June 12, 2024 • 27 mins
Companies are grappling with how to market the eco-friendly, people friendly, and animal friendly characteristics of their products and services, while also not getting in trouble with the law. Some have learned this the hard way. Some have wisely consulted experts. (That's foreshadowing.)
ESG – or Environmental, Social and Governance – reporting and so-called greenwashing litigation have implications for a wide range of stakeholders. Companies face significant financial and reputational risks, while investors, regulators, advocacy groups, and consumers all have an interest in ensuring the accuracy and transparency of ESG information.
Last year the SEC adopted amendments to the Investment Company Act with the “Names Rule,” which addresses fund names that are likely to mislead investors about a fund’s investments and risks.
On the consumer side, the FTC has been on the case as it stalks misleading advertising claims. Violations have real consequences. In 2022 the FTC reached multimillion dollar settlements with store chains Kohl’s and Walmart over claims that certain products were eco-friendly and made from bamboo, when they were really made from rayon.
More recently, a class action was filed in federal court in New York over the "carbon neutral" branding on bottled water. But there are some important court decisions our guest wants to know about, involving shoemaker AllBirds and beauty products company Sephora.
She is Ramya Ravishankar, General Counsel & Corporate Secretary of the HowGood company, an independent research firm that helps the world’s largest food brands meet their sustainability commitments. Ramya is a former environmental biologist turned attorney who is – as you will soon hear -- passionate about the intersection of food and sustainability. Previously, Ramya was Associate General Counsel at Bowery Farming – producer of pesticide free lettuce, other leafy foods and herbs. Before that she was a regulatory enforcement associate at Skadden Arps. Ramya earned her J.D. from Columbia Law School in New York and a B.S. from Queen’s University in Ontario, Canada.
Enjoy the interview!
*******
This podcast is the audio companion to the Journal of Emerging Issues in Litigation. The Journal is a collaborative project between HB Litigation Conferences and the vLex Fastcase legal research family, which includes Full Court Press, Law Street Media, and Docket Alarm.
If you have comments, ideas, or wish to participate, please drop me a note at Editor@LitigationConferences.com.
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Host of the Emerging Litigation Podcast
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Tom Hagy (00:01):
Welcome to the Emerging Litigation Podcast.
This is a group project drivenby HB Litigation, now part of
Critical Legal Content and VLEXCompany's Fast Case and Law
Street Media.
I'm your host, tom Hagee,longtime litigation news editor
and publisher and currentlitigation enthusiast.
If you wish to reach me, pleasecheck the appropriate links in
(00:23):
the show notes.
This podcast is also acompanion to the Journal of
Emerging Issues and Litigation,for which I serve as
editor-in-chief, published byFastcase Full Court Press.
And now here's today's episode.
If you like what you hear,please give us a rating.
Esg or Environmental, social andgovernance.
(00:45):
The reporting of your ESGcommitments and so-called
greenwashing litigation haveimplications for a wide range of
stakeholders.
Maybe you Companies facesignificant financial and
reputational risks, whileinvestors, regulators, advocacy
groups and consumers all have aninterest in ensuring the
(01:05):
accuracy and transparency of ESGclaims and information.
On the investor side, last year, the Securities and Exchange
Commission you know the SECadopted amendments to the
Investment Company Act with theNames Rule, and this is intended
to address fund names that arelikely to mislead investors
(01:28):
about a fund's investments andrisks.
One way some companies canmislead investors is by saying
they're doing good things forthe planet or for your health,
when the reality is, they areeither exercising wordplay or
just not telling the truth.
Can you imagine?
Certain terms that reference athematic investment focus, such
(01:51):
as the incorporation of one ormore ESG factors, are being
scrutinized, but on the consumerside, the Federal Trade
Commission has been on the case,because the agency stalks
misleading advertising claims.
Such violations have realconsequences.
In 2022, the FTC reachedmulti-million dollar settlements
(02:12):
with store chains Kohl's andWalmart over claims that certain
products were eco-friendly andmade from bamboo.
Who doesn't love bamboo?
I know I do, but as it turnsout, the FTC said some items
advertised as bamboo wereactually made of rayon.
And who doesn't love rayon?
(02:33):
I don't know if anyone lovesrayon.
Side note, did you know thatrayon is marketed in some
countries as cactus silk?
That's a fun fact.
I'm no expert, but I'm certainthe FTC would be all over that.
Back to bamboo.
The agency said theeco-friendly bamboo claims from
the store chains were misleadingrepresentations that violated
(02:54):
the FTC Act and the Textile Act.
In addition, the FTC saysKohl's and Walmart engaged in
greenwashing by making deceptiveeco-friendly claims for those
products.
Each company paid a couplemillion dollars for their
violations and the FTC hasresources for those looking to
stay on the eco-friendlystraight and narrow, like its
(03:15):
green guides.
This is welcome news forconsumers.
According to McKinsey Company,more than half of US consumers
are highly concerned about theenvironmental impact of
packaging.
In general, consumers arewilling to pay more for more
green.
So companies are accommodating,mostly on the up and up,
developing and marketing moreproducts than ever that are in
(03:38):
addition to eco-friendly thingslike sulfate-free, all-vegan
plant-based, like sulfate-free,all-vegan plant-based, non-toxic
, earth-friendly,environmentally friendly or
carbon neutral to remaincompetitive.
That last one, carbonneutrality, is the subject of a
class action in federal court inNew York over the branding on
bottled water.
(03:59):
But there are other noteworthycases and my guest is here to
talk about them.
She is Ramya Ravi Shankar,general Counsel and Corporate
Secretary of the HowGood Company.
Howgood is an independentresearch firm that helps the
world's largest food brands meettheir sustainability
commitments, so she's helpingthem stay on the straight and
(04:20):
narrow Well, she and her team.
