Litigators and regulators often look for specific tells or red flags that suggest a company is overstating its environmental credentials. Watch out for these common red flags that may trigger a greenwashing lawsuit or regulatory investigation.

1. The “Offset Only” Strategy: Claiming “carbon neutrality” solely through the purchase of cheap carbon offsets without reducing operational emissions is a major red flag.

2. Selective Disclosure: Also known as “cherry-picking.” If you highlight a carbon-neutral product line while ignoring the massive footprint of your global supply chain (Scope 3 emissions), you are at risk.

3. Vague or Generic Adjectives: Words like “eco-friendly,” “green,” or “sustainable” have no legal definition and are often viewed by courts as deceptive if not accompanied by narrow, specific explanations. The ECGT Directive requires recognized excellent performance when using generic terms like “green,” “energy efficient” or “climate friendly.”

4. Hidden Trade-offs: Advertising a product as “recyclable” when the infrastructure to recycle that specific material doesn’t exist in most markets.

5. Self-Created Badges: Banned by the newly enacted ECGT Directive, any badge that could function as a sustainability label (think leaf icon, plant positive seal, or other visual label) can only be used if established by public authorities or a compliant certification scheme independently verified.

6. Future Promises Without A Publishable Plan: Marketing aspirations will get you into trouble. If you are making claims about your environmental performance in 2030 or beyond, they must be support by clear, objective, publicly available, and verifiable commitments in a detailed, realistic implementation plan.

Red-Flag: Offset-Only Strategy

Consumer complaints, regulatory investigations, class actions, and multi-million-dollar payments: from the ASA’s ruling against HSBC to Keurig’s settlement of a class action, companies face significant climatewashing risk.

Note that under current EU guidance, carbon neutral claims based on offsetting are prohibited unless they are product-specific and “based on the actual lifecycle impact of the product in question within the product’s own value chain.”

• HSBS’s ads highlighting offsets without full disclosure were misleading (UK ASA). Leading up to COP26, HSBC ran bus-stop posters stating that it was “aiming to provide up to $1 trillion in financing and investment globally to help our clients transition to net zero” and “helping to plant 2 million trees which will lock in 1.25 million tonnes of carbon over their lifetime.” In ASA Ruling on HSBC UK Bank plc (19 Oct. 2022), the ASA found that HSBC’s bus stop ads, while factually true, were misleading because they highlighted climate-positive initiatives while omitting HSBC’s continued financing of emissions‑intensive industries, including fossil fuels and deforestation‑linked activities. The ASA concluded that consumers would be led to believe HSBC was making a positive overall environmental contribution despite its ongoing role in generating significant emissions. See also Sky UK ruling.

• Delta “carbon neutral” flights (US consumer class action). In Berrin v. Delta Air Lines, Inc. (C.D. Cal. 2022), plaintiffs alleged that Delta’s claim to be the “world’s first carbon neutral airline” misled consumers because the airline relied heavily on carbon offsets of questionable quality rather than deep emissions cuts and did not clearly disclose that neutrality was achieved almost entirely through offsets.

• Oil & gas “net‑zero” and “lower carbon” narratives (US securities/consumer actions). Several US suits, including actions against major energy companies over “net‑zero” and “low‑carbon” narratives, argue that marketing and investor communications implied transformational decarbonization while companies continued high levels of fossil fuel expansion and leaned on offsets or future technologies; regulators and plaintiffs point to the gap between messaging and actual absolute reductions as evidence of deception or securities fraud.

• Apple Watch not “CO2 neutral” (German federal court). In 2025, a German court ordered Apple to withdraw “CO2‑neutral” marketing for certain Apple Watches, holding that consumers would understand the neutrality label as indicating that the product’s lifecycle emissions had been effectively eliminated, but Apple instead relied heavily on offsetting in making that claim without explaining that most emissions were still produced and merely compensated via offset projects. The court stressed that generic neutrality labels are insufficient: neutrality claims must clearly disclose the role and limits of offsets and cannot imply deep decarbonization where only modest reductions have occurred.

• EnergyAustralia “Go Neutral” offsets case (Australia Federal Court). In Parents for Climate v EnergyAustralia (Fed. Ct. of Australia, filed 2023, settled 2025), an advocacy group challenged EnergyAustralia’s “Go Neutral” electricity and gas products, arguing that claims the products were “carbon neutral” and had a “positive environmental impact” were misleading because they were based on avoidance‑type offsets that did not undo the climate harms of burning fossil fuels. In settlement, EnergyAustralia publicly acknowledged that its “offsets do not prevent or undo the harms caused by burning fossil fuels” and agreed to move away from offsets for residential products, providing a clear warning that offset‑heavy neutrality claims are high‑risk without robust disclosure and real reductions.

• New CONAR greenwashing rules on offsets and climate goals (Brazil). In 2025, Brazil’s National Council for Advertising Self‑Regulation (CONAR) approved new rules under Article 36 and Annex U of the Brazilian Advertising Self‑Regulation Code to combat greenwashing, requiring that environmental and climate‑related claims be supported by technical documentation or recognized certifications, that ads involving emissions, carbon offsets, and climate goals indicate the product’s lifecycle and disclose deadlines, action plans, and verifiable sources, and that offset‑based claims clearly explain how offsets operate and their limits; these rules make “offset‑only” neutrality messaging particularly vulnerable where advertisers cannot demonstrate real decarbonization and transparent offset use.

TAKEAWAYS: Know the rules in the jurisdictions where you do business. Those rules govern what you can say, how you can say it, and what type of backup you need. A good rule of thumb: avoid generality and vagueness. 

