Net Zero Claims Under the Gun

What a difference a few years can make.  Three years ago, American corporations were falling over themselves to make advertising claims that they would achieve “net zero” carbon emissions or would be “carbon-neutral” by a date certain – typically 2050.  At the time, such claims were thought to be helpful for marketing.  

Today, such claims are disappearing from the market. The impetus appears to be ongoing questions and a worldwide backlash against all matters stemming from “ESG,”questions about offsets, and litigation.

Factor 1: Consumers have pivoted from prevention to mitigation.

Many consumers seem to accept that cutting carbon dioxide emissions will no longer limit global warming to 1.5 deg C., which is the temperature target set forth in the Paris Climate Agreement. Recognizing that slowing global warming is still perceived by many to be a good idea, remaining ESG investors have pivoted to technological moonshots such a carbon capture and even shooting atmospheric particles into the sky to dim the sun.  Communities seem resigned to adaptation, rather than mitigation.  Moreover, some of the computer-based technology that consumers previously thought as "saving" the environment has turned out to consume vast amounts of energy.  Legitimate carbon offsets will remain useful tools, but apart from voluntary commitments, there is no federal law requiring carbon emissions reduction in the United States. Thus, the voluntary carbon market still exists, but is less robust than it was predicted to be.  

Factor 2: Litigation risk

As technologies do not yet exist that can ensure most manufacturing processes emit zero carbon, aspirational net zero goals are usually premised on a combination of reducing scope 1, 2 and (sometimes ) Scope 3 emissions, and then applying carbon offsets to cover the "last mile" in order to reach net zero commitments.  I have previously written about burgeoning concerns regarding the validity of carbon offsets, but even assuming they are totally viable, what message does a claim of "net zero by 2050" likely convey to consumers today?

Stated another way, what would a consumer seeing or hearing the statement, "net zero by 2050," reasonably assume that the advertiser had already done or was in the process of doing?  The advertiser is informing consumer about its aspirations because it believes that doing so will provide a marketing boost.  The litmus test of compliance will ultimately be assessed on the due date in 2050, but can the advertiser get a free pass and do nothing until 2049?  How much progress towards the net zero goal might a reasonable consumer expect from the advertiser today?  At one extreme, could the advertiser emit carbon unfettered until 2049, when it suddenly procured sufficient carbon offsets for its entire carbon emissions?  At the other extreme, should we require advertisers making the claim to reduce carbon emissions or procure offsets on a straight line reduction path to 2050?  

An organization called the Science Based Targets Initiative (SBTI) provides the tools and support for a Net Zero Standard.  The current standard requires that a participant commit in writing to a specific target, submit the target for validation to SBTI, and then adhere to their communication standards going forward.  There are third-parties that will audit emissions against the stated commitments, including Carbon Trust and Verra, to name two.

SBTI has published a new draft standard that tries to take into account recent litigation outcomes.  It remains to be seen how effective the new standard will be at insulating companies from lawsuits.  We have seen an unfortunate rise in litigation attacks naming third-party certifiers, which are de rigeur for any company wishing to make complicated environmental claims. Fortunately, few of these lawsuits have been successful, but one still worries about their chilling effects.  Simply put, companies should be rewarded in the market for truthful and verifiable environmental progress, even if slight.

In a 2023 decision, the National Advertising Division and its appellate body, the National Advertising Review Board, reviewed the net zero commitments of international food giant, JBS, which had communicated a "net zero by 2040" claim.  JBS's promise was backed by a variety of measures, including engaging SBTI and a third-party auditor to verify carbon emission reduction, as well as issuing $1 billion in Sustainability Bonds to finance research and actions towards carbon reduction measures.  Nevertheless, it argued that its "net zero" claim was aspirational in nature and was not intended to communicate to consumers that JBS had already achieved reductions in carbon emissions today.  NAD recommended that JBS substantially modify such claims.  JBS USA Holdings, Inc. (Net Zero 2040 ), Report #7135, NAD/CARU Case Reports (February 2023).

When JBS allegedly did not comply with NAD's recommendations to modify its claims, the New York Attorney General sued the company, alleging that JBS had not made meaningful progress towards its stated goal.  The New York Supreme Court dismissed the case without prejudice, and the parties settled before the AG could file an amended complaint.  New York v. JBS USA Food Company et al., No. 25-067 (Oct. 30, 2025).  A prominent shortcoming cited by the AG was JBS's inability to fully calculate Scope 3 emissions. 