Ramya is a former environmentalbiologist turned attorney who
is, as you will soon hear,passionate about the
intersection of food andsustainability.
It's great to love your job,and so can you.
Previously, ramya was associategeneral counsel at Bowery
Farming, a producer ofpesticide-free lettuce and other
(04:42):
leafy foods and herbs.
Before that, she was aregulatory enforcement associate
at Skadden Arps.
You've heard of them.
Ramya earned her JD fromColumbia Law School in New York
and her Bachelor of Sciencedegree from Queen's University
in Ontario, canada.
And now here is my interviewwith Ramya Ravishankar of how
(05:05):
Good speaking to me from hertidy in what I can only assume
is a plant-based, non-toxicapartment in New York.
I hope you enjoy it, ramya.
Thank you very much forspeaking with me today.
Ramya Ravishankar (05:16):
I'm excited to be here.
Tom Hagy (05:17):
Are you?
Ramya Ravishankar (05:18):
I am.
This is actually my favoritepart of my job.
It really is.
Tom Hagy (05:22):
Well, yeah, they say, if you love your job, you never
work a day in your life, right?
Somebody said that.
I learned it from a sitcom.
We're going to talk aboutgreenwashing and greenwashing
litigation, so if you could helpset the stage for this.
What is greenwashing for thosewho don't know, and why is it
such a hot topic?
Ramya Ravishankar (05:40):
Yeah, greenwashing has become
certainly a more prevalentpractice and has been making
mainstream news beyond just thesort of niche circles.
Maybe it once took up in thepast.
But it describes a deceptivemarketing practice where
companies make exaggerated orotherwise unsupported claims
(06:01):
about the positive impacts thatthey and their products or
services have on the environment.
And it can really run the gamut.
You know it could beexaggerating that a product has
a particular environmentalbenefit, or it could be, you
know, actively making a false ormisleading claim about a
(06:22):
particular sustainabilityinvestment, or it could even be
a statement or message thatdiverts attention away from a
company's you know overallnegative environmental impact.
And you know, at the end of theday, the through line across
all of these types of examplesis with greenwashing.
Anything that's types ofexamples is with greenwashing.
(06:42):
Anything that's untruthful,inaccurate, exaggerated or even
ambiguous could fall under theumbrella and could be a cause
for concern and cause for riskfor businesses.
Tom Hagy (06:56):
Okay, let's get into some of the litigation.
So I've read about greenwashinglawsuits.
I just wanted to get your ideaof sense of how prevalent they
are and who typically files them.
Ramya Ravishankar (07:06):
They're quite prevalent, and increasingly so.
I think in the last couple ofyears you know some statistics
show it's gone from like acouple hundred to like high
hundreds to even over thousandsof claims in the US being
brought under the banner ofgreenwashing.
And the reason they're becomingmore prevalent is because
consumers on the whole arebecoming more concerned about
(07:28):
corporate sustainability andabout putting their money in
investments or in purchases thatthey really believe in.
So not only is there anincreased attention from
consumers and investors aroundsustainability and claims around
sustainability, businesses aretrying to meet the moment by
touting their sustainabilitybona fides and making more
(07:50):
sustainability focused claimsabout why people should be
investing and buying from themhave the directional increase of
risk and ambiguity and evenexaggeration that can then lead
to these lawsuits.
So you know, some folks mightactively, you know, be taking
(08:15):
creative liberties incommunicating how sustainable
they really are, whereas othersmight not be doing it in such an
egregious manner but just notdoing it properly.
But in any case, these are someof the kind of push factors
into why we're seeing so manysuits.
Tom Hagy (08:29):
Yeah, seems like a lot of marketing claims are like
that.
They'll push an envelope.
I remember when my kids werelittle they'd say look dad, free
cell phones.
Yeah, they're free if you buythem.
So I'm sure that was completelylegal, but not to somebody who
was like eight years old.
Who's typically filing thesecases?
(08:51):
Are there specific groups orindividuals or firms leading it?
Ramya Ravishankar (09:01):
that is engaged in bringing these cases
and, as I said, with moresophisticated consumers who want
more details around thesustainability marketing that
they are relying on.
There are plenty of plaintiffswho want to be the named
plaintiff in these cases.
But apart from class actions,you're also seeing an increase
in state regulators and federalregulators bringing cause of
(09:23):
action from a consumerprotection perspective.
So you know, the Federal TradeCommission is a really good
example of that.
You know they are responsiblefor false advertising risk and
protecting consumers from that.
So from that angle, we'vegotten a lot of inquiries and a
lot of cause of action beingbrought, of inquiries and a lot
of cause of action being brought.
And the National AdvertisingDivision, which is an arm of the
(09:45):
Better Business Bureau, alsobrings inquiries and actions
against companies.
So you're seeing across allthese different platforms in the
US just a rising tide lifts allboats.
Everybody is getting in on thegreenwashing litigation train.
That's what's most prevalent.
But layer onto that, you know,securities regulators are also
(10:07):
interested in bringinggreenwashing cases.
You see the SEC's released somerules around climate disclosure
, reporting and I think fromtheir perspective, when a
company touts its environmentalbona fides and doesn't actually
have the substantiation to backit up.
That inflates its value toinvestors and therefore could be
(10:32):
disrupting the financial systemand not providing accurate
disclosures to investors.
So everybody wants to targetand attack this from different
angles.
Tom Hagy (10:42):
Right.
Are there any cases, recentones, that you find particularly
interesting?
Ramya Ravishankar (10:47):
Yeah, the seminal case for me from the
last few years is one that wasbrought against the footwear
company Allbirds.
So in 2022, a case in New Yorkfederal court was brought
against the brand, which hadadvertised that they were
reducing their carbon footprintand in doing that, they had
(11:08):
shared a carbon score and theyhad showed the life cycle
assessment tool that they hadused to calculate that score.
