Major media and consultants are noting the increasing trend towards corporate “greenhushing,” that is, adopting a “radio-silence approach to environmental goals.” For example, a survey late last year reported that one in four companies were adopting corporate net-zero goals but not mentioning those goals publicly. Those companies probably adopt this stance because they fear litigation and public backlash. Remaining silent makes it harder to scrutinize their progress or methodology. Yet by doing so, they may also be leaving significant value on the table.
regarding the so-called “sustainability gap,” which the authors define as the gap between the current brand value attributable to sustainability and the unrealized value to be gained if the full efforts of the company were publicly reported. For some major companies surveyed, the authors concluded that more robust and open communications around sustainability activities could dramatically increase the corporate reputational value. Some surveyed companies, however, had substantial value at risk because of laggard environmental performance, which was at odds with the value consumers (perhaps mistakenly) attributed to the company for that performance.
Thus, there appears to be a possible benefit from making properly substantiated aspirational claims. This begs the question of how much support is required. How can a company bridge the gap between saying too much (giving rise to greenwashing allegations that put the company at risk) and saying too little (self-limiting greenhushing)?
As the United States experiences wild weather, with some scientists speculating the world has reached a climate change tipping point, a corporate policy of silence is too bad. Silence limits information sharing, fails to announce leadership positions, and allows companies to backslide.
Rather than remaining completely silent, there is another way, but one which requires effort and homework. Companies seeking to advertise long-term environmental goals can couch their claims in terms of future “aspirations” rather than attainment of immediate results. One online dictionary defines “aspiration” as “a strong desire to achieve something high or great,” while another refers to it solely as “a hope or ambition of achieving something.” The common thread is that of an ambition or desire to reach a goal in the future. That said, not all aspirations are vague, and even aspirational statements may require support if they generate consumer expectations.
Announcing aspirations is not new in corporate culture. Stated aspirations can range from improving corporate culture to increasing revenue growth to improving environmental performance. Making such statements public is typically motivated by a desire to communicate to consumers, investors and employees about initiatives the company is undertaking that may not otherwise be readily apparent but which they believe will be well-received by various audiences. For example, a consumer might not know that the company hopes to embark on a research program to find alternative technologies. An investor might also be interested in knowing about such aspirations.
Aspirational claims are common in the ESG area. Companies variously promise to phase out fossil fuels, recycle more, generate less waste, reduce packaging, reduce “chemicals,” and become “more sustainable.” Some put an attainment date on their aspiration, such as “Our company will become net-zero by 2040.”
Much depends, of course, on the context and wording of the claim. The FTC Green Guides do not currently address aspirational claim support, although it is possible that a future revision might do so. Without such federal guidance, the courts and National Advertising Division (NAD) have stepped in with opinions.
The courts have frequently addressed aspirational claims in the context of securities laws. For example, in a leading decision, the Ninth Circuit evaluated whether shareholders may bring a claim for securities fraud when a CEO violates the corporate code of ethics after publicly touting the business’s high standards for ethics and compliance. Retail Wholesale & Department Store Union Local 338 Retirement Fund v. Hewlett-Packard Co., 845 F.3d 1268 (2017) The court reasoned that Rule 10b–5 makes it unlawful for any person “[t]o make any untrue statement of fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading.” This is a standard similar to that applied in many false advertising statutes. The Ninth Circuit found that the challenged statements regarding corporate ethics were insufficiently definite to constitute factual claims but rather were merely “aspirational” in nature, akin to “puffery.” For example, among the challenged statements were the following:
- “We want to be a company known for its ethical leadership . . . .”
- “We know actions speak louder than words. We must make decisions and behave in ways that we can be proud of, that reflect our commitment to doing the right thing. . . . . . . .”
- “Let us commit together, as individuals and as a company, to build trust in everything we do by living our values and conducting business consistent with the high ethical standards within our SBC.”
The court concluded that the aspirational nature of these statements was “self-evident,” consisting solely of “vague” exhortations to improve ethics that were incapable of objective verification. See also, e.g., City of Pontiac Policeman’s System v. UBS AG, 752 F.2d 153 (2d. Cir. 2014) (“It is well-established that general statements about reputation, integrity, and compliance with ethical norms are inactionable ‘puffery,’ meaning that they are ‘too general to cause a reasonable investor to rely upon them.’ This is particularly true where, as here, the statements are explicitly aspirational, with qualifiers such as ‘aims to,’ ‘wants to,’ and ‘should.’ Plaintiffs’ claim that these statements were knowingly and verifiably false when made does not cure their generality, which is what prevents them from rising to the level of materiality required to form the basis for assessing a potential investment.")
