Fossil fuel companies are facing a new challenge because of “greenwashing” advertising
WASHINGTON (Thomson Reuters Foundation) – As oil and gas companies increasingly tout their green credentials, climate activists who find such claims misleading are pursuing a new way to hold companies accountable.
While several US states and cities have filed lawsuits against fossil fuel companies for “greenwashing” in recent years, three environmental groups took a different route in March when they launched a landmark lawsuit against Chevron Corp.
Instead of going to court, the green groups – Global Witness, Greenpeace and Earthworks – filed a false advertising lawsuit against Chevron, which enforces rules against misleading advertising, with the Federal Trade Commission (FTC).
The three organizations hope that their complaint to the National Agency under the new Biden government will be more popular than a lawsuit in a federal or regional court, and set a marker for further action against “greenwashing”.
“We hope that a successful case against Chevron would set a precedent that prevents other companies from engaging in such greenwashing tactics,” said Zorka Milin, a senior legal advisor at Global Witness, in a telephone interview.
The FTC may issue warnings or seek civil or financial sanctions if it determines that companies have violated advertising laws that prohibit unfair or misleading advertising. The agency has said warnings are often enough to reconcile abusive companies.
The environmental groups said in the complaint that despite advertising its investments in renewable energy, Chevron spent only 0.2% of its annual investment budget – about $ 26 million a year – on lower-carbon energy sources.
In a statement, Chevron described the complaint as “frivolous” and said it was investing $ 3 billion between 2021 and 2028 “to drive the energy transition.”
The American Petroleum Institute (API), a leading trading group, dismissed the notion that oil and gas company green advertising campaigns were misleading, saying the industry is keen to balance new climates with customer needs.
“A record of the past two decades shows that the industry has achieved its goal of delivering affordable, reliable American energy to US consumers while significantly reducing emissions and our environmental footprint,” said Paul G. Afonso, senior vice president and Chief Legal Officer for the API.
NEW ADMINISTRATION, NEW OPPORTUNITY
Public scrutiny of advertisements by oil companies for their claims to reduce emissions and move to cleaner energy is increasing, and legal challenges against such advertisements are breaking new ground in the United States following similar actions overseas.
Last year, the Italian competition authority fined energy giant Eni SpA € 5 million ($ 5.94 million) for advertisements claiming its diesel was “green” and helping the environment.
And the British advertising watchdog confirmed a complaint in 2019 against a complaint by Norwegian energy giant Equinor ASA alleging that gas was a “low-carbon” energy source.
Global Witness said its complaint against Chevron was the first to ask the FTC to use its “green guides” against an oil company. The Commission’s updated 2012 guidelines are designed to prevent companies from making false environmental claims.
It can take months or years for the FTC to rule on such cases. The agency confirmed that it had received the groups’ complaint but declined to comment on whether or not it is pursuing a case.
However, Milin said she was encouraged by the appointment of Lina Khan as the new chairman of the FTC last week.
The Democrats now have a 3-2 majority in the commission, with President Joe Biden signaling that he wants to use all government levers to encourage swift action against climate change.
“We definitely see an opportunity in the (new) government,” Milin told the Thomson Reuters Foundation.
Various US states and cities – including New York City and the District of Columbia – have sued oil companies for “greenwashing” in recent years, and activists say such litigation is likely to become more frequent and successful in the future.
Carroll Muffett, president of the Center for International Environmental Law, a nonprofit, said lawsuits against fossil fuel companies are increasingly forward-looking, examining how their plans are compatible with internationally agreed climate goals.
“What we will see increasingly are litigation that will address not just what these companies have done in the past, but how they are aligning their business models for a climate- and carbon-constrained future,” said Muffett.
Still, such lawsuits could ultimately be hampered by the conservative 6: 3 majority in the US Supreme Court, underscoring the importance of new avenues like the FTC lawsuit against Chevron, said environmental law expert Karen Sokol.
“I think (the FTC complaint) is a really important development,” said Sokol, a professor at the New Orleans College of Law at Loyola University in Louisiana. “It makes sense to also ask the federal government to monitor this.”
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Reporting by David Sherfinski; Editing by Kieran Guilbert. Please mention the Thomson Reuters Foundation, the non-profit arm of Thomson Reuters. Visit news.trust.org/climate