Plaintiffs in this class actionclaimed that that methodology
and that lifecycle assessmentwas not robust enough and was
not including enough aspects ofAllbirds manufacturing in order
(11:30):
to accurately share what itstrue carbon impact was and
therefore was affecting theirpurchasing decisions.
The court actually ruled inAllbirds favor because the
underlying claim was notactually that the brand was
misleading consumers.
It was simply that themethodology they were using was
(11:50):
not up to the plaintiff'sstandard for what it should be.
Simple criticism around themethodology was not enough under
the consumer protection statutethat the claim was brought
under to be sufficient for thecourt to rule in the plaintiff's
favor.
You can see, though, how ithinged entirely on how clearly
(12:11):
and overtly the brand disclaimedor caveated its incremental
benefit claims.
It had cited to a particularmethodology, it had cited to a
particular score and had madethat, you know, reasonably
available to consumers.
But if it hadn't, if it hadjust stopped at our shoes are
great for the earth or our shoeshave a carbon impact of X Y, z,
(12:34):
without any underlying supportdocuments, the court could have
easily ruled in favor of theplaintiffs instead of dismissing
the case.
So it's a really good exampleof how companies can avoid a
unfavorable ruling down the road.
Tom Hagy (12:49):
The only thing I'd like to say about Allbirds is,
first of all, I'm wearing themright now, and what I'd like to
say, what my problem with themis, is they've convinced us that
it's okay to wear slippersoutside.
Ramya Ravishankar (13:00):
I think there are a lot of people who would
agree with you that fashiontrends have moved almost too far
in the direction of informaland that we might want to rein
it in a little bit.
Tom Hagy (13:12):
Yeah, I see people walking around Aren't those
pajamas.
I can't tell what that person'swearing.
Ramya Ravishankar (13:16):
Yeah, or like workwear that is wrinkle-free
and so easy to get into, butyou're basically wearing a
sweatsuit, yeah.
Tom Hagy (13:23):
That's America.
We're a casual country.
You said there were two cases.
What was the other case?
Ramya Ravishankar (13:27):
Yeah, the other case that I wanted to
bring to your audience'sattention is a little bit more
recent.
It was actually just decided inMarch of this year and it
involves the cosmetics companySephora.
And full disclaimer up front.
I am a Sephora consumer so Iunderstand and appreciate the
(13:47):
depth of offerings that thiscompany has.
The underlying claims wererelated to Sephora's Clean at
Sephora program, which is adesignation that they attribute
to various personal care andcosmetics products that meet
certain criteria that they havedetermined are clean Sephora
(14:12):
criteria that they havedetermined are clean.
Sephora, in its website and inits marketing materials, makes
it very apparent what thosecriteria are, including the fact
that the products have to bemade without certain chemicals
like parabens or sulfates,mineral oil, formaldehyde, so on
and so forth, and itarticulates all of this.
But the plaintiffs in this casesuggested that the phrase and
(14:34):
the label clean at Sephora madethem reasonably think that the
products were free of syntheticmaterials altogether or all
harmful materials altogether.
Here again the court actuallyruled in favor of the brand and
dismissed the action because theway the definition and criteria
(14:58):
for the clean at Sephoraprogram was set out, no
reasonable consumer could assumethe more expansive definition
that the plaintiffs were puttingforward.
Clean at Sephora means X, y andZ, and this is where we've
listed it and this is why it'snot misleading was the company's
argument and it held up incourt.
(15:18):
Again, it hinged on the factthat the company had made very
clear and very easily accessibleinformation for consumers so
that whatever green claim wasbeing assessed, the consumer
would have a robust set of factsto assess that, instead of
jumping in and filling the gapsthemselves with more ambiguous
(15:41):
or, more you know, incorrectdetails.
Tom Hagy (15:45):
So in both cases both companies were transparent about
the yardstick they were using,but the plaintiffs didn't like
the yardstick.
Does it kind of come down tothat?
Ramya Ravishankar (15:55):
That's right.
The reason I think we are inthe US seeing a lot of these
cases that could go either way,where the definitions might
shift of what a reasonableconsumer relies on in the
advertising, is because greenclaims at the moment in the
United States are covered by theFTC's green guides, which are a
(16:16):
non-binding set ofrecommendations or guidance from
the Federal Trade Commissionaround how to structure green
claims.
It was last updated over 10years ago and it hasn't moved
forward.
And along with the greaterinnovation in sustainability,
the greater innovation insustainability, marketing and
(16:39):
things that might have beenfringe or outlier type claims in
the past are becoming moreaggressively used, for example,
net zero.
That was not something that wewere really talking about back
when the green guides were lastupdated.
So getting more guardrails inplace from these regulators
around what can and can't bedone is really important and
(17:01):
because we don't yet have thatupdate, we're seeing more
pushing of the boundaries fromcompanies and then a reaction to
that and greater litigationfrom plaintiffs and other
regulators.
Tom Hagy (17:13):
In terms of the kinds of claims we might be seeing.
What do you anticipate outthere based on what you're
seeing in the US or the EU?
Ramya Ravishankar (17:21):
The EU is actually at the forefront of
regulating green claims and aredoing a more active and fulsome
job of that.
Just this year, the EuropeanParliament passed something
called the Green ClaimsDirective, which requires large
companies operating in the EU toprovide specific scientific
(17:44):
validation before they can evensay something is eco-friendly or
biodegradable or sustainable.
They have gone outright andbanned certain types of claims
that otherwise would have beenpermitted before.
The UK now has a newanti-greenwashing rule that's
going into effect and theregulating authority there is
(18:04):
the Financial Conduct Authority.