Simply placing statements such as “aims,” “wants” and “should” in front of a stated goal does not automatically render a statement aspirational, nor are all aspirational statements necessarily puffery. For example, in LA Taxi Cooperative v. Uber Technologies, 114 F. Supp. 3d 852 (N.D. Cal. 2015), Judge Tigar of the Northern District of California, who had participated on the Hewlett Packard panel, rejected the argument that all aspirational statements were categorically inactionable: “Where a challenged statement includes ‘aspirational’ language, a court must still determine whether it ‘is extremely unlikely to induce consumer reliance.’” In denying Uber’s motion to dismiss false advertising claims, the court distinguished statements such as “GOING THE DISTANCE TO PUT PEOPLE FIRST,” which it considered to be puffery, from statements like “setting the strictest safety standards possible,” “already best in class” and a “comprehensive and new industry standard,” which it concluded could be factual statements susceptible to being proved false.
The NAD has always scrutinized aspirational advertising claims and tends to harbor a narrow view of puffery. In a case reviewing advertising by one of the world’s largest food companies, NAD concluded that aspirational claims about the company’s “commitment to be net-zero by 2040” on its corporate website, social media channels and YouTube, as well as in newspapers and publicly accessible corporate reports, were sufficiently definite to require support. JBS USA Holdings, Inc. (Net Zero 2040), Report #7135, NAD/CARU Case Reports (February 2023). The challenger, an activist group, argued that the “net-zero claim” reasonably conveyed the message that JBS has “an operational plan in place to achieve its net-zero goals and is implementing such a plan.”
NAD found that JBS’s “net-zero commitment” was not merely aspirational, reasoning that “when aspirational claims are tied to measurable outcomes an advertiser must be able to demonstrate that its goals and aspirations are not merely illusory and to provide evidence of the steps it is taking to reach its stated goal.”
Many companies would consider the measures that JBS reported to be sufficient evidence of concrete steps toward net zero. For example, the advertiser reported that (a) it had signed a contract with Carbon Trust Advisory Limited to provide a detailed “Global Footprinting and Net Zero” plan for JBS, which “details the steps that the parties will take together to set targets in line with [Science Based Targets Initiative] SBTi inclusive of Scope 1, 2 and 3 emissions across the entirety of JBS’s operations; (b) it had issued a $1 billion Sustainability-Linked Bond, linked to its net zero climate goals; and (c) it had partnered with experts to help it reach its net-zero by 2040 goal and provided information about its research projects with the University of Minnesota and Colorado State University.
NAD disagreed that these three measures were sufficient evidence of “concrete steps” taken by JBS, however: “the evidence did not support the broad message conveyed by the challenged advertising that JBS is on a path towards net zero, which would include a plan with specific objectives and measurable outcomes likely to be achieved.” As NAD stated, “[t]he record shows JBS has undertaken steps to begin learning how to address the operational and scientific challenges it will face achieving net zero impact on the environment by 2040, including partnering with sustainability experts to establish feasible goals. These steps may enable the company to work toward its net zero goal in the near future after science-based targets are established and implemented.”
JBS appealed this decision to the National Advertising Review Board (NARB) but lost again. The NARB agreed with the NAD decision, explaining in particular that the evidence regarding what “JBS has accomplished to date” was lacking. Although “JBS emphasized in its arguments to NAD that 2040 is 17 years into the future, giving JBS ample opportunity to first formulate and then implement a definitive plan,” JBS admitted that it had not yet submitted a “workable” carbon reduction plan to SBTi. NARB concluded that “[c]onsumers are ... likely to interpret the challenged advertising as communicating that the goal is a feasible one, and a feasible plan is being implemented.”
What lessons can be drawn from JBS and other “aspirational” claims decisions?
- An “aspirational” claim is not per se considered puffery. Depending on the context, it may require concrete evidence that shows the advertiser is taking steps to achieve the stated aspiration.
- The aspiration must be realistic and achievable if the claim is a claim. The plan for achieving the aspiration must actually lead to attaining the goal.
- The pathway to the aspiration must include measurable milestones.
- The mere fact that an aspirational goal is far in the future (e.g., by 2040) does not insulate the claim from review regarding whether a realistic and achievable plan exists, which, if met, will reach the stated goal by the deadline.
- Organizational aspirations can be couched more generally with introductory phrases like “we hope” or “we want.” However, these statements are not magically protective. The key is to analyze the overall consumer expectation that is created.
- For climate claims in particular, the advertiser should be clear regarding whether the claim includes Scope 3 emissions and, if so, candidly acknowledge uncertainties. The plan should be sufficiently developed to achieve the stated target by the committed date. Given that SBTi includes interim carbon emissions deadlines, the advertiser should be prepared to show how the interim deadlines are in the process of being met.
All of this is more costly than simply stating an aspiration and leaving the messy business of compliance to future corporate leaders. However, there are concrete reputational benefits to making such commitments public and sticking to them.