For practically all companies, there is increased pressure to promote their sustainability and overall “green” efforts. This includes Environmental Social and Governance or ESG, sustainability efforts, and in general, activity associated with reducing anthropogenic emissions of greenhouse gases. Increasingly, company statements regarding their commitment to a green agenda can open them up to liability as witnessed by the lawsuits focused on “greenwashing” and deception.
Greenwashing
According to the United Nations, “Greenwashing presents a significant obstacle to tackling climate change. By misleading the public to believe that a company or other entity is doing more to protect the environment than it is, greenwashing promotes false solutions to the climate crisis that distract from and delay concrete and credible action.”
Reach and Scope of ESG
ESG is unlike the more classical environmental issues that focus on discharges and disposal. ESG includes aspects as diverse as direct emissions from a company, recycling consumer products, emissions from business travel, where companies invest, “diversity” of management, company policies, “ethics,” and much more. Consequently, the lawsuits are not confined to the “smokestack industry.” You may recall the recent case against Keurig Canada.
Lawsuit against Keurig Canada
According to a January 2022 news release from the Competition Bureau Canada, “The Bureau’s investigation concluded that Keurig Canada’s claims regarding the recyclability of its single-use coffee pods are false or misleading in areas where they are not accepted for recycling. The Bureau found that, outside the provinces of British Columbia and Quebec, K-Cup pods are currently not widely accepted in municipal recycling programs.”
As part of the Keurig settlement, they paid a $3 million penalty, donated $800,000 to a Canadian charitable organization focused on environmental causes, paid an additional $85,000 for the costs of the Bureau’s investigation, and changed its recyclable claims in the packaging of the K-Cup pods.
Activists Focus on ESG
Activist organizations, such as Greenpeace, have been actively pursuing greenwashing complaints, including those that result in investigations by securities regulators or competition regulators (Source: Canadian Lawyer Magazine).
To that point, Greenpeace Canada filed a complaint against Pathways (a group of six oilsands companies) based on their campaign, “Let’s Clear the Air.” The March 2023 article is in Canada’s National Observer.
The complaint by Greenpeace states that advertisements by Pathways aim at “creating the public and political support necessary to maintain their oilsands production.” They also state that “Pathways is engaging in ‘anti-competitive’ behaviour by attempting to unfairly gain an advantage … over other Canadian oil producers and clean energy producers trying to compete with oil in the market.”
If you are making public proclamations regarding your efforts, you should carefully consider all statements regarding ESG/Sustainability/Climate (Photo Credit feri-tasos unsplash).
Competition Act Amendments
Bolstering the efforts by the green groups are the 2022 amendments to the Competition Act. Previously, there was a $10 million cap on companies that engaged in fraudulent or misleading practices. That is now up to three percent of the value of the benefit derived from the product or three percent of worldwide annual gross revenue.
As reported in the Financial Post, “In the last year, Canadian green groups have lodged at least four formal complaints with the (Competition) bureau…” The article goes on to say that under Canada’s Competition Act, it only takes six signatories to a deceptive advertising complaint to compel the bureau to launch an investigation.
Global and US ESG/Climate Litigation
According to a report by the United Nations, as of the end of 2022, there have been 2,180 climate-related cases filed in 65 jurisdictions, including international and regional courts, tribunals, quasi-judicial bodies, or other adjudicatory bodies, such as Special Procedures at the United Nations and arbitration tribunals.
For comparison, in 2017 there were 884 cases and in 2020 there were 1,550 cases.
A website created by the Sabin Center for Climate Change Law at Columbia University in conjunction with the law firm, Arnold & Porter, tracks climate change litigation. The site reports global climate change litigation and is updated monthly.
- Global Climate Change Litigation includes 806 cases in about 55 countries. This includes suits against governments, suits against corporations and individuals, and advisory opinions.
- US. Climate Change Litigation dwarfs the Global database with nearly 1,700 cases. The litigation is segregated by federal environmental acts, state laws, and constitutional claims.
As we reported in a US Blog, one of the more recent high-profile ESG cases in the US involved children suing the State of Montana over Montana’s State Energy Policy Act. A provision in the Act forbids the state and its agents from considering the impacts of greenhouse gas emissions or climate change in their environmental reviews. In ruling in favor of the plaintiffs, Judge Kathy Seeley states “Plaintiffs have proven that as children and youth, they are disproportionately harmed by fossil fuel pollution and climate impacts.”
Companies in the US are also awaiting the outcome of a proposed rule by the US Security and Exchange Commission that would include Scope 1, 2, and 3 emissions. This rule if/when implemented will be very impactful across the US economy.
As the focus on ESG continues to grow so will the associated litigation. If you are making public proclamations regarding your efforts, you should carefully consider all statements regarding ESG/Sustainability/Climate. Before making these commitments, it would be prudent to discuss them with legal counsel.
If you need assistance with an environmental-related matter, contact Christopher Pare’, P.Geo. Q.P. at 519-948-7300, Ext. 114.
Dragun Corporation does not use artificial intelligence in drafting our blogs or any other material.
Alan Hahn drafted this blog. Alan holds an undergraduate degree in Environmental Studies and completed a graduate program in Environmental Management. He has worked in environmental management for 45 years. He has written hundreds of blogs and articles. His published work includes HazMat Magazine, BizX Magazine, Michigan Lawyers Weekly, GreenStone Partners, Manure Manager Magazine, and Progressive Dairy.
Christopher Paré, P.Geo, reviewed this blog. Chris is a senior geoscientist and manager of Dragun’s Windsor, Ontario, office. Chris has more than 30 years of experience on projects ranging from environmental site assessments (Phase One/Two ESA), excess soils, remedial investigations, soil and groundwater remediation, Permits to Take Water, Records of Site Conditions, vapour intrusion, and site decommissioning. Chris is a frequent speaker, author, and expert witness. See Chris’ bio.
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