So it's giving them more toolsto combat claims that companies
are making around greenwashingand to address noncompliance.
So, whether you see it in theUS through the FTC or other
regulators here or not, ifyou're a large operator, you're
going to be paying attention togreenwashing regulation abroad,
(18:29):
and it's coming fast and furious.
Washing regulation abroad andit's coming fast and furious.
There's going to be a lot morethat marketing teams and legal
teams are going to have to do tostay abreast of these updates?
Tom Hagy (18:39):
What advice, practical guidance, would you give to
companies to avoid greenwashingclaims?
Ramya Ravishankar (18:43):
So at a high level to minimize risk.
I think the common denominatoracross jurisdictions is to have
any statements that a company isputting forward externally be
accompanied by strongsubstantiation data and
transparency around thatsubstantiation and data.
And then you also want toaugment that system of
(19:06):
transparency with strongunderlying policies around risk
management and having crediblestandards by which you are
determining that a particularproduct or a particular service
is what you're claiming it is.
With respect to environmentalimpacts, you want to be really
clear and concise around whatthe purported environmental
(19:30):
benefit is and you want to makesure you're not overstating or
even omitting certain thingsthat would be material to your
consumers.
And if I were to drill downmore tactically for companies, I
would say you want to havestrong data provider partners
who can support some of theseclaims that you're making.
If it is 50% more recyclablethan your average brand or
(19:55):
whatever the claim is, you wantto make sure that the data
that's powering that 50% claimcan be substantiated with
credible scientific evidence.
It complies with leadingsustainability standards and
frameworks.
You want to make sure that thedata and the methodology used to
calculate that data areregularly reviewed and updated
(20:16):
so that you're not relying onstandards that are already too
old from a few years back.
Tom Hagy (20:21):
Your company, howgood, serves companies in the food
industry, so do you haveanything to say relating to
those companies that may bedifferent from other companies?
Ramya Ravishankar (20:33):
yeah.
So I think food is special intwo ways and I and I genuinely I
believe this uh, not, notbecause I work at a company that
services the food industry, butfood is special because
everybody eats and can relate tofood and can understand the
impact of their purchasingdecisions with respect to food.
And the other reason isagriculture truly has an
(20:55):
outsized impact on climate andenvironmental issues.
Individuals can tie moreclosely what they're eating with
the impact that choice ismaking on sustainability and on
the environment.
For companies in this space,when they are trying to share
their sustainability investmentsand make green claims, I would
(21:17):
emphasize, in their partneringwith data providers, that they
focus on data providers thathave a specialty in agricultural
production, that can providedata that is not just ingredient
specific but location and cropspecific and can incorporate
different levels of granularityand complexity across their
(21:40):
supply chain.
So if they have data on aparticular supplier that grows a
crop in a particular region,your data provider can
incorporate that supplier dataand be able to provide more
detailed insights.
Tom Hagy (21:56):
Could you say a few words about green hushing?
Frankly, not until I talked toyou the first time that I hear
that term, Of course.
Now I see it all over the place.
But what's going on with greenhushing?
What is that?
Ramya Ravishankar (22:08):
is actually under-reporting or altogether
omitting their sustainabilitycredentials in fear of lawsuits
and regulator scrutiny.
So what I can say is, assustainability becomes an
(22:33):
increasing factor inindividuals' purchasing
decisions, it becomes a factorin regulators policy priorities.
You are also going to seecompanies being more activist
and embracing that, but you'realso going to see companies
afraid of embracing that andtrying to distance themselves
(22:54):
from it, and that's what greenhushing refers to.
But in this context, I want toput your audience, put a few
other points on your audience'sradar.
One is this other practice ofgreen rinsing.
So when a company sets a targetaround its sustainability goals
(23:15):
and then, before they'reachieved, moves the goalposts
and changes the target becauseit was not able to meet what it
had set itself out to do.
In fact, several large,well-known brands have recently
been under fire for doingexactly that.
They had set aggressive goalsfor 2030 a couple of years ago
(23:38):
and, as 2030 approaches, areeither decreasing the impact
that they are hoping to achieveby then or changing the timeline
to beyond 2030, to a longertimescale by when they expect
this impact to be realized.
And then the last concept isgreen lighting.
So, like gaslighting, greenlighting, oh my gosh Last
(24:00):
concept is green lighting.
So, like gas lighting, greenlighting, oh my gosh, where
companies tout theirenvironmental bona fides, but in
doing that they're reallytrying to draw attention away
from the negative aspects ofwhat they're doing.
So it's like they're greatpartners and contributors to the
fight against climate change,but really, on the whole,
(24:21):
they're probably not doingenough relative to their
externalities that they'recontributing.
Tom Hagy (24:28):
Okay, Any other variations on green?
I'm sure there's a few others.
Ramya Ravishankar (24:32):
These are just my favorite and I feel like
they're all reactions andcounter reactions to an
increasingly sophisticatedconsumer base that cares about
sustainability and that wants tosee its dollar going to
businesses that are making moresustainable choices.
Tom Hagy (24:52):
Yeah, it just seems like a very tricky area right
now.
You want to do the right thing,or maybe you have to do the
right thing, but if you don't doit right you're in a lot of
trouble.
You want to tell everybodyabout it, but you don't want to
be too obvious, Like hey, lookat me over here.
So it's tricky.
But I think your advice aroundhaving statements backed up by
(25:15):
data or good data partners beingtransparent, those kinds of
things to keep you on thestraight and narrow Sound like
good guidance.
Ramya Ravishankar (25:24):
What I'd leave your listeners with at the
end, I think, is this is reallya cross-functional project for
companies.
It's not just theresponsibility of legal, it's
not just the responsibility ofmarketing.
