Are "Carbon Neutral" Claims Misleading?

Danone Waters of America promotes its Evian brand of water as “carbon neutral.”  What do consumers understand a “carbon neutral” claim to communicate?  Does “carbon neutral” mean that no greenhouse gasses are emitted during the production of the product?  Or does it just mean that any greenhouse gasses that are emitted by the company are offset through the purchase of carbon offsets?  That was the issue in a recent case just decided by a federal court in New York. 

Danone's lawsuit

Consumers sued Danone, under various state laws, alleging that the “carbon neutral” claim on Evian's packaging is false and misleading because “reasonable consumers reviewing the Product's label and packaging would believe the manufacturing of the Product is sustainable and does not leave a carbon footprint.”  The product packaging includes a certification, awarded by Carbon Trust, that looks like this:  

The plaintiffs argued that the “carbon neutral” claim is false and misleading because, among other things, the manufacturing of the product still causes carbon dioxide to be released into the atmosphere.   (The plaintiff also makes other arguments that, even if the claim is based on  the purchase of carbon offsets, the claim is still misleading.) 

Danone moved to dismiss the complaint.  First, Danone said that its packaging accurately states that the “carbon neutral” claim is based on a certification awarded by Carbon Trust.  And second, Danone argued that “no reasonable consumer would interpret carbon neutral to mean the Product does not emit any carbon dioxide whatsoever during its entire life cycle.”  

The court didn't buy Danone's arguments and allowed many of the plaintiffs' claims to continue.  Here's why. 

The decision

First, the court held that reasonable consumers could plausibly be misled by Danone's “carbon neutral” claims.  The court explained that the term itself is ambiguous and could lead to consumer confusion.  The court wrote, “Rather than possessing a common, everyday meaning, the term ‘carbon neutral’ is more technical and scientific, unfamiliar to and easily misunderstood by the reasonable consumer.”  The court held, then, that a reasonable consumer could plausibly understand a “carbon neutral” claim to mean that no carbon is emitted during the production of the product.  

Second, the court cited the FTC's Guides for the Use of Environmental Marketing Claims as support for its conclusion, noting that a “carbon neutral” claim is “precisely the type of ‘unqualified general environmental benefit’ claim that the FTC cautions marketers not to make.” 

Third, the court felt that consumers simply don't know what the so-called technical definition of “carbon neutral” is and could understand the claim to mean “carbon zero” or “carbon free."  The pointed some of the blame for this at the industry here, noting that, “consumer confusion over the term's definition is further by imprecise usage of certain climate action technology by individuals in the climate change industry and companies deviating from the technical definition.”   The court determined, therefore, that “Consumers' general confusion about ‘carbon neutral’ demonstrate that the term has a reasonable likelihood to deceive."  

Finally, the court didn't buy Danone's arguments that consumers should have to dig deeper to understand what the “carbon neutral” claim was specifically communicating here.  Noting that Danone does provide a link to its website on its back label along with an invitation to “learn more,” the court held that, “Reasonable consumers are not expected to look beyond misleading representations on the front of the container” or “to do research.”  

In allowing the case to continue, the court made its opinion clear:  “'Carbon neutral' is an ambiguous term, and evidence shows that consumers are confused by it.” 

Some takeaways

Advertisers should take very seriously the concerns that the district court is raising about “carbon neutral” claims and how consumers may interpret them.  If the court's instincts are right here – that consumers may understand “carbon neutral” to mean that no carbon was produced during the production process – advertisers who are making these types of claims, based on carbon offsets, may need to rethink their approach.  At a minimum, advertisers may want to consider qualifying their “carbon neutral" claims to clearly communicate that they are based on the purchase of offsets.  

Finally, this case serves as yet another reminder that, if you're going to qualify a claim to prevent it from being misleading, that qualification probably is going to need to be in close proximity to the claim.  Explanations that appear somewhere else, such as on a website, are much less likely to be effective.