Should Climate Claims Be Immune from Greenwashing Allegations?
A growing number of lawsuits accuse companies of using low-quality carbon credits to make false or misleading climate claims. Industry-aligned stakeholders argue in court and in proposed legislation that companies should be immune from liability if their claims are based on carbon credits issued by third-party programs—even though these programs are known to produce low-quality credits that don’t represent real climate benefits.
As concerns about greenwashing grow, plaintiffs around the world have filed lawsuits arguing that companies’ use of carbon credits to make climate claims is deceptive under local consumer protection and false advertising laws. Although the details vary by case, most allege that a company’s climate claims—e.g., that it or its products are “carbon neutral”—are false or misleading because they are based on low-quality carbon credits.
One key question in these cases is whether companies can rely on third-party carbon crediting programs as an affirmative defense against greenwashing allegations, independent of the actual quality of their carbon credits.
In some sense, this is a strange question because nearly all carbon credits are issued by third-party programs that have been widely criticized. For example, a peer-reviewed study found that fewer than 16% of carbon credits represent real climate benefits, despite 100% being issued by third-party programs.
But that is exactly why the question matters: such a defense, if recognized, would effectively eliminate greenwashing liability for carbon-credit buyers.
Two efforts aim to codify this broad defense in law.
The first arises from a lawsuit, Dib v. Apple, challenging Apple’s claim that certain Apple Watch models are “carbon neutral” thanks to carbon credits. The Environmental Defense Fund (EDF) filed an amicus brief arguing that climate claims are never false or misleading when they are based on carbon credits from third-party programs that follow standard industry practices (in this case, Verra’s VCS program). Judge Noël Wise of the Northern District of California issued an order that was sympathetic to this view and dismissed the case. The plaintiffs have appealed to the Ninth Circuit Court of Appeals.
The second involves a new bill, AB 1911, introduced by California Assembly Member Chris Rogers. AB 1911 would provide an affirmative legal defense under California law to any purchaser of a carbon credit that is:
- Issued by the state of California as part of its cap-and-invest program;
- Approved for use in the international aviation offsetting program, CORSIA; or
- Issued by a third-party carbon crediting program that follows certain box-checking procedures (see section (b) of the proposed bill text).
Each of these proposed defenses is substantively questionable. For example, California’s carbon offsets program has been widely criticized by journalists and in the peer-reviewed literature (see Chapter 7). CORSIA, meanwhile, has excluded certain low-quality forestry projects but still allows other disputed credits. Neither is a reliable indicator of quality, to say the least.
The third defense is the most far-reaching and closely parallels EDF’s arguments in Dib v. Apple. Couched in technical language, this provision would apply to any buyer of carbon credits issued by a carbon crediting program that follows ten procedural requirements, including third-party verification. What the bill doesn’t say is that these requirements are already standard industry practice. As a result, AB 1911 would provide a legal defense to practically any carbon-credit buyer, no matter the evidence about the quality of their carbon credits or the buyer’s knowledge of that quality.
Both efforts sharply contrast with the law in other jurisdictions and the status quo in the United States. In Europe, for example, it is presumptively misleading and therefore illegal to market a consumer product or service as having lower or no greenhouse gas emissions because of carbon credits. And in the United States today, a wide range of parties might be held responsible for false or misleading climate claims under state and federal laws.
So who should be responsible when companies make false or misleading claims based on low-quality carbon credits? If either effort becomes law, the answer may be no one.
Danny Cullenward
Senior FellowDanny Cullenward is a senior fellow at the Kleinman Center. He is an economist and lawyer focused on the scientific integrity of climate policy with additional appointments at the Institute for Responsible Carbon Removal at American University and Google.