You really want yourprocurement teams, your
communications teams, yourcompliance teams all working in
lockstep with legal andmarketing to make sure that the
(25:48):
company's reputation and thecompany's value proposition are
appropriately and adequatelycommunicated.
One way to do that is havingsome sort of working group or
committee in place that owns andis responsible for this.
Tracking trends and regulatorydevelopments and incorporating
(26:09):
them into the company-widestrategy around sustainability
will be really helpful.
Tom Hagy (26:14):
Well, ramya Ravi Shankar, thank you very much for
talking with me about thistoday.
Thank you, it's been a pleasuremuch for talking with me about
this today.
Thank you, it's been a pleasure.
That concludes this episode ofthe Emerging Litigation Podcast,
a co-production of HBLitigation, Critical Legal
Content, VLEX Fast Case and ourfriends at Losty Media.
I'm Tom Hagee, your host.
(26:34):
Please feel free to reach outto me if you have ideas for a
future episode and don'thesitate to share this with
clients, colleagues, friends,animals you may have left at
home and certain classificationsof fruits and vegetables, and
if you feel so moved, pleasegive us a rating.
Those always help.
Thank you for listening.
Welcome to the Emerging Litigation Podcast.
This is a group project drivenby HB Litigation, now part of
Critical Legal Content and VLEXCompany's Fast Case and Law
Street Media.
I'm your host, tom Hagee,longtime litigation news editor
and publisher and currentlitigation enthusiast.
If you wish to reach me, pleasecheck the appropriate links in
(00:23):
the show notes.
This podcast is also acompanion to the Journal of
Emerging Issues and Litigation,for which I serve as
editor-in-chief, published byFastcase Full Court Press.
And now here's today's episode.
If you like what you hear,please give us a rating.
Esg or Environmental, social andgovernance.
(00:45):
The reporting of your ESGcommitments and so-called
greenwashing litigation haveimplications for a wide range of
stakeholders.
Maybe you Companies facesignificant financial and
reputational risks, whileinvestors, regulators, advocacy
groups and consumers all have aninterest in ensuring the
(01:05):
accuracy and transparency of ESGclaims and information.
On the investor side, last year, the Securities and Exchange
Commission you know the SECadopted amendments to the
Investment Company Act with theNames Rule, and this is intended
to address fund names that arelikely to mislead investors
(01:28):
about a fund's investments andrisks.
One way some companies canmislead investors is by saying
they're doing good things forthe planet or for your health,
when the reality is, they areeither exercising wordplay or
just not telling the truth.
Can you imagine?
Certain terms that reference athematic investment focus, such
(01:51):
as the incorporation of one ormore ESG factors, are being
scrutinized, but on the consumerside, the Federal Trade
Commission has been on the case,because the agency stalks
misleading advertising claims.
Such violations have realconsequences.
In 2022, the FTC reachedmulti-million dollar settlements
(02:12):
with store chains Kohl's andWalmart over claims that certain
products were eco-friendly andmade from bamboo.
Who doesn't love bamboo?
I know I do, but as it turnsout, the FTC said some items
advertised as bamboo wereactually made of rayon.
And who doesn't love rayon?
(02:33):
I don't know if anyone lovesrayon.
Side note, did you know thatrayon is marketed in some
countries as cactus silk?
That's a fun fact.
I'm no expert, but I'm certainthe FTC would be all over that.
Back to bamboo.
The agency said theeco-friendly bamboo claims from
the store chains were misleadingrepresentations that violated
(02:54):
the FTC Act and the Textile Act.
In addition, the FTC saysKohl's and Walmart engaged in
greenwashing by making deceptiveeco-friendly claims for those
products.
Each company paid a couplemillion dollars for their
violations and the FTC hasresources for those looking to
stay on the eco-friendlystraight and narrow, like its
(03:15):
green guides.
This is welcome news forconsumers.
According to McKinsey Company,more than half of US consumers
are highly concerned about theenvironmental impact of
packaging.
In general, consumers arewilling to pay more for more
green.
So companies are accommodating,mostly on the up and up,
developing and marketing moreproducts than ever that are in
(03:38):
addition to eco-friendly thingslike sulfate-free, all-vegan
plant-based, like sulfate-free,all-vegan plant-based, non-toxic
, earth-friendly,environmentally friendly or
carbon neutral to remaincompetitive.
That last one, carbonneutrality, is the subject of a
class action in federal court inNew York over the branding on
bottled water.
(03:59):
But there are other noteworthycases and my guest is here to
talk about them.
She is Ramya Ravi Shankar,general Counsel and Corporate
Secretary of the HowGood Company.
Howgood is an independentresearch firm that helps the
world's largest food brands meettheir sustainability
commitments, so she's helpingthem stay on the straight and
(04:20):
narrow Well, she and her team.
Ramya is a former environmentalbiologist turned attorney who
is, as you will soon hear,passionate about the
intersection of food andsustainability.
It's great to love your job,and so can you.
Previously, ramya was associategeneral counsel at Bowery
Farming, a producer ofpesticide-free lettuce and other
(04:42):
leafy foods and herbs.
Before that, she was aregulatory enforcement associate
at Skadden Arps.
You've heard of them.
Ramya earned her JD fromColumbia Law School in New York
and her Bachelor of Sciencedegree from Queen's University
in Ontario, canada.
And now here is my interviewwith Ramya Ravishankar of how
(05:05):
Good speaking to me from hertidy in what I can only assume
is a plant-based, non-toxicapartment in New York.
I hope you enjoy it, ramya.
Thank you very much forspeaking with me today.
Ramya Ravishankar (05:16):
I'm excited to be here.
Tom Hagy (05:17):
Are you?
Ramya Ravishankar (05:18):
I am.
This is actually my favoritepart of my job.
It really is.
Tom Hagy (05:22):
Well, yeah, they say, if you love your job, you never
work a day in your life, right?
