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California Consumers Challenge ‘Carbon Negative’ Water

Friday, January 7, 2011 by

Hibiscus
The rising tide against greenwashing may have swamped the Fiji Water Company.  The issue is carbon offsets.  Is Fiji Water truly “carbon negative” as the company has advertised?  A lawsuit filed last month by the Newport Trial Group, a law firm representing California consumers, argues that it isn’t.  The problem isn’t that Fiji hasn’t tried to account for and offset carbon emissions.  The problem, according to the consumers’ complaint, is that Fiji relies on carbon offsets that are premised on speculative offsets that “may or may not happen in the future.”  Once again, the market is looking closer at green marketing claims – and class action plaintiffs’ attorneys are striking out against vague claims.   Whether Fiji Water has actually deceived consumers with its ecofriendly claims is yet to be determined. 

Certainly, the Fiji Water case isn’t the first consumer class action that alleges deception in the context of greenwashing, but it is another indicator that green marketing can be risky.  And while there has been significant attention to the Federal Trade Commission’s release of new Green Guides for environmental marketing in recent months, the Fiji Water case also serves as a reminder that the FTC isn’t the only stakeholder empowered to challenge environmental marketing claims. 

What did Fiji Water do to provoke this challenge?  According to the complaint, the key issue is that carbon offsets purchased by Fiji rely on something called “forward crediting,” a method of providing carbon offset credits based on future offsetting activities.  The complaint alleges that forward crediting has been discredited by the Stockholm Environment Institute.

The fact that Fiji Water went beyond merely trying to offset its carbon emissions, and claimed that its products are “carbon negative” based on the purchase of carbon offsets equal to 120% of its carbon emissions is also very relevant.  This may be  a case of “no good deed goes unpunished” – if Fiji in fact did purchase bona fide carbon offsets that will materialize in the future.  On the other hand, if the facts show that Fiji purchased speculative or poorly administrated carbon offset credits, expect the California consumers to demand a big settlement.  (The complaint argues that Fiji Water’s “carbon negative” advertising helps the company charge super-premium prices.)

An interesting aspect of the complaint is that while it does not reference the FTC’s new Green Guides, the consumer challenge against forward crediting tracks with the FTC’s thinking.  The proposed new Guides advise that  “marketers should clearly and prominently disclose if [their] carbon offset represents emission reductions that will not occur for two years or longer.”  The Green Guides are not California law of course, but California’s consumer protection statute does actually make reference to the Green Guides and provides a legal defense for companies that can show their marketing claims are consistent with the Guides.  

Regardless of where the Fiji case actually goes, it teaches a couple important lessons to all marketers.  First, remember that the FTC isn’t the only “enforcer” empowered to challenge a green marketing strategy.  Bogus, vague, or speculative claims may be challenged by class action attorneys under state laws, especially in big states like California.  Second, the guiding principle for green marketing claims has to be complete disclosure.  A company can merely claim that it purchases carbon offsets, but that claim is risky without further disclosure of the fine print.

Guest Blogger Joseph ("Jay") Eckhardt is an attorney at Stoel Rives LLP, based in Portland, Oregon.