Red Flag: Selective Disclosure

Risks arise when your business selectively discloses or focuses on a positive or low carbon effort while ignoring or eliding contradictory information,

• Coca-Cola’s recyclable packaging, recycling efforts, and packing “made with recycled plastic” but omitting virgin plastic dependency (US action). The D.C. Court of Appeals allowed a greenwashing suit against Coca‑Cola to proceed, rejecting Coca-Cola’s arguments that “made with 100% recycled material” claims, claims about reducing single use plastics, and about improving recycling infrastructure non‑actionable puffery. Plaintiffs alleged that Coca-Cola’s ads, website, and sustainability reports hid that Coca‑Cola’s actual bottle production relies on virgin plastic due to insufficient recycled PET supply, and failed to disclose that “recycled” content often includes downcycled, lower‑quality material with limited environmental benefits.

• Lululemon “Be Planet” campaign (ongoing investigation by Competition Bureau Canada). In May 2024, Competition Bureau Canada launched a greenwashing investigation into lululemon athletica. It is believed that the investigation centers on stand.earth’s complaint’s allegations that lululemon’s Be Planet sustainability campaign selectively highlighted recycled nylon content and emissions reduction goals while omitting contradictory details, such as continued use of virgin petroleum-based synthetics, and purposefully limiting Scope 3 (supply chain) disclosures.

TAKEAWAYS: Be transparent about your disclosures and avoid implying deep structural decarbonization when only modest reductions have occurred. 

Red Flag: Vague Adjectives

Failing to clearly explain your claims or using vague and undefined terms for their feel-good value can result in litigation even for well-meaning efforts.

• KLM’s Fly Responsibly and CO2ZERO marketing campaigns (District Court of Amsterdam, The Netherlands). Two environmental groups sued airline KLM, targeting its marketing campaigns that encouraged customers to purchase carbon offsets to fund restoration projects and biofuels and sustainable aviation fuel (SAF) to offset emissions from flights. The Court determined that KLM made numerous misleading statements and prohibited trade practices (under the Dutch Unfair Commercial Practices Act and the EU Unfair Commercial Practices Directive). The term “sustainable” in SAF was “too absolute and not concrete enough” and the statements regarding the use of SAF as a “promising solution” painted “too rosy a picture” that were not adequately qualified because SAF only has a limited share of total fuel consumption and the growth of that share is not expected in the near term. The CO2ZERO service implied a link between a customer’s purchase of offsets and reducing the negative environmental aspects of the customer’s own flight. However, these statements were misleading as “there is no direct link between the customer’s concrete contribution and the impact of their flight’s CO2 emissions” and the options described by KLM only provided a marginal effect and “do not result in zero CO2 emissions or in the mitigation of the harmful environmental impacts of flying” sufficiently to justify use of the term “CO2ZERO.”

• Tyson Foods “Climate-Smart Beef Program” settlement (US action). Tyson Foods settled a lawsuit commenced by the Environmental Working Group concerning its claims to have a “Climate-Smart” beef program to decarbonize beef or the ability to achieve net-zero greenhouse gas emissions by 2050. The complaint alleged that “climate-smart” beef was misleadingly vague because Tyson “nowhere defines what exactly “climate-smart beef” is, what baseline it is using for comparison, or how it is measuring any alleged GHG reductions.” As part of the settlement, Tyson Foods agreed that no climate claims or net zero claims would be made unless substantiated and verified by an independent expert.

TAKEAWAYS: Provide context for your claims and don’t focus exclusively on a single environmentally beneficial initiative when it’s not the only thing in your business or is only a small portion of your business. Don’t hide high-carbon aspects of your business. Qualify what needs to be qualified to be clear. 

Red Flag: Hidden Trade-Offs

Claims that products are part of a circular economy are facing scrutiny from regulators.

• Keurig “recyclable” cups (US consumer class action; US SEC investigation & cease and desist order). In Smith v. Keurig Green Mountain, Inc., Keurig paid $10 million dollars to settle a false advertising class action lawsuit alleging that its “recyclable” claim for single‑use coffee pods was misleading because, in practice, most facilities could not process the cups, and the ads failed to qualify that limitation. This lawsuit led to an investigation by the SEC and charges that Keurig violated Section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 13a-1 promulgated thereunder in connection with its filing of allegedly incomplete and inaccurate annual reports. The violation centers around Keurig’s ESG disclosures in its 2019 and 2020 annual reports, in which Keurig represented that its K-Cup coffee pods could be “effectively recycled.” Keurig paid $1.5 million USD to settle these charges in 2024.

• Shein “recyclable” packing with no recycling pathways (Italy AGCM; France DGCCRF). In 2025, the Italian Competition Authority (AGCM) fined Shein €1,000,000 for misleading and deceptive environmental claims on its fast-fashion products that were “vague, generic, overly emphatic,” and “misleading or omissive.” These included statements about the circularity of its system, the recyclability of packaging and produces, and the use of “green” fibers. French regulators (DGCCRF) fined Shein €40,000,000 for misleading consumers about price reductions and environmental claims. The DGCCRF found that Shein was unable to verify its claims that the company had reduced its GHG emissions by 25%.

TAKEAWAYS: Get the backup (data) for all numbers and claims that you are going to use – in advance, before publication – and make sure that the data exist or claim is true and that it matches your other published numbers and claims. Keep that data and backup. All your materials should match – from your investment materials and presentations to your website, white papers, and ads.

The Stress Test: Practical Checks for Your Claims

Before you hit publish on that press release or update your website, run your claims through these practical legal checks:

These practical checks will help your business steer clear of red flags when talking about your environmental progress.

About the Author

Kristie M. Blase is a Shareholder at Frazer + Blase, P.C., a Chambers-spotlight-ranked corporate law firm with offices in New York and Houston. She draws on her global regulatory and commercial litigation experience to deliver actionable advice for investors, companies, and boards on risk evaluation, best practices, and strategic decisions.