McCarter & English LLP on Insurance Coverage for Greenwashing Claims: It Depends on the Packaging

McCarter & English LLP on Insurance Coverage for Greenwashing Claims: It Depends on the Packaging

   By J. Wylie Donald and Stephanie Platzman-Diamant, Attorneys, McCarter & English LLP

J. Wylie Donald and Stephanie Platzman-Diamant wrote a recent commentary discussing “greenwashing”. They wrote that purveyors of goods and services seek to cash in on the wave of environmental consciousness sweeping the planet.  This rush to “green” marketing is not without good reason.  In a recent survey, over 60% of consumers surveyed across eight developing and developed countries “want to buy from environmentally responsible companies.”  Companies have responded by offering “green” products and services, often at a premium.

But what happens when a product or service that claims to be ecologically sound does not live up to its representations?  Or is asserted not to live up to its claim?  In that case, the company providing or marketing the product or service may find itself subject to suit by consumers and competitors for the deceptive claims.  Indeed, claims of deceptive environmental marketing have been increasing.  In this new eco-conscious landscape, the term “greenwashing” has been coined to describe the practice of companies’ deceptively representing their offerings as environmentally friendly.

The Federal Trade Commission’s “Green Guides” provide guidelines for environmental marketing claims.  The FTC recently published proposed revisions to its Green Guides, which if adopted, will make the Green Guides both stricter and broader in scope.  While these guidelines by themselves do not have the force of law, actions inconsistent with the guidelines may result in the FTC’s taking “corrective action.”

The spectre of stricter environmental marketing regulation and more lawsuits alleging greenwashing naturally leads policyholders to ask, “Will my liability insurance cover it?”  This commentary discusses how the Personal and Advertising Injury Liability part of the standard commercial general liability form may provide coverage for greenwashing claims, and possible barriers to coverage under the Failure to Conform exclusion. Court decisions from which relevant analogies may be drawn are analyzed.

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For additional discussion of the personal and advertising injury, see New Appleman on Insurance Law Library Edition, Chapter 30 INTELLECTUAL PROPERTY INSURANCE.

Access New Appleman on Insurance Law Library Edition, Chapter 30, on Lexis.com.

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Obtain a FREE DOWNLOAD of New Appleman on Insurance Law Library Edition § 30.03 Commercial General Liability Coverage for Intellectual Property Lawsuits--Advertising Injury Provisions.

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Mr. Donald is a partner of McCarter & English LLP and is a resident of its Wilmington, Delaware office. He counsels and litigates for clients on insurance coverage, environmental and products liability matters. Ms. Platzman-Diamant is an associate in McCarter & English's Insurance Coverage Group. She is a resident in the firm's Newark office.

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