As we discussed in a blog last September (“ESG Related Pressures, Fines, and Litigation”), commitments beyond “classical” environmental protection and compliance carry some risks, including litigation risks. Recently, there has been backlash on these non-mandated environmental and social commitments.
Diversity, Equity, and Inclusion (DEI), Environmental Social and Governance (ESG), sustainability, and climate-related issues are separate but related issues. They have all emerged or at least got their “footing” in recent years.
These “softer” non-regulatory environmental programs and DEI come with potential liability for companies that make commitments but fail to meet those commitments. Some companies are choosing to avoid this liability and are scaling back their DEI commitments.
DEI Losing Favor
While DEI and “green” commitments have enjoyed favorable coverage in the past, recently, companies are backing down from these commitments due in part to their customers who object to these programs. Recently, Tractor Supply Company, Harley Davidson, and John Deere have walked back their DEI commitments.
Tractor Supply issued a statement on June 27, 2024, stating among other things that they will, “Eliminate DEI roles and retire our current DEI goals while still ensuring a respectful environment.”
As reported in Morningstar, Ford has joined the growing list of companies that are making changes in their DEI commitments. “In a memo to employees – the authenticity of which Ford (F) confirmed on Wednesday – the company said that earlier this year, it had stopped participating in external culture surveys like the corporate equality index from the Human Rights Campaign, an LGBTQ+ civil-rights group, and some ‘best places to work’ lists.”
In a Wall Street Journal article on July 24, 2024, (paywall protected) they discussed the alternative to DEI. “It’s known as MEI, short for merit, excellence and intelligence. As described by Scale AI Chief Executive Alexandr Wang, who helped popularize the term, MEI means hiring the best candidates for open roles without considering demographics.”
While DEI commitments are falling out of favor in some companies, sustainability commitments hold increased liability.
Some companies are eliminating their social commitments including DEI (Image by Public Domain Pictures from Pixabay).
Lawsuits Over Sustainability Claims
The District of Columbia Court of Appeals recently ruled (August 29, 2024) that Coca-Cola must face a lawsuit alleging it deceptively marketed the role sustainability plays in its business strategy. According to the court documents, Earth Island Institute alleges that “Coca-Cola engages in deceptive marketing that misleads consumers into thinking that its business is environmentally sustainable, or at least that it is currently making serious strides toward environmental sustainability….Earth Island’s claims amount to what is sometimes called greenwashing: companies deceptively billing themselves as environmentally friendly, in an effort to generate profits, when they are in fact far from it.”
The focus of the legal action against Coca-Cola is the company’s use of single-use plastics.
The court filing brings up statements made on social media and their website.
Again from the court documents, “We start with the two most concrete statements, in which Coca-Cola touts some fairly specific goals it has set for itself:
- ‘Make 100% of our packaging recyclable globally by 2025. Use at least 50% recycled material in our packaging by 2030. (website, retrieved June 2021)’
- ‘Part of our sustainability plan is to help collect and recycle a bottle or can for every one we sell globally by 2030. (tweet, Feb. 2020)’”
With this lawsuit as a backdrop, companies may want to re-evaluate their sustainability and other “social” statements on social media, websites, and print material.
Fashion Company Sued Over Sustainability Claims
On July 22, 2024, a lawsuit was filed against the fashion company, H&M. According to the court documents, “This case is about H&M’s labeling, marketing, and advertising that is designed to mislead consumers about its products’ environmental attributes, through the use of false and misleading ‘environmental scorecards’ for its products called ‘Sustainability Profiles.’”
DEI and sustainability efforts aside, in the United States there has been a growing trend to sue over anthropogenic greenhouse gas emissions that are associated with climate change. The US leads the world in climate-related litigation.
Canada’s Bill C-59
Our neighbors to the north in Canada recently passed Bill C-59 which drastically increased regulation in greenwashing by classifying environmental claims as within the scope of deceptive marketing practices. Violations of the new law in Canada carry harsh monetary penalties. In response, The Pathways Alliance, a group of Canada’s biggest oil sands producers, has removed all content about environmental goals from its website and social media pages. For more information, see our Canadian environmental blog on July 15, 2024.
Most consumers appreciate and are likely to look favorably on companies that are good stewards of the environment and treat employees and customers with respect. However, with the growing risk of litigation associated with some of the non-essential environmental and social programs, it appears more companies are re-evaluating these commitments.
If you need assistance with an environmental permit, assessment, remediation, litigation support, etc…contact Jeffrey Bolin, M.S., CHMM at 248-932-0228, Ext. 125.
Dragun Corporation does not use artificial intelligence to draft our blogs or any other material.
Alan Hahn drafted this blog. Alan has an undergraduate degree in Environmental Studies and completed a graduate program in Environmental Management. He has worked in environmental management for 45 years. He has written hundreds of blogs and articles. His published work includes Michigan Lawyers Weekly, Detroiter, Michigan Forward, GreenStone Partners, Manure Manager Magazine, Progressive Dairy, and HazMat Magazine.
Jeffrey Bolin, M.S., reviewed the blog. Jeff is a partner and senior scientist at Dragun Corporation. He is a published author, frequent speaker, and expert witness. His expertise in environmental due diligence, PFAS, vapor intrusion, and site assessments has led to projects in the US, Canada, and overseas. See Jeff’s Bio.
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