Last year, we posted about a lawsuit against Allbirds alleging (among other things) that the company’s environmental claims – including claims about its “sustainable” practices, the “low carbon footprint” of its shoes, and its other “environmentally friendly” initiatives – are false and misleading. This week, the US District Court for the Southern District of New York dismissed the lawsuit. The decision covers a lot of ground, but here are some of the key points.
Among other things, the plaintiff took issue with Allbirds’ life cycle assessment (“LSA”) tool and its use of the Higg Material Sustainability Index (“MSI”) to measure the environmental impact of materials. For example, the plaintiff argued that the LSA tool only measures the carbon footprint of each product, while omitting other environmental impacts, and that the Higg MSI only includes raw materials and that it doesn’t account for the entire lifecycle of wool production.
The court determined that many of the plaintiff’s complaints about the LSA tool simply amounted to criticisms of the tool’s methodology, and that the plaintiff did not actually describe any false or misleading statements. The court held that Allbirds “does not mislead the reasonable consumer because it makes clear what is included in the carbon footprint calculation, and does not suggest that any factors are included that really are not.”
The court came to similar conclusions about use of the Higg MSI. The plaintiff’s criticism that the calculation doesn’t go beyond raw materials or that results would be higher if it had considered the entire lifecycle of wool production is “simply a critique of its methodology.” Just because a standard may have room for improvement, does not render a company’s reliance on that standard deceptive. Again, Allbirds clearly discloses its use of the Higg MSI.
The plaintiff also argued that Allbirds omitted information about “the environmental impact of the wool industry’s methane emissions, land occupation, and eutrophication.” Although companies are required to disclose material information, there is no obligation under New York law “to provide whatever information a consumer might like to know.” Again, the court found it unlikely that consumers would have expected Allbirds calculations to include anything other than what the company had described.
Although there are still a lot of gray areas when it comes to green claims, this decision suggests that companies have some flexibility in how they measure the environmental impact of their products. That flexibility has its limits, though. Companies will need to use reputable methodologies and clearly disclose the basis of their claims. Unqualified environmental benefit claims and claims that may imply a larger benefit than a company can substantiate still pose a high risk.