. Case Studies

The role of the FTC Green Guides in greenwashing litigation

Courts have relied on FTC Green Guides to evaluate the accuracy and potential deceptiveness of environmental marketing claims. A California district court recently analyzed such a claim.

In August 2023, consumers brought a punitive class action against Colgate-Palmolive Company (Colgate) for misrepresenting the recyclability of its toothpaste tubes.^[21] Consumers alleged that the label of “RECYCLABLE TUBE” was “false, deceptive, misleading and/or unlawful” because most recycling facilities in the nation do not accept these products.^[22] Colgate filed a motion to dismiss, arguing that the “Recyclable Tube” labels were accurate descriptions of the product because “recyclable” worked as “an adjective that means capable of being recycled.”^[23] Colgate also argued that this claim about the toothpaste tubes met the requirements of “substantial majority” threshold^[24] defined in the Green Guides because recycling facilities are available to 87% of consumers.^[25]

The Northern District of California District Court also relied on FTC Green Guides to evaluate Colgate’s “Recyclable” claim.^[26] Specifically, under Green Guide § 260.12(d), “[i]f any component significantly limits the ability to recycle the item, any recyclable claim would be deceptive. An item that is made from recyclable material, but, because of its shape, size, or some other attribute, is not accepted in recycling programs, should not be marketed as recyclable.”^[27] Here, although the Colgate toothpaste tubes were “made from recyclable material,” they were indistinguishable from non-recyclable tubes because of their shape and the possible contamination by the leftover toothpaste unremovable from the tubes.^[28] The Colgate “Recyclable Tubes” were also rejected by recycling facilities.^[29] Therefore, the court concluded that Plaintiffs had adequately alleged that Colgate’s “Recyclable Tube” claims were misleading.^[30] Consequently, the court denied Colgate’s motion to dismiss on February 6, 2024.^[31] The case is now pending for mediation with the deadline on July 15, 2025.^[32]

The California district court’s analysis in the Colgate case demonstrated the pivotal role of the FTC Green Guides in leading judicial evaluations of the environmental claims’ fairness and deceptiveness.

A warning from the SEC: Watch out for greenwashing in public filings.

In addition to environmental litigation, the SEC issues rules and guidance to regulate environmental marketing claims. For example, in an investigation similar to the Colgate case, the SEC investigated Keurig Dr Pepper Inc. (“Keurig”) making false claims about its products’ recyclability.^[33]

On September 10, 2024, the SEC charged Keurig for making inaccurate statements in its annual reports regarding its K-Cup beverage pods’ recyclability. Specifically, Keurig claimed in its 2019 and 2020 Form 10-K filings that its K-Cup pods “can be effectively recycled.”^[34] However, the company failed to disclose negative feedback from two large recycling companies which had deemed the commercial recycling of K-Cups commercially infeasible and refused to accept them.^[35] Research indicated that environmental concerns were a significant factor for consumers when deciding whether to purchase a Keurig brewing system.^[36]

The SEC concluded that Keurig’s “incomplete and inaccurate” disclosure violated Section 13(a) the Securities Exchange Act of 1934 and Rule 13a-1, which require public companies to file “complete and accurate annual reports.”^[37] Ultimately, Keurig agreed to pay $1.5 million to settle the claim.^[38]

This enforcement action against Keurig shows the SEC’s focus on the completeness and accuracy of public filings. Companies must be mindful not to leave out material information, as such omissions can lead to significant legal and financial consequences.

Questions from recent egg lawsuits: is “free range” mere puffery?

Setting the recyclability issues aside, a recent lawsuit also shed light on the tension between consumers and businesses over false and deceptive environmental marketing claims related to egg products. The core issue, common in greenwashing litigation, is this: To what extent should businesses be allowed to make “mere puffery” claims and how can consumers distinguish between genuine promises and such “too good to be true” marketing claims?

In April 2021, consumers brought a class action against defendant Pete and Gerry’s Organics, LLC (“Nellie’s”), alleging that the company falsely marketed its eggs as “free-range” when in fact the hens were “crammed” into overcrowded sheds—“20,000 at a time,”—with little to no access to outdoor space.^[39] Plaintiffs further alleged that they relied on these representations and paid a premium for Nellie’s eggs.^[40]

Nellie’s moved to dismiss the lawsuit, arguing that its farming practices met the “Certified Humane Free-Range” standard and the “free-range” label was not misleading.^41] Alternatively, it contended that “free-range” was non-actionable puffery, or “a statement that is too vague to constitute actionable misrepresentation.”^[42]

The U.S. District Court for the Southern District of New York denied Nellie’s motion, finding that “free range” was not mere puffery because “a reasonable consumer could interpret the disputed product descriptions as factual claims on which he or she could rely.”^[43] The case settled in 2023. According to Nellie’s website, the company still markets its eggs as “free-range.”^[44] However, it’s unclear whether Nellie’s has made any substantive changes to its farming practices following the settlement.

