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Greenwashing
How to avoid being caught in the trap of its climate commitments
Defined as the dissemination of misleading information about the strategy or climate performance of an organization such as a company, greenwashing is criminally and civilly sanctioned. Let us recall the judgment of the Nanterre summary judgment judge of October 23, 2012 rendered on a complaint by France Nature Environnement enjoining Toyota under a fine of 100 euros per day to withdraw its advertisements featuring its 4X4s driving in the middle of nature. The judge had relied on Article L.362-4 of the Environmental Code prohibiting advertising on vehicles driving off the road. He argued that "by letting the public believe that the possession of this type of vehicle is worth doing everything in nature, the dissemination of this type of advertising is, obviously, the promotion of behavior contrary to the protection of the environment, the preservation of natural resources.
Ten years later, in 2022, the risk of greenwashing is multiplied; while the energy transition requires companies to publicly attest to their climate commitments, These commitments must be truly respected. If not, the company would be liable to prosecution for greenwashing, i.e. for deceiving the consumer, whose choices may be dictated by his desire to encourage a sustainable economy. However, as the European Commission emphasized in its Communication on "a new action plan for a circular economy" of March 11, 2020 (COM (2020), 98 final), it is necessary "to give consumers and public purchasers the means to choose".
Thus, the "Climate and Resilience" law (n°2021-1104 of August 22, 2021) assimilates greenwashing to a "misleading commercial practice" within the meaning of article L.121- 2 of the Consumer Code, which is the case of "false or misleading allegations, indications or presentations concerning one or more of the following elements [... b) The essential characteristics of the good or service, namely: its substantial qualities, its composition, its accessories, its origin, its quantity, its method and date of manufacture, the conditions of its use and its suitability for use, its properties and the results expected from its use, as well as the results and main characteristics of the tests and controls carried out on the good or service [...] e) The scope of the advertiser's commitments, the nature, the process or the reason for the sale or the provision of services". The penalties incurred can be up to two years' imprisonment and a fine of 300,000 euros, but they can be considerably increased up to 10% of the annual turnover of the last three financial years, and up to 80% of the expenses incurred for the advertising or the offending practice. Advertising the sanction in the press and on the website can add to the financial penalty "a reputational penalty".
Other more specific provisions target certain types of misleading claims, such as claiming that a product or service is "carbon neutral" (Article L.229-68 of the Environmental Code), while of course allowing the company to promote its approach to the energy transition, including "the methods of offsetting residual greenhouse gas emissions". Violation of this provision is punishable by an administrative fine of 100,000 euros "which may be increased to the full amount of expenditure devoted to the illegal operation" (Article L.229-9 of the Environmental Code).
These offences apply both to producers of goods and services and to the institutions that finance them. Moreover, the AMF has published its doctrine to encourage the latter to integrate environmental criteria in their choice of investments or loans.
Faced with American-style litigation in the climate field, driven by French and foreign NGOs, a "wake up call" is needed. Too many companies still see the publication of extra-financial information (extra-financial performance declarations, vigilance plans, climate strategies, etc.) as a communication tool. However, these are legal commitments that are just as important as legal obligations.
Lawsuits for "greenwashing" in the United States are legion. In the last few months, we can cite the conviction on May 7, 2021 of the cosmetics company Reynolds for having falsely declared that its plastic bags "were perfect for recycling" (Hanscom v. Reynolds Consumer Products Inc, No. 3:21-cv-03434-SK); or the class action against Oatly, a dairy products company, and its executives, filed on September 22, 2021 in the U.S. District Court for the Southern District of New York (No. 21-7904) for disposing of stock whose price fell after revelations of greenwashing.
In France, all modalities are possible to have him sanctioned. NGOs have broad access to the courtroom to exercise the rights of the civil party in criminal proceedings or to bring into play the civil liability of companies for failure to exercise due diligence. Finally, since the law of November 18, 2016 (N°2016-1547), group action is possible in environmental matters (Article L. 142-3-1 of the Environmental Code).
As long as the public action has not been set in motion, the company may request a penal transaction (instituted by Decree No. 2014-368 of March 24, 2014 validated by a decision of May 27, 2015 of the Council of State, No. 380652, Assoc. France Nature Environnement).
No doubt that these procedures will be very successful.
We can only recommend that companies and their financiers pay close attention to the wording of their climate commitments which, as soon as they are made public, acquire a quasi force of law.
Noëlle Lenoir Avocats
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