ESG for Consumer Product Brands: Whitewashing the Greenwash—Identifying and Reducing Greenwashing Risk
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Key takeaways:
- As ESG efforts among brands are skyrocketing, so is the risk of marketing campaigns being impacted by “greenwashing”—a phenomenon that occurs when a brand, eager to tell its stakeholders what it is doing in this area, intentionally or unintentionally misrepresents or exaggerates its ESG activities.
- Greenwashing can lead to both reputational backlash and legal scrutiny. It brings a risk of negative media coverage, class-action lawsuits, and advertising challenges by competitors and even increased scrutiny from federal regulators like the Federal Trade Commission.
- In thinking about ways to minimize greenwashing risks, companies should review regulations, identify and assess express and implied claims, substantiate all claims before making them, and consult counsel when necessary. There are also a variety of tools that can help ensure advertisers avoid greenwashing, including the FTC “Green Guides” and certain product certifications.