However, egg-related lawsuits did not stop there. In July 2024, another two consumers sued Eggland’s Best for falsely representating its eggs as “cage free” and including small print on the packaging saying that every hen is “free to roam in a pleasant, natural environment.”^[45] In fact, undercover footage revealed “thousands of birds packed into filthy wire battery cages, hardly able to move without crawling over other birds.”^[46]

Eggland’s Best filed a motion to dismiss the class action, arguing that the term “cage free” is not misleading because a reasonable consumer would not equate “free to roam” with “free range” or “pasture raised.”^[47] The company also argued that the word “pleasant” was “mere puffery.”^[48] Plaintiffs countered that “free to roam in a pleasant, natural environment” was not inactionable “puffery” because consumers rely on the product claims about hens’ living conditions.^[49]They further argued out that “a claim is not puffery if the opposite of the claim is allegedly true.” Here, “pleasant” was not “puffery” because hens actually lived with stress and pain, the very opposite of “pleasant.”^[50]The case is now pending the court’s ruling on the motion to dismiss.

As illuminated in the above egg lawsuits, businesses commonly invoke the “puffery” doctrine as a defense in greenwashing litigation. Disputes more often arise from businesses’ use of vague or undefined terms.

4. Best Practice

To mitigate legal risks, businesses should familiarize themselves with the FTC Green Guides. First, companies should avoid making unqualified claims of environmental benefit.^[51]Instead, companies should ensure every environmental benefit claim it makes is supported by “reliable scientific evidence.”^[52]When designing product packages, businesses should use “plain language” to make the environmental marketing claims “clear and prominent.”^[53] For public companies, disclosures on their ESG efforts should be accurate and complete.

The FTC also publishes articles for consumers to effectively identify common green claims on household products.^[54]For example, when products claim to be made with “recyclable” materials, the FTC suggests that consumers check “whether the claims are about the product, the package, or both.” The FTC also encourages consumers to be critical when interpreting green claims. Three questions can help guide consumers in this critical thinking process: (1) Who is responsible for the message? (2) What is the message actually saying? (3) What does it want me to do?^[55] Finally, if you see misleading marketing claims, report it to the FTC at ReportFraud.ftc.gov.

5. Conclusion

Recent greenwashing litigation and regulatory enforcements underscore the importance of clarity and accuracy in environmental marketing. Vague and misleading marketing terms might bring businesses short-term benefits, but may also erode consumer trust and harm the company’s social reputation.

For businesses, the key takeaway is to substantiate environmental claims with reliable evidence and avoid the use of vague or undefined terms. Complying with regulatory guidelines including the FTC Green Guides and the SEC filing rules when making environmental marketing claims can help businesses maintain consumer trust and avoid litigation.

For consumers, going green requires critically evaluating green claims and timely reporting misleading advertisements. As sustainability continues to influence consumer decisions, the legal landscape surrounding greenwashing will likely grow more stringent. A culture of transparency and accountability will be essential in fostering genuine sustainability.

Katie Jeffress is an associate at Baker Botts LLP. Her practice focuses on a range of environmental issues at the state and federal level, including regulatory compliance, permitting, and litigation. Her experience includes air and water permitting, waste issues and enforcement matters. She earned her B.S. in Environmental Economics from Juniata College and her J.D. from the University of Texas School of law, with high honors.

Jinhua Zhang is a 3L from China. She attended the Shanghai International Studies University for her bachelor’s degree in Japanese. She joined TELJ during her second year of law school and she is especially interested in environmental litigation.

---

[1] Environmentally Friendly Products: FTC’s Green Guides, FED. TRADE COMM’N, https://www.ftc.gov/news-events/topics/truth-advertising/green-guides (last visited Nov. 18, 2024).

