The Legal Brief - 12th April 2023
KC Partners
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Greenwashing has become an increasingly prevalent issue in recent years, as companies look to capitalize on the growing public interest in environmentalism. The practice involves companies making exaggerated or false claims about their environmental credentials in order to appeal to consumers who are looking to make more sustainable choices. But how can consumers and investors know which companies are truly green and which are engaging in greenwashing? And what legal remedies are available to hold companies accountable for misleading claims?
One of the main challenges in pursuing legal action against greenwashing is the lack of clarity surrounding many green terms. Terms like “eco-friendly” or “made from recycled materials” can be open to interpretation, and what one person considers environmentally friendly might not be the same as what another person considers to be green. Until regulators establish clear definitions for these terms, it can be difficult to prove that a company has made false claims about its environmental impact.
This problem is compounded when companies use more general language to imply that their values and processes are aligned with sustainability, without making specific claims about their products. In these cases, it can be even more challenging to establish what a reasonable person would have understood the company to mean. Without clear guidelines from regulators, it falls on consumers and investors to do their own research and carefully evaluate companies’ environmental claims.
Another challenge in pursuing legal action for greenwashing is the requirement to prove individual loss. Most private law remedies are designed to compensate individuals for losses they have suffered, but in environmental cases, the harm caused may be more diffuse and affect society as a whole. This is known as the “tragedy of the commons” problem, where the costs of environmental damage are borne collectively by society, rather than by individual claimants. This can make it difficult to establish standing to bring a claim and to demonstrate that a particular individual has suffered harm as a result of a company’s greenwashing.
The third challenge is related to the second: companies may calculate that the profits they stand to gain from greenwashing outweigh any potential legal liabilities. If they are only required to compensate a small subset of individuals who have suffered individual losses, they may decide that it is worth it to continue engaging in environmentally harmful practices. This creates a need for legal remedies that can more effectively deter companies from engaging in greenwashing and make it less financially attractive to do so.
Despite these challenges, there are legal remedies available for greenwashing. One option is to bring claims for breach of contract, negligent or fraudulent misrepresentation, or consumer protection legislation-based remedies. These claims can be challenging to establish, as they require a high degree of specificity and evidence, but they can provide a way to hold companies accountable for misleading environmental claims.
Another option is to rely on regulatory action. While regulators may be under-resourced and behind the curve when it comes to establishing clear guidelines for green terms, they still have the power to enforce existing regulations and take action against companies that engage in deceptive marketing practices. Investors and consumers can also play a role in pressuring regulators to take stronger action to combat greenwashing and establish clearer guidelines for environmentally friendly products and services.
In conclusion, greenwashing poses a significant challenge for those seeking to promote genuine environmental responsibility. While there are legal remedies available, such as breach of contract or fraudulent misrepresentation claims, these face several challenges in practice. The lack of clear definitions for many green terms makes it difficult to prove falsehoods, and most private law remedies require individual claimants to demonstrate specific losses, which may not reflect the broader societal impact of environmental harm. Additionally, companies that engage in greenwashing may weigh the cost of individual compensation against the profit gained from continuing harmful practices.
While regulation is one potential solution, it can be slow and difficult to enforce, and it may not keep pace with changing industry standards. Ultimately, consumers and investors must be vigilant in scrutinizing green claims and holding companies accountable for their actions. However, this requires greater legal creativity and innovation to ensure that claims brought by individuals are taken seriously, with appropriate remedies for the wider harm caused by environmental damage. As more companies seek to present themselves as environmentally responsible, it will be important to establish clear, enforceable standards that prevent greenwashing and ensure that environmental responsibility is not just a marketing tactic but a genuine commitment to sustainability.
Written by Max Howard
Apple have continued their growth in India, giving the tech giant a significant presence on both sides of the Himalayas.
Building on their success in China, whilst at the same time trying to give themselves other options should trade relations between the US and China break down, Apple has been gradually developing its business in India, with a new manufacturing centre there, and their first shop front, which opened last month. Having manufacturing, and selling capability, in India will streamline the supply chain, and no doubt lead to more options in terms of costings and profit margins, as well as improving sentiment amongst locals due to the job opportunities the manufacturing, and retail, centres will provide.
That profit margin, and flexibility within it, may be key for success in India. The average smartphone price bought in the country in the last year was a little over $200, which is nothing compared to the $900 approx. for a new iPhone. Discounts and trade-ins could bring this price down to nearer the $500 mark, but having some flexibility to knock some value off the initial $900, by means of reducing the production and transport costs, will certainly help Apple to get a foothold in the marketplace - particularly with the esteem and status that could potentially go with the owning of an iPhone.
Should this barrier be overcome, India is a smartphone market ready to explode. Apple has grown massively in the country, from 1% market share in 2019, to around 5% now. In a marketplace which is the second largest (12% share) in the world, this is a large amount of business. Interestingly, the smartphone market in India still has huge growth potential, too, as it is only 50% penetrated currently. Should Apple manage to make their handsets affordable to a larger population percentage, this could be 50% ripe for the picking. With the advancements in technology, particularly 5G, it is also foreseeable that Apple could really capitalise, and provide people a device that could replace all their current devices. This could be particularly powerful in marketplaces, such as India, where wireless data communication has potential to overtake wired communications, due to the lack of infrastructure for the latter.
Written by Duncan Balcon
?? DO YOU PRIORITISE VALUES OUTSIDE OF YOUR CAREER?
?? Are you struggling to balance your roles as a professional and a parent?
Eli Albrecht, a dedicated M&A and Business lawyer, candidly shares invaluable insights into achieving work-life balance through to fatherhood, marriage, memorable business cases, faith, and personal branding.
In addition to learning more about our latest?Legally Speaking Podcast ???powered by?Clio - Cloud-Based Legal Technology?episode; we shout out AMAZING previous guests; highlighting their achievements and what they are getting up to for the legal & wider communities:
???Amelia Platton?- for?The ND Lawyer Project?x?Geldards LLP?upcoming roadshow, an accessible and informative event that discusses neurodiversity and disability in law
???Johnny Shearman?- for his comeback as a writer for PLC Magazine, and his recent article co-written with?Claire Broadbelt?discussing the UK's signing of the Singapore Convention on Mediation
???Colin Levy?- for his panel appearance for the Legal Operators in partnership with Malbek webinar exploring the use of generative AI (ChatGPT) in contracting to automate routine tasks and more
???Alex Su?- for being one of the panellists for Hastings Communications and Entertainment Law Journal Spring 2023 Symposium "Generative AI and Privacy: ChatGPT & Beyond" webinar HAPPENING TODAY
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