Greenwashing lawsuits could be headed for construction

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Garrett Gibson is a trial attorney in the Houston office of national law firm Eversheds Sutherland.

Opinions are the author’s own.

Issues around greenwashing practices have hit home with industries across the country in the past five years as numerous government and private plaintiffs have filed lawsuits alleging that companies’ claims about sustainability achievements and environmental friendliness are overstated. 

At its core, greenwashing occurs when a company makes an untrue or unverifiable claim or gives the impression that its products, services or supply chain are more environmentally friendly than they actually are. Greenwashing lawsuits are often brought as false advertising claims: Consumers or regulators assert a claim that a company inflated its environmental bona fides to attract buyers.

Greenwashing-related lawsuits have affected nearly every major industry in recent years. As an attorney focusing on the construction industry, I’ve written about greenwashing lawsuits and whether they are a passing fad (probably not), how these lawsuits have impacted the retail sectors (often) and how companies can mitigate the risk of greenwashing lawsuits (carefully).

Garrett Gibson

Permission granted by Eversheds Sutherland

So far, the construction industry remains largely insulated from these claims, but is that about to change? If so, how quickly will these lawsuits materialize, and what can be done to prevent them?

A push for sustainability

Combined, buildings and the construction industry make up an estimated 37% of global emissions. New York City has recently enacted new standards for building emissions for buildings larger than 25,000 square feet, forcing property owners to reduce emissions in the coming years or face fines. Similarly, California has followed suit, imposing emissions standards for buildings ranging from 50,000 to 100,000 square feet. 

In addition, California requires that all new commercial construction be “Zero Net Energy” or “ZNE” by 2030 (i.e., “where the actual annual consumed energy is less than or equal to the on-site renewable generated energy,” according to the California Public Utilities Commission.)

These types of regulations are pushing the industry to strive for increasingly aggressive environmental benchmarks. Owners, contractors and architects are more often making design choices and value-engineering decisions driven by environmental factors, leading building systems contractors or manufacturers to advertise their environmental friendliness with vague terms such as:

- Sustainable.

- Green.

- Environmentally friendly.

- Carbon friendly.

- Carbon neutral.

Most greenwashing litigation surrounds companies allegedly using terms such as these without any meaningful data to substantiate these terms.

Greenwashing litigation has both proliferated and shifted its targets. Early greenwashing claims were brought by environmental activists and government regulators who accused the major oil and gas giants of greenwashing the scope of their conventional energy businesses by playing up their investments in renewable energies. 

This shifted to consumer-facing lawsuits that accuse fashion retailers and major household brands of selling products that are not as recyclable, compostable or environmentally friendly as claimed. Now, state attorney generals are becoming more involved, most notably with a greenwashing lawsuit filed by the New York attorney general against one of the largest meat companies in the world.

Construction leaders would be wise to understand that greenwashing targets are constantly and rapidly evolving and changing. While construction hasn’t been targeted yet, it likely will be, particularly as the environmental regulations begin to come into effect. 

How to avoid problems

There are several steps that construction firms can take to minimize their exposure. They include:

Make your claims as specific as possible. Broad, unqualified claims such as a product is “green,” “sustainable” or “eco-friendly” are often viewed as deceiving. Almost all materials and equipment have some environmental impact. It is a best practice for companies to qualify claims by saying a building material or building system is clean or sustainable relative to a quantifiable baseline. Claims backed up by measurable, verifiable data are the strongest.

Be truthful in the scope of the emissions covered by your claim. Any claim that material or equipment is the product of low- or zero-emissions may be interpreted to cover the full lifecycle emissions of the product, including all downstream suppliers of its component materials and any end-of-life-cycle disposal requirements. Companies have been accused of greenwashing by considering only a slice of a material’s emissions lifecycle. To mitigate risk, companies should specify if their claims are meant to cover the full lifecycle or are limited to a certain portion.

Be cautious about relying on carbon offsets. The corporate practice of purchasing carbon offsets in the market to achieve environmental goals has been the target of recent greenwashing lawsuits that accuse prominent carbon credit brokers of “inaccurate accounting” and selling credits that result in “non-immediate speculative emissions reductions.” Be aware that carbon offsets are not a risk-free strategy for meeting publicly stated emissions goals. Consider whether the company’s operational practices support a verifiable net reduction in environmental impact.

Greenwashing lawsuits have risen meteorically in the last five years, affecting almost all major industries. With increasing pressure to limit the emissions of buildings and construction, we will likely see greenwashing lawsuits in the industry in the near future.

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