[2] Consumers Willing To Pay 9.7% Sustainability Premium, Even as Cost-of-Living and Inflationary Concerns Weigh: PwC 2024 Voice of the Consumer Survey, PricewaterhouseCoopers Intern. LTD. (May 15, 2024), https://www.pwc.com/gx/en/news-room/press-releases/2024/pwc-2024-voice-of-consumer-survey.html.

[3] Greenwashing, Merriam-Webster Dictionary, https://www.merriam-webster.com/dictionary/greenwashing.

[4] Consumers Care About Sustainability—and Back It up With Their Wallets, McKinsey & Co. (Feb 6, 2023), https://www.mckinsey.com/industries/consumer-packaged-goods/our-insights/consumers-care-about-sustainability-and-back-it-up-with-their-wallets.

[5] 15 U.S.C.A. §1454(a).

[6] Fair Packaging and Labeling Act: Regulations Under Section 4 of the Fair Packaging and Labeling Act, FED. TRADE COMM’N,, https://www.ftc.gov/legal-library/browse/rules/fair-packaging-labeling-act-regulations-under-section-4-fair-packaging-labeling-act.

[7] 15 U.S.C. § 45 (2006).

[8] 16 C.F.R. § 260.1(a) (2012) (“The guides help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act, 15 U.S.C. 45.”).

[9] Environmentally Friendly Products: FTC’s Green Guides, FED. TRADE COMM’N, https://www.ftc.gov/news-events/topics/truth-advertising/green-guides.

[10] Public Workshop Examining Guides for the Use of Environmental Marketing Claims, FED. TRADE COMM’N  (Mar. 7, 2023), https://www.regulations.gov/document/FTC-2023-0025-0001.

[11] Laura Brett, It’s Not Easy Being Green: Preparing for the FTC’s Updated Green Guides, Adweek (Oct, 19, 2023), https://www.adweek.com/commerce/green-advertising-ftc-2024-guide/.

[12] Lesley Fair, FTC Greenlights Green Guides Comment Extension, FED. TRADE COMM’N (Jan. 31, 2023), https://www.ftc.gov/business-guidance/blog/2023/01/ftc-greenlights-green-guides-comment-extension.

[13] Id.

[14] Talking Trash at the FTC: Recyclable Claims and the Green Guides, FED. TRADE COMM’N  (May 23, 2023), https://www.ftc.gov/news-events/events/2023/05/talking-trash-ftc-recyclable-claims-green-guides.

[15] SEC Adopts Climate Change Disclosure Rules; Court Imposes Temporary Stay, White & Case (Mar. 21, 2024), https://www.whitecase.com/insight-alert/sec-adopts-climate-change-disclosure-rules-court-imposes-temporary-stay.

[16] See Press Release,  U.S. Sec. & Exch. Comm’n, SEC Adopts Rules to Enhance and Standardize Climate-Related Disclosures for Investors https://www.sec.gov/newsroom/press-releases/2024-31(last updated Mar. 6, 2024) (listing some of the disclosures required under the new rule, including but not limited to: “a registrant’s climate-related targets or goals”; “If, as part of its strategy, a registrant has undertaken activities to mitigate or adapt to a material climate-related risk, a quantitative and qualitative description of material expenditures incurred and material impacts on financial estimates and assumptions that directly result from such mitigation or adaptation activities.”).

[17] The Enhancement and Standardization of Climate-Related Disclosures for Investors, 17 C.F.R. §§ 210, 229, 230, 232, 239, 249 (2024).

[18] S.B. 664, 88th Leg., 2023–2024 Sess. (Tex. 2023).

[19] Id. See also Cindy Hazen, Texas Passes New Labeling Law for Plant-Based Food Products, Supply Side Food & Beverage J. (May 31, 2023), https://www.supplysidefbj.com/food-beverage-regulations/texas-passes-new-labeling-law-for-plant-based-food-products.

[20] Hazen, supra note 18.

[21] Della v. Colgate-Palmolive Co., No. 23-CV-04086-JCS, 2024 WL 457798, at *1 (N.D. Cal. Feb. 6, 2024).

[22] Id. at *2.

[23] Id. at *4.

[24] 16 C.F.R. § 260.12(b)(1) (“When recycling facilities are available to a substantial majority of consumers or communities where the item is sold, marketers can make unqualified recyclable claims. The term “substantial majority,” as used in this context, means at least 60 percent.”).

[25] Della, 2024 WL 457798 at *25.

[26] Id. at *24–25.

[27] 16 C.F.R. § 260.12(d).

