Greenwashing litigation to increase as mandatory reporting comes into effect

The number of greenwashing litigation cases will continue to increase as we go into 2024, with a wide variety of sectors being impacted.

Climate litigation has doubled since 2017, according to data from the UN Environment Programme. Historically, climate litigation against companies was focused primarily on the energy sector. However, greenwashing litigation is somewhat distinctive in that it is impacting a wide variety of sectors, from aviation to fashion, and has now become the fastest growing area of climate litigation.

Greenwashing litigation to date has been primarily driven by NGOs and activists, but to a large extent they have common cause with regulators and standards bodies such as the Advertising Standards Agency in the UK.

In the UK, businesses must abide by the Competition and Markets Authority Green Claims Code. A proposed EU directive, due to come into force in 2026, will outlaw generic environmental claims such as “climate neutral” or “natural” without proof of recognised excellent environmental performance.  In addition new EU legislation will oblige companies to report on the environmental impacts of their products, operations and value chains, and these public statements will be closely scrutinised by NGOs and others.

Upcoming litigation could take different forms. Currently, it is mostly about behaviour change, seeking to force businesses to withdraw an advertising campaign or claims about a product. However, in the next year, we might see more claims based on allegedly misleading statements in listed companies’ filings.

Businesses will need to become more rigorous about their environmental assertions to protect themselves against regulatory and reputational risk.