Greenwashing Suit Exposes Risks for Manufacturers and Suppliers

Recently the State of New York sued the world’s largest beef producer for improperly representing their environmental targets and actions. This recent lawsuit exposes the material risks that companies face when setting and pursuing their sustainability targets. As regulatory regimes for environmental reporting across the globe are expanded, risks for manufacturers and food companies are increasing. But what are some lessons learned from this situation that may help other companies avoid a similar fate?

The Attorney General indicated in their press release that the company “has claimed that it will achieve net zero greenhouse gas emissions by 2040, despite documented plans to increase production, and therefore increase its carbon footprint.” And that “When companies falsely advertise their commitment to sustainability, they are misleading consumers and endangering our planet”. These are important statements as they demonstrate that the State is taking a proactive approach to reviewing corporate environmental claims, their impact on consumers, and evaluating the underlying assumptions and methodology for these claims. While some may say that the State should not be directly involved in validating voluntary environmental claims, the impact on consumer protection seems to be the primary driver.

For most major manufacturers, including JBS, their Scope 3 GHG emissions are 80% to 90% of their total carbon footprint. Due to the sheer size of the operation globally, the company reported more than 71 million tons of total GHG emissions in 2021, making their early Net Zero targets very daunting. What are the key highlights from the suit that show a path forward for manufacturers to avoid this situation? Based on our review of the legal documents, there are four areas where the company did not follow best practices on Scope 3 accounting or planning. By addressing these areas, risks can be avoided while making actual progress toward important environmental goals. These observations include:

·      A complete Scope 3 GHG inventory had not been completed, creating a very weak foundation for setting aggressive reduction targets.

·      No credible plan had been established for achieving their goals, making it highly unlikely they could meet them.

·      There had been no material progress toward the goals, exposing the company to “greenwashing” claims.

·      They had been previously warned about making claims only for marketing purposes but persisted in these communications to consumers.

Urgent action is required by manufacturers that are in the process of setting their GHG reduction goals or are already pursuing them. To reduce this regulatory oversight risk, companies can and should avoid the issues that were exposed in this lawsuit. More specifically, manufacturers need to build a comprehensive strategy and roadmap for Scope 3 GHG reduction targets that are built on complete and accurate data from your full supply chain. Resources from the GHG Protocol, Science Based Targets, and other organizations are available to help companies get started on their journey or make a course correction if off target.