[28] Della, 2024 WL 457798 at *25.

[29] Id.

[30] Id.

[31] Id.

[32] Weingarter  v. Colgate-Palmolive Co., No. 3:23-cv-04086 (N.D. Cal. Aug 11, 2023).

[33] Keurig Dr Pepper Inc., Exchange Act Release No. 34-100983, at 2–3 (Sep. 10, 2024).

[34] Id. at 2.

[35] Id.

[36] Id.

[37] Securities Exchange Act of 1934 Release No. 100983, Admin. Proc. File NO. 3-22100, at 4 (Sept. 10, 2024).

[38] Press Release, U.S. Sec. & Exch. Comm’n, SEC Charges Keurig Dr Pepper with Making Inaccurate Statements Regarding K-Cup Beverage Pod Recyclability (Sept. 10, 2024), https://www.sec.gov/enforcement-litigation/administrative-proceedings/34-100983-s.

[39] Mogull v. Pete & Gerry’s Organics, LLC, 588 F. Supp. 3d 448, 452 (S.D.N.Y. 2022).

[40] Id. at 454.

[41] Id.

[42] Id. at 453.

[43] Id. at 457.

[44] Nellie’s Free Range, Free Range Eggs, https://www.nelliesfreerange.com/products/free-range-eggs (last visited Nov. 11, 2025).

[45] Complaint, at 1, Janecyk v. Eggland’s Best, Inc., No. 1:24-cv-06222 (N.D. Ill. Jul. 23, 2024) (ECF No. 1).

[46] Id. at 7.

[47] Defendant Motion to Dismiss, at 6, Janecyk v. Eggland’s Best, Inc., No. 1:24-cv-06222 (N.D. Ill. Oct. 7, 2024), (ECF No. 20).

[48] Id.

[49] Plaintiffs’ Response in Opposition to Defendants’ Motion to Dismiss, at 23–24, Janecyk v. Eggland’s Best, Inc., No. 1:24-cv-06222 (N.D. Ill. Oct. 30, 2024) (ECF No. 27).

[50] Id. at 24.

[51] 16 C.F.R. § 260.4(b) (“Because it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims, marketers should not make unqualified general environmental benefit claims”).

[52] 16 C.F.R. § 260.2 (“Marketers must ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims. In the context of environmental marketing claims, a reasonable basis often requires competent and reliable scientific evidence”).

[53] 16 C.F.R. § 260.3(a).

[54] Eco-Friendly and Green Marketing Claims, FED. TRADE COMM’N (May 2021), https://consumer.ftc.gov/articles/eco-friendly-and-green-marketing-claims.

[55] Go Ahead — Be Critical, FED. TRADE COMM’N (July 2012), https://consumer.ftc.gov/articles/0308-go-ahead-be-critical.

 

 

Federal Update

Deep-Sea Mining and the Two-Year Rule

The seabed of the Pacific Ocean is one of the richest remaining sources of untapped raw minerals used to make batteries for electric vehicles, including cobalt, copper, and nickel.[1] The minerals are scattered 15,000 feet below sea level on the ocean floor in the form of polymetallic nodules, which are fist-sized rocks that have formed over millions of years.[2] The nodules are collected through deep-sea mining by using a vehicle that vacuums up the top four inches of sediment and separates out the nodules for harvesting.[3]

Although the collection technology needed for deep-sea mining is relatively new, the existence of mineral deposits on the seabed has been known for decades.[4] The first nodule was discovered in 1873 by a British naval ship, but it took another hundred years for developed nations to seriously begin exploring the seabed of the Pacific Ocean as a possible resource.[5] Those early explorations identified the Clarion-Clipperton Zone, which is a section of ocean located between Hawaii and Mexico that has an “especially large volume of nodules.”[6] The area is estimated to have “six times more cobalt and three times more nickel than all known land-based stores, as well as vast deposits of manganese and a substantial amount of copper.”[7]

The United Nations established the International Seabed Authority (ISA) on November 16, 1994 under the 1982 United Nations Convention on the Law of the Sea (UNCLOS) and the 1994 Agreement relating to the Implementation of Part XI of the United Nations Convention on the Law of the Sea (1994 Agreement).[8] Ratified by 167 countries and the European Union, the ISA controls activities relating to mineral resources in around 54% of the total area of the world’s oceans for “the benefit of mankind as a whole.”[9]  The ISA’s duty is to adopt appropriate regulations that “ensure the effective protection of the marine environment from harmful effects that may arise from mineral exploration and exploitation.”[10]