Somebody said that.
I learned it from a sitcom.
We're going to talk aboutgreenwashing and greenwashing
litigation, so if you could helpset the stage for this.
What is greenwashing for thosewho don't know, and why is it
such a hot topic?
Ramya Ravishankar (05:40):
Yeah, greenwashing has become
certainly a more prevalentpractice and has been making
mainstream news beyond just thesort of niche circles.
Maybe it once took up in thepast.
But it describes a deceptivemarketing practice where
companies make exaggerated orotherwise unsupported claims
(06:01):
about the positive impacts thatthey and their products or
services have on the environment.
And it can really run the gamut.
You know it could beexaggerating that a product has
a particular environmentalbenefit, or it could be, you
know, actively making a false ormisleading claim about a
(06:22):
particular sustainabilityinvestment, or it could even be
a statement or message thatdiverts attention away from a
company's you know overallnegative environmental impact.
And you know, at the end of theday, the through line across
all of these types of examplesis with greenwashing.
Anything that's types ofexamples is with greenwashing.
(06:42):
Anything that's untruthful,inaccurate, exaggerated or even
ambiguous could fall under theumbrella and could be a cause
for concern and cause for riskfor businesses.
Tom Hagy (06:56):
Okay, let's get into some of the litigation.
So I've read about greenwashinglawsuits.
I just wanted to get your ideaof sense of how prevalent they
are and who typically files them.
Ramya Ravishankar (07:06):
They're quite prevalent, and increasingly so.
I think in the last couple ofyears you know some statistics
show it's gone from like acouple hundred to like high
hundreds to even over thousandsof claims in the US being
brought under the banner ofgreenwashing.
And the reason they're becomingmore prevalent is because
consumers on the whole arebecoming more concerned about
(07:28):
corporate sustainability andabout putting their money in
investments or in purchases thatthey really believe in.
So not only is there anincreased attention from
consumers and investors aroundsustainability and claims around
sustainability, businesses aretrying to meet the moment by
touting their sustainabilitybona fides and making more
(07:50):
sustainability focused claimsabout why people should be
investing and buying from themhave the directional increase of
risk and ambiguity and evenexaggeration that can then lead
to these lawsuits.
So you know, some folks mightactively, you know, be taking
(08:15):
creative liberties incommunicating how sustainable
they really are, whereas othersmight not be doing it in such an
egregious manner but just notdoing it properly.
But in any case, these are someof the kind of push factors
into why we're seeing so manysuits.
Tom Hagy (08:29):
Yeah, seems like a lot of marketing claims are like
that.
They'll push an envelope.
I remember when my kids werelittle they'd say look dad, free
cell phones.
Yeah, they're free if you buythem.
So I'm sure that was completelylegal, but not to somebody who
was like eight years old.
Who's typically filing thesecases?
(08:51):
Are there specific groups orindividuals or firms leading it?
Ramya Ravishankar (09:01):
that is engaged in bringing these cases
and, as I said, with moresophisticated consumers who want
more details around thesustainability marketing that
they are relying on.
There are plenty of plaintiffswho want to be the named
plaintiff in these cases.
But apart from class actions,you're also seeing an increase
in state regulators and federalregulators bringing cause of
(09:23):
action from a consumerprotection perspective.
So you know, the Federal TradeCommission is a really good
example of that.
You know they are responsiblefor false advertising risk and
protecting consumers from that.
So from that angle, we'vegotten a lot of inquiries and a
lot of cause of action beingbrought, of inquiries and a lot
of cause of action being brought.
And the National AdvertisingDivision, which is an arm of the
(09:45):
Better Business Bureau, alsobrings inquiries and actions
against companies.
So you're seeing across allthese different platforms in the
US just a rising tide lifts allboats.
Everybody is getting in on thegreenwashing litigation train.
That's what's most prevalent.
But layer onto that, you know,securities regulators are also
(10:07):
interested in bringinggreenwashing cases.
You see the SEC's released somerules around climate disclosure
, reporting and I think fromtheir perspective, when a
company touts its environmentalbona fides and doesn't actually
have the substantiation to backit up.
That inflates its value toinvestors and therefore could be
(10:32):
disrupting the financial systemand not providing accurate
disclosures to investors.
So everybody wants to targetand attack this from different
angles.
Tom Hagy (10:42):
Right.
Are there any cases, recentones, that you find particularly
interesting?
Ramya Ravishankar (10:47):
Yeah, the seminal case for me from the
last few years is one that wasbrought against the footwear
company Allbirds.
So in 2022, a case in New Yorkfederal court was brought
against the brand, which hadadvertised that they were
reducing their carbon footprintand in doing that, they had
(11:08):
shared a carbon score and theyhad showed the life cycle
assessment tool that they hadused to calculate that score.
Plaintiffs in this class actionclaimed that that methodology
and that lifecycle assessmentwas not robust enough and was
not including enough aspects ofAllbirds manufacturing in order
(11:30):
to accurately share what itstrue carbon impact was and
therefore was affecting theirpurchasing decisions.
The court actually ruled inAllbirds favor because the
underlying claim was notactually that the brand was
misleading consumers.
It was simply that themethodology they were using was
(11:50):
not up to the plaintiff'sstandard for what it should be.
Simple criticism around themethodology was not enough under
the consumer protection statutethat the claim was brought
under to be sufficient for thecourt to rule in the plaintiff's
favor.
You can see, though, how ithinged entirely on how clearly
(12:11):
and overtly the brand disclaimedor caveated its incremental
benefit claims.
It had cited to a particularmethodology, it had cited to a
particular score and had madethat, you know, reasonably
available to consumers.
