The ‘E‘ of ESG: Greenwashing under the spotlight – recent trends in the US

Similar to the recent developments and intensifying regulatory approaches we outlined in our blog posts covering greenwashing trends in the EU and the UK, green marketing claims in the US are now subject to growing scrutiny by a range of actors, including regulators, state attorneys general, and private plaintiffs and their counsel, albeit in an increasingly patchwork manner.

Regulatory Updates and Trends 

On the regulatory front, federal enforcement related to greenwashing may take a backseat for the time being, particularly in light of the Trump administration’s broad pullback on climate-related issues, including the SEC’s announcement in March that it would end its defense of its climate disclosure rules against ongoing legal challenge and decisions by various agencies to cease collection or publication of various climate-related information. We also have yet to see the long-anticipated revisions to the Federal Trade Commission’s (FTC) Green Guides (the Guides), which provide guidance regarding environmental marketing claims. Although not legally binding, the Guides have been incorporated into some state consumer protection laws and are widely used by regulators, courts, and industry groups to assess compliance with consumer protection laws. The FTC initiated the process of updating the Guides in late 2022, and many commentators expected to see final revisions to the Guides released in 2024. The change in administration delayed release, and it remains to be seen whether the Guides will be updated under the Trump administration.  

In parallel, the regulatory landscape around greenwashing at the state level is evolving at a faster pace and, in the case of California, creating greater opportunities for scrutiny of companies’ sustainability representations. In October 2023, California enacted the Voluntary Carbon Market Disclosures Act, or AB 1305, which requires in-scope companies to publish detailed information regarding their emissions-reduction claims and reliance on or marketing of voluntary carbon offsets. Additionally, California’s new Climate Accountability Package, including SB 261 and SB 253, imposes new reporting mandates beginning in 2026 that will, among other things, require reporting of assured greenhouse gas emissions and companies’ metrics and targets used to manage climate-related financial risks (if any). Increasing public disclosures of this nature could potentially come to form the basis of new greenwashing claims in the US, to the extent there are inconsistencies between the public disclosures and the steps in place to achieve disclosed goals.  

State Attorneys General enforcement 

State Attorneys General have also been taking action, on both ends of the political spectrum. State Attorneys General are the top law enforcers for their states and are typically – but not always – elected officials. In more democratic-leaning states, state attorneys general have challenged companies’ "net zero" commitments. Earlier this month, New York Attorney General Letitia James secured a $1.1 million settlement with JBS USA Food Company and JBS USA Food Company Holdings over allegedly misleading claims that the company would reach net zero greenhouse gas emissions by 2040, despite allegedly having no viable plan to achieve that goal.  

 In September of this year, sixteen state Attorneys General in conservative-leaning states initiated an investigation into several large technology companies on the theory that they have made misleading and deceptive claims regarding their energy usage. In particular, the announcement and letter from the Attorneys General alleges that the companies advertised that they are 100% powered by renewable energy but instead rely on non-renewable energy sources in part and purchase unbundled “renewable energy certificates.” One month before, another group of conservative-leaning state Attorneys General issued a letter to the Science Based Targets Initiative (SBTi) that suggested companies making ESG commitments (e.g., around net-zero) “would likely need to be open with consumers about the actual probability that Earth’s economy would reach net-zero carbon emissions by 2050 absent near-universal government coercion or near-universal effort by the entire global populace.” It remains to be seen whether such allegations will lead to further enforcement activity or be tested in the courts. 

Litigation 

Although greenwashing litigation in the US initially targeted statements declaring products or services to be environmentally friendly, consistent with the broader global trend, there are increasing challenges to companies’ and financial institutions’ broader sustainability goals and representations (e.g., net-zero pledges). Recent lawsuits in a range of different sectors including for example the food industry, technology, and retail/consumer goods highlight a focus on the credibility of climate-related marketing statements, particularly those involving carbon neutrality and offsetting. The legal scrutiny reflects broader questions about corporate target setting, the complexity of carbon accounting, inconsistent standards in the carbon offset markets, and the difficulty of substantiating environmental claims, all factors which have made industries more vulnerable to greenwashing allegations.

Outlook and key takeaways 

As the blogs on EU, UK and US greenwashing have shown, greenwashing remains a top priority for regulators, consumers, and NGOs on both sides of the Atlantic, with enforcement actions expanding rapidly from regulatory investigations to private and class actions in court and through quasi-judicial mechanisms. As litigation risk grows, greenwashing claims are also increasingly likely to attract interest from litigation funders. Landmark cases in sectors such as energy, aviation and consumer goods illustrate that greenwashing claims now extend to issues like carbon offsets and the prominence given to “green” initiatives.  To mitigate legal and reputational risks, companies should ensure that all sustainability statements are precise, substantiated, and aligned with relevant guidelines and advertising codes. 

See our latest posts on how these trends (and others) are playing out in the EU and the UK.

This blog is part of ‘The ‘E’ of ESG’ blog series. Click here to explore more blogs of our series. You can read more about our Environment, Social and Governance offering here.