As of mid-2019, the ISA has granted fifteen-year exploration contracts to thirty governmental and private entities.[11] However, the ISA has never granted an exploitation contract.[12] The reason for this discrepancy is that exploitation contracts cannot be granted until the ISA develops comprehensive exploitation regulations, which it has yet to do—despite working on the regulations for over twenty years.[13] This state of affairs might change in the very near future: Nauru, a Pacific island nation with a population of around 10,0000 people[14] invoked the “two-year rule” in June 2021.[15]

The two-year rule is a provision in the 1994 Agreement that allows member states to request that the ISA “‘elaborate and adopt’ the exploitation regulations” within two years of the request.[16] If the ISA fails to meet this deadline, it must provisionally approve the exploitation request in accordance with other sections of UNCLOS and the 1994 Agreement.[17] The ISA has until July 2023 to finalize exploitation regulations.[18]

If the finalized regulations allow industrial deep-sea mining to begin in earnest, the environmental consequences could be far-reaching. The major environmental concern with deep-sea mining is that it “poses unknown risks to the ocean, the climate, valuable fisheries, biodiversity, and the people that depend on the ocean.”[19] At the moment, very little is known about the short- and long-term environmental effects of deep-sea mining, although researchers are working to uncover the potential consequences.[20] One of the key concerns is that sediment accumulates on the ocean floor “at a glacial pace. . . of 1 millimeter every millennium.”[21] This slow growth rate means that mined areas of the seabed will be unlikely to recover within any reasonable timeframe.[22] As a result, both organisms and geographic features like water columns that exist on the seabed today could be irreparably damaged.[23]

In light of such significant environmental concerns, it would be a serious problem if the two-year rule forces the ISA to rush its exploitation regulations and consequently causes it to produce sub-standard regulations that inadequately protect the marine environment. One researcher, Pradeep Singh, has suggested that the two-year deadline “could largely prove inconsequential” because the ISA could choose to take “a measured, calculated risk” by advancing creative legal arguments to delay or frustrate the elaboration and adoption of exploitation regulations.[24] Yet other environmental lawyers, like Duncan Currie, who advises the Deep Sea Conservation Coalition, are convinced that the ISA will be forced to provide a decision by July 2023 as to “whether to go down what is a very one-way street toward deep-sea mining at the enormous expense of the marine environment, or whether…to continue to take a cautious view.”[25]

Critics of deep-sea mining are also concerned about Nauru’s motivations for triggering the two-year rule in the first place.[26] Nauru triggered the rule on the basis that it is sponsoring a company called Nauru Ocean Resources, Inc. (NORI), that wants to apply for a contract to begin exploiting the seabed.[27] But while NORI is incorporated and registered in Nauru, it is a wholly owned subsidiary of a private Canadian company, the Metals Company.[28] Both Nauru and the Metals Company portray deep-sea mining as essential to cutting carbon emissions because it can provide metals that are necessary to facilitate the switch from gas to electric vehicles.[29] While this potential environmental benefit is real, it is arguably offset or canceled out by the environmental costs of disrupting the seabed.[30] It is also true that deep-sea mining could be incredibly lucrative; the Metals Company estimates that it will earn at least $31 billion over the course of its 25-year mining project.[31] As a small island nation without a lot of resources, Nauru has “no ability of its own to pursue such an undertaking” like deep-sea mining, but still wants to benefit from it.[32] The solution is to partner with a foreign firm, potentially for as little as “half of one percent of the firm’s total estimated value of the mined mineral.”[33]

While it is understandable that Nauru would seek to boost its own economic situation given the circumstances, the fact remains that it has unilaterally put the ISA in an uncomfortable position. For almost twenty years the ISA has been maintaining a delicate balance between promoting industry and protecting the environment by allowing the exploration of the seabed while delaying the exploitation of it. It remains to be seen next summer whether that balance could be permanently upset if exploitation regulations are formalized.

Amy Rodriguez is an attorney at Montage Legal. She primarily handles civil litigation and her previous work centered on advancing environmental goals through negotiation and administrative hearings. She is a 2017 graduate of the University of Texas School of Law.

Camille Richieri is a J.D. Candidate, Class of 2024, at The University of Texas School of Law. Camille joined TELJ in Fall 2022. She was born in New York and studied public policy and economics at Duke University.