A recently settled D.C. case had a similar set of allegations. Tyson Foods agreed to stop making net zero claims after plaintiff activists alleged that Tyson’s public statements “regarding Tyson’s Climate-Smart Beef Program and Tyson’s ambition to achieve net-zero greenhouse gas emissions by 2050 are false and misleading to consumers because, given the scale of Tyson’s emissions, achieving these commitments would require radical changes to Tyson’s beef production, and Tyson has no plan and has taken no meaningful steps to achieve this.” See Settlement Agreement between EWG and Tyson Foods,  D.C. Superior Court, No. 2024-CAB-005935 (filed 11/12/25).

These two cases illustrate concerns that animate much current greenwashing litigation: a focus on the mismatch between a company's aspirational advertising and its inability to completely account for supply chain activities; and a decision by activists to target high-intensity carbon-producing activities. 

Factor 3: Concerns  about Scope 3

If we accept the imperative that a successful business will grow its sales, Scope 3 emissions should increase – at least so long as the world operates in a fossil fuel-based economy and/or other decoupling of supplier emissions from sales growth is not achieved.  Scope 3 emissions are those not produced by the company, but which result from activities of third party suppliers and others in the value chain. They are notoriously hard to calculate.  If they are included, it  seems likely today that most growing businesses will not be able to achieve net zero (even 25 years from now) without the aid of carbon offsets.  

Renewable energy credits (RECs), are also under scrutiny.  A company that pays more for energy supply may receive RECs that signify the consumption of renewable energy from the grid.  That renewable energy might be produced elsewhere.  Activists sometimes criticize RECs on the basis that using them allows the consuming party to continue to burn fossil fuels, while maintaining the illusion of consuming renewable energy produced (in some cases) far away.  Theoretically a company in New York could buy RECs from a wind power plant in California.  It might claim that it is powered by 100% renewable energy – all the  while continuing to spew pollutants from smoke stacks.  The activists want RECs to be generated close in time and space to the consuming entity.  (The treatment of RECs issue is being debated as part of upcoming revisions to the Greenhouse Gas Protocol.)

Factor 4: Concerns about offset validity

That leads us to concerns about offset validity.  I have written about this before.  In a nutshell, the gold rush for offsets led to the generation of offsets of dubious value.  That said, offsets if real and verifiable should be valid.  The Biden Administration even issued an unusual statement saying so.  Although this statement has not been formally rescinded, one wonders whether the White House would back it today.

Factor 5: Do carbon claims still move the needle?

Greenwashing litigation is on the rise.  Climate-related claims feature prominently.  

Much of today's greenwashing litigation stems from societal decisions to employ market-based forces rather than command-and-control regulation to achieve environmental improvements. Market-based mechanisms are remarkably successful.  However, following them occasionally may be painful.  In a market-based paradigm, the judicial branch is important.  Moreover, there are limitations on the messages that businesses take from, and changes in behavior based on, ad hoc court decisions, which may vary by jurisdiction.  

The market-based solution goes partly like this: advertisers will truthfully advertise environmental advantages of their products when compared to others.  Consumers will vote with their purchases, rewarding truthful claims.  The most meaningful checks on malfeasance will come from court decisions, regulatory false advertising investigations and consequent voluntary discontinuances of challenged claims.  The hope is that other advertisers will learn from the hardships of those dragged into court or investigated and adjust their behavior accordingly.

Society must also rely on these mechanisms to ensure that truthful signals will permeate the market and reward the  “right” behaviors.  There are many underlying questions slowing down compliance though.  For example, many plaintiffs are reaching for defendants who should not be sued, potentially distorting the signals sent to the rest of the industry and leading to the phenomenon of “greenhushing.”   Where the costs of defending meritorious claims outweigh potential sales benefits from making them, companies may choose to refrain from making the claims at all.  

In a world where net zero claims seem to be less impactful, is the risk still worth it to make such a claim?  Certainly, there are values served other than generating bottom line profits by publicly stating a net zero commitment, but defending that statement against questions, some merited and others not, may be costly.