But if it hadn't, if it hadjust stopped at our shoes are
great for the earth or our shoeshave a carbon impact of X Y, z,
(12:34):
without any underlying supportdocuments, the court could have
easily ruled in favor of theplaintiffs instead of dismissing
the case.
So it's a really good exampleof how companies can avoid a
unfavorable ruling down the road.
Tom Hagy (12:49):
The only thing I'd like to say about Allbirds is,
first of all, I'm wearing themright now, and what I'd like to
say, what my problem with themis, is they've convinced us that
it's okay to wear slippersoutside.
Ramya Ravishankar (13:00):
I think there are a lot of people who would
agree with you that fashiontrends have moved almost too far
in the direction of informaland that we might want to rein
it in a little bit.
Tom Hagy (13:12):
Yeah, I see people walking around Aren't those
pajamas.
I can't tell what that person'swearing.
Ramya Ravishankar (13:16):
Yeah, or like workwear that is wrinkle-free
and so easy to get into, butyou're basically wearing a
sweatsuit, yeah.
Tom Hagy (13:23):
That's America.
We're a casual country.
You said there were two cases.
What was the other case?
Ramya Ravishankar (13:27):
Yeah, the other case that I wanted to
bring to your audience'sattention is a little bit more
recent.
It was actually just decided inMarch of this year and it
involves the cosmetics companySephora.
And full disclaimer up front.
I am a Sephora consumer so Iunderstand and appreciate the
(13:47):
depth of offerings that thiscompany has.
The underlying claims wererelated to Sephora's Clean at
Sephora program, which is adesignation that they attribute
to various personal care andcosmetics products that meet
certain criteria that they havedetermined are clean Sephora
(14:12):
criteria that they havedetermined are clean.
Sephora, in its website and inits marketing materials, makes
it very apparent what thosecriteria are, including the fact
that the products have to bemade without certain chemicals
like parabens or sulfates,mineral oil, formaldehyde, so on
and so forth, and itarticulates all of this.
But the plaintiffs in this casesuggested that the phrase and
(14:34):
the label clean at Sephora madethem reasonably think that the
products were free of syntheticmaterials altogether or all
harmful materials altogether.
Here again the court actuallyruled in favor of the brand and
dismissed the action because theway the definition and criteria
(14:58):
for the clean at Sephoraprogram was set out, no
reasonable consumer could assumethe more expansive definition
that the plaintiffs were puttingforward.
Clean at Sephora means X, y andZ, and this is where we've
listed it and this is why it'snot misleading was the company's
argument and it held up incourt.
(15:18):
Again, it hinged on the factthat the company had made very
clear and very easily accessibleinformation for consumers so
that whatever green claim wasbeing assessed, the consumer
would have a robust set of factsto assess that, instead of
jumping in and filling the gapsthemselves with more ambiguous
(15:41):
or, more you know, incorrectdetails.
Tom Hagy (15:45):
So in both cases both companies were transparent about
the yardstick they were using,but the plaintiffs didn't like
the yardstick.
Does it kind of come down tothat?
Ramya Ravishankar (15:55):
That's right.
The reason I think we are inthe US seeing a lot of these
cases that could go either way,where the definitions might
shift of what a reasonableconsumer relies on in the
advertising, is because greenclaims at the moment in the
United States are covered by theFTC's green guides, which are a
(16:16):
non-binding set ofrecommendations or guidance from
the Federal Trade Commissionaround how to structure green
claims.
It was last updated over 10years ago and it hasn't moved
forward.
And along with the greaterinnovation in sustainability,
the greater innovation insustainability, marketing and
(16:39):
things that might have beenfringe or outlier type claims in
the past are becoming moreaggressively used, for example,
net zero.
That was not something that wewere really talking about back
when the green guides were lastupdated.
So getting more guardrails inplace from these regulators
around what can and can't bedone is really important and
(17:01):
because we don't yet have thatupdate, we're seeing more
pushing of the boundaries fromcompanies and then a reaction to
that and greater litigationfrom plaintiffs and other
regulators.
Tom Hagy (17:13):
In terms of the kinds of claims we might be seeing.
What do you anticipate outthere based on what you're
seeing in the US or the EU?
Ramya Ravishankar (17:21):
The EU is actually at the forefront of
regulating green claims and aredoing a more active and fulsome
job of that.
Just this year, the EuropeanParliament passed something
called the Green ClaimsDirective, which requires large
companies operating in the EU toprovide specific scientific
(17:44):
validation before they can evensay something is eco-friendly or
biodegradable or sustainable.
They have gone outright andbanned certain types of claims
that otherwise would have beenpermitted before.
The UK now has a newanti-greenwashing rule that's
going into effect and theregulating authority there is
(18:04):
the Financial Conduct Authority.
So it's giving them more toolsto combat claims that companies
are making around greenwashingand to address noncompliance.
So, whether you see it in theUS through the FTC or other
regulators here or not, ifyou're a large operator, you're
going to be paying attention togreenwashing regulation abroad,
(18:29):
and it's coming fast and furious.
Washing regulation abroad andit's coming fast and furious.
There's going to be a lot morethat marketing teams and legal
teams are going to have to do tostay abreast of these updates?
Tom Hagy (18:39):
What advice, practical guidance, would you give to
companies to avoid greenwashingclaims?
Ramya Ravishankar (18:43):
So at a high level to minimize risk.
I think the common denominatoracross jurisdictions is to have
any statements that a company isputting forward externally be
accompanied by strongsubstantiation data and
transparency around thatsubstantiation and data.
And then you also want toaugment that system of
(19:06):
transparency with strongunderlying policies around risk
management and having crediblestandards by which you are
determining that a particularproduct or a particular service
is what you're claiming it is.
With respect to environmentalimpacts, you want to be really
clear and concise around whatthe purported environmental
(19:30):
benefit is and you want to makesure you're not overstating or
even omitting certain thingsthat would be material to your
consumers.
