Climate Claims and Energy Companies — A Greenwashing Cautionary Tale?

The Lawsuit

In 2022, Greenpeace France, Friends of the Earth France, and Notre Affaire a Tous, filed suit alleging that the Company’s “reinvention” campaign the previous year, where it made claims regarding its carbon neutrality goals and cited itself as a “major player in the energy transition,” falsely portrayed the Company as on track to address climate change. The Court agreed, finding that the Company had committed deceptive commercial practices by making such claims which were very likely to mislead consumers about the Company’s environmental commitments. Notably, the Court found the Company had not made clear it was using its own scenario analysis and assumptions to achieve carbon neutrality. The Court ruled that promoting its ambition to reach net zero by 2050 meant consumers were inclined to believe that the Company was aligned with the Paris Agreement’s scientific findings that to avoid certain global warming scenarios, the winding down of fossil fuel output would be required, whereas the Company was continuing to increase its production and investments in oil and gas. The Court found these practices misleading and likely to alter the behavior of purchasing consumers and/or make consumers believe that continuing to purchase and use the Company’s products aligned with the Paris Agreement goals.

The Court ordered that such statements be removed from the Company’s website, alongside other claims with a similar message. Additionally, the Company is to pay €8,000 to each of the plaintiffs and €15,000 for legal costs. If the Company does not remove the statements from its website within the one-month compliance period, it will be subject to a €10,000 per day fine. Although the fine itself is unlikely to result in material financial damages to the Company, the Court’s ruling clearly shows that companies should not presume that these types of carbon neutrality statements and goals will not be subject to judicial scrutiny.

Why U.S. Companies Should Care

As noted above, it is important for U.S. companies — particularly those in the oil and gas sector — to keep a watchful eye on developments related to greenwashing, such as this ruling. Allegations of greenwashing are becoming more and more common, and this is the first known case where a company has been found to be greenwashing solely as it relates to its claims regarding forward-looking ambitions to achieve net zero and its decarbonization goals.

It is not unusual for developments in the European Union to eventually be mirrored in the United States, particularly in more sympathetic U.S. states and jurisdictions. For instance, the proposed EU Green claims directive has many parallels in California’s AB 1305 law, which is intended to curb the alleged misleading nature of certain types of greenhouse gas emissions-related claims and products (like voluntary carbon offsets) used by companies in difficult-to-abate sectors. U.S. companies, many of which have made similar claims to the ones at issue in this ruling, should, therefore, take note of this case as a potential warning, especially as they navigate inconsistent markets across the country where the legal landscape may be more conducive — or at least more receptive — to lawsuits of this nature.

We will continue monitoring developments related to greenwashing, both internationally and domestically. Please reach out to your Vinson & Elkins team to discuss these matters further and the implications of the same upon your business.