Fossil fuel firms face new challenge over 'greenwashing' ads

by David Sherfinski | @dsherfinski | Thomson Reuters Foundation
Wednesday, 23 June 2021 00:01 GMT

ARCHIVE PHOTO: The logo of Chevron Corp is seen in its booth at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan April 4, 2017. REUTERS/Toru Hanai

Image Caption and Rights Information

Rather than going through the courts, green groups have filed a false advertising complaint against Chevron with the U.S. agency which enforces rules against deceptive ads

* Activists file complaint with FTC over advertising by Chevron

* Oil companies criticized for small clean energy investments

* Industry flags need to balance climate action and customer needs

By David Sherfinski

WASHINGTON, June 23 (Thomson Reuters Foundation) - As oil and gas majors increasingly tout their green credentials, climate change activists who say such claims are misleading are pursuing a new avenue to hold companies to account.

While several U.S. states and cities have filed lawsuits against fossil fuel firms over "greenwashing" in recent years, three environmental groups took a different tack in March when they launched a landmark complaint against Chevron Corp.

Rather than going through the courts, the green groups - Global Witness, Greenpeace and Earthworks - filed a false advertising complaint against Chevron with the Federal Trade Commission (FTC), which enforces rules against deceptive ads.

The three organizations are hopeful that their complaint to the national agency under the new Biden administration will gain more traction than a lawsuit filed in a federal or state court, and lay down a marker for further action against "greenwashing".

"We would hope that a successful case against Chevron would set a precedent that would discourage other companies ... from engaging in these kinds of greenwashing tactics," Zorka Milin, a senior legal advisor at Global Witness, said in a telephone interview.

The FTC can send warnings or seek civil or financial penalties if it finds that firms have broken advertising laws that prohibit unfair or deceptive ads. The agency has said warnings are often enough to bring offending companies in line.

The environmental groups said in the complaint that despite Chevron's ads touting its investment in renewable energy, the company spent just 0.2% of its annual capital expenditure budget – roughly $26 million a year - on lower-carbon energy sources.

In a statement, Chevron called the complaint "frivolous" and said it was investing $3 billion between 2021 and 2028 "to advance the energy transition".

The American Petroleum Institute (API), a leading trade group, rejected the notion that green ad campaigns by oil and gas companies were misleading and said the industry was striving to balance new climate realities with the needs of customers.

"The record of the past two decades demonstrates that the industry has achieved its goal of providing affordable, reliable American energy to U.S. consumers while substantially reducing emissions and our environmental footprint," said Paul G. Afonso, senior vice president and chief legal officer for the API.

NEW ADMINISTRATION, NEW OPPORTUNITY

Public scrutiny of oil company ads over their claims to curb emissions and transition to cleaner energy is growing, and legal challenges against such advertising are entering new territory in the United States in the wake of similar action overseas.

Last year, Italy's competition authority fined energy giant Eni SpA 5 million euros ($5.94 million) for ads claiming that its diesel was "green" and helped the environment.

And Britain's advertising watchdog upheld a complaint in 2019 against an ad by Norwegian energy giant Equinor ASA that suggested gas was a "low carbon" energy source.

Global Witness said its complaint against Chevron was the first to petition the FTC to use its "Green Guides" against an oil company. The commission's updated 2012 guidelines aim to prevent businesses from making false environmental claims.

The FTC can take months, or years, to rule on such cases. The agency confirmed it had received the groups' complaint but declined to comment on whether or not it was pursuing a case.

However, Milin said she was encouraged by the appointment last week of Lina Khan as the new chair of the FTC.

Democrats now have a 3-2 majority on the commission with President Joe Biden signaling he wants to use all levers of the government to spur swift action on climate change.

"We see an opportunity with the (new) administration, for sure," Milin told the Thomson Reuters Foundation.

Various U.S. states and cities - including New York City and the District of Columbia - have in recent years sued oil companies over "greenwashing", and activists say such litigation is likely to become more frequent and fruitful in the future.

Carroll Muffett, president of the Center for International Environmental Law, a non-profit, said lawsuits against fossil fuel firms were increasingly forward-looking and examining how their plans complied with internationally agreed climate goals.

"What we're going to see increasingly is litigation that not only looks at what these companies did in the past, but how they are aligning their business models to a climate-constrained future and a carbon-constrained future," Muffett said.

Yet such lawsuits may ultimately be hamstrung by the U.S. Supreme Court's 6-3 conservative majority, thus highlighting the importance of new avenues such as the complaint against Chevron filed with the FTC, said environmental law expert Karen Sokol.

"I think (the complaint to the FTC) is a really important development," said Sokol, a professor at Loyola University New Orleans College of Law in Louisiana. "It makes sense to call on the federal government as well to police this." ($1 = 0.8411 euros)

Related stories:

Climate lawsuits snowball as South Americans seek a healthy environment

Why are climate campaigners turning to the courts?

Dutch court orders Shell to deepen carbon cuts in landmark ruling 

(Reporting by David Sherfinski; Editing by Kieran Guilbert. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters. Visit http://news.trust.org/climate)

Our Standards: The Thomson Reuters Trust Principles.