And if I were to drill downmore tactically for companies, I
would say you want to havestrong data provider partners
who can support some of theseclaims that you're making.
If it is 50% more recyclablethan your average brand or
(19:55):
whatever the claim is, you wantto make sure that the data
that's powering that 50% claimcan be substantiated with
credible scientific evidence.
It complies with leadingsustainability standards and
frameworks.
You want to make sure that thedata and the methodology used to
calculate that data areregularly reviewed and updated
(20:16):
so that you're not relying onstandards that are already too
old from a few years back.
Tom Hagy (20:21):
Your company, howgood, serves companies in the food
industry, so do you haveanything to say relating to
those companies that may bedifferent from other companies?
Ramya Ravishankar (20:33):
yeah.
So I think food is special intwo ways and I and I genuinely I
believe this uh, not, notbecause I work at a company that
services the food industry, butfood is special because
everybody eats and can relate tofood and can understand the
impact of their purchasingdecisions with respect to food.
And the other reason isagriculture truly has an
(20:55):
outsized impact on climate andenvironmental issues.
Individuals can tie moreclosely what they're eating with
the impact that choice ismaking on sustainability and on
the environment.
For companies in this space,when they are trying to share
their sustainability investmentsand make green claims, I would
(21:17):
emphasize, in their partneringwith data providers, that they
focus on data providers thathave a specialty in agricultural
production, that can providedata that is not just ingredient
specific but location and cropspecific and can incorporate
different levels of granularityand complexity across their
(21:40):
supply chain.
So if they have data on aparticular supplier that grows a
crop in a particular region,your data provider can
incorporate that supplier dataand be able to provide more
detailed insights.
Tom Hagy (21:56):
Could you say a few words about green hushing?
Frankly, not until I talked toyou the first time that I hear
that term, Of course.
Now I see it all over the place.
But what's going on with greenhushing?
What is that?
Ramya Ravishankar (22:08):
is actually under-reporting or altogether
omitting their sustainabilitycredentials in fear of lawsuits
and regulator scrutiny.
So what I can say is, assustainability becomes an
(22:33):
increasing factor inindividuals' purchasing
decisions, it becomes a factorin regulators policy priorities.
You are also going to seecompanies being more activist
and embracing that, but you'realso going to see companies
afraid of embracing that andtrying to distance themselves
(22:54):
from it, and that's what greenhushing refers to.
But in this context, I want toput your audience, put a few
other points on your audience'sradar.
One is this other practice ofgreen rinsing.
So when a company sets a targetaround its sustainability goals
(23:15):
and then, before they'reachieved, moves the goalposts
and changes the target becauseit was not able to meet what it
had set itself out to do.
In fact, several large,well-known brands have recently
been under fire for doingexactly that.
They had set aggressive goalsfor 2030 a couple of years ago
(23:38):
and, as 2030 approaches, areeither decreasing the impact
that they are hoping to achieveby then or changing the timeline
to beyond 2030, to a longertimescale by when they expect
this impact to be realized.
And then the last concept isgreen lighting.
So, like gaslighting, greenlighting, oh my gosh Last
(24:00):
concept is green lighting.
So, like gas lighting, greenlighting, oh my gosh, where
companies tout theirenvironmental bona fides, but in
doing that they're reallytrying to draw attention away
from the negative aspects ofwhat they're doing.
So it's like they're greatpartners and contributors to the
fight against climate change,but really, on the whole,
(24:21):
they're probably not doingenough relative to their
externalities that they'recontributing.
Tom Hagy (24:28):
Okay, Any other variations on green?
I'm sure there's a few others.
Ramya Ravishankar (24:32):
These are just my favorite and I feel like
they're all reactions andcounter reactions to an
increasingly sophisticatedconsumer base that cares about
sustainability and that wants tosee its dollar going to
businesses that are making moresustainable choices.
Tom Hagy (24:52):
Yeah, it just seems like a very tricky area right
now.
You want to do the right thing,or maybe you have to do the
right thing, but if you don't doit right you're in a lot of
trouble.
You want to tell everybodyabout it, but you don't want to
be too obvious, Like hey, lookat me over here.
So it's tricky.
But I think your advice aroundhaving statements backed up by
(25:15):
data or good data partners beingtransparent, those kinds of
things to keep you on thestraight and narrow Sound like
good guidance.
Ramya Ravishankar (25:24):
What I'd leave your listeners with at the
end, I think, is this is reallya cross-functional project for
companies.
It's not just theresponsibility of legal, it's
not just the responsibility ofmarketing.
You really want yourprocurement teams, your
communications teams, yourcompliance teams all working in
lockstep with legal andmarketing to make sure that the
(25:48):
company's reputation and thecompany's value proposition are
appropriately and adequatelycommunicated.
One way to do that is havingsome sort of working group or
committee in place that owns andis responsible for this.
Tracking trends and regulatorydevelopments and incorporating
(26:09):
them into the company-widestrategy around sustainability
will be really helpful.
Tom Hagy (26:14):
Well, ramya Ravi Shankar, thank you very much for
talking with me about thistoday.
Thank you, it's been a pleasuremuch for talking with me about
this today.
Thank you, it's been a pleasure.
That concludes this episode ofthe Emerging Litigation Podcast,
a co-production of HBLitigation, Critical Legal
Content, VLEX Fast Case and ourfriends at Losty Media.
I'm Tom Hagee, your host.
(26:34):
Please feel free to reach outto me if you have ideas for a
future episode and don'thesitate to share this with
clients, colleagues, friends,animals you may have left at
home and certain classificationsof fruits and vegetables, and
if you feel so moved, pleasegive us a rating.
Those always help.
Thank you for listening.
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