United States: NYAG Sues Meat Producer For Making False "Net Zero By 2040" Claims

New York Attorney General Letitia James announced that she sued JBS USA Food Company and and JBS USA Food Company Holdings for false advertising, alleging that the companies misled consumers about the environmental impact of the meat that they produce. The defendants (which I'll refer to as "JBS") are subsidiaries of JBS S.A., which is a Brazilian company that apparently claims to be the largest beef and poultry producer in the world.

The New York Attorney General's lawsuit – which is clearly going to be a meaty case – is focused on JBS's claims that it will be "Net Zero by 2040." According to the NYAG, in March 2021, JBS announced "a commitment to achieve net-zero greenhouse gas (GHG) emissions by 2040. The commitment spans the company's global operations, ... as well as its diverse value chain of agricultural producer partners, suppliers and customers in their efforts to reduce emissions across the value chain." The NYAG then alleged that, in April 2021, JBS ran a full page advertisement in The New York Times which claimed, "We are the first major global company in our industry to commit to net zero by 2040. Can it actually be done? We think so and we're taking real actions to achieve our goal." The NYAG alleged that similar ads appeared on company websites and in other advertising as well.

The NYAG alleged that JBS's claim that it will be "Net Zero by 2024" is false and misleading, however, because the company failed to fully take into account its "scope 3" emissions. "Scope 3" emissions are essentially the emissions from a company's vendors and suppliers (other than suppliers of energy). According to the U.S. Environmental Protection Agency, the problem with omitting Scope 3 emissions from a company's calculations of its greenhouse gas emissions is that those emissions "often represent the majority of an organization's total greenhouse gas (GHG) emissions."

And that is exactly the NYAG's concern here. The NYAG alleged that, when calculating its greenhouse gas emissions, JBS did not account for emissions from Amazon deforestation and other land uses changes in its supply chain. The NYAG explained that, "Deforestation for cattle operations contributes to the JBS Group's Scope 3 emissions not only through the immediate release of greenhouse gases from destroyed biomass, but also through the resulting inability of that biomass to subsequently absorb and store greenhouse gases from the atmosphere."

The NYAG also charged that JBS's "Net Zero by 2024" commitment is also false and misleading because of the company's current levels of production and its plans to dramatically increase production. The NYAG alleged that, notwithstanding the company's public commitments, it didn't have a feasible plan in place to reduce its emissions (or to offset them) based on both its current level of production or based on its plan to substantially increase its production as well. As the NYAG put it, "The JBS Group, however, has had no viable plan to meet its commitment to be "Net Zero by 2040."

This case is still at its very early stages, of course, but there are still several important take-aways from the NYAG's complaint.

First, just because you're making an aspirational claim about something you're going to achieve way off in the future, don't assume that regulators and others won't say that you're making claims that require substantiation. (For a court taking a different view, however, check out this case involving Coke's aspirational claims.)

Second, if your environmental claims are based on certain assumptions – or you're excluding certain factors in your calculations – you'd better be up front about that, so that consumers don't misunderstand what you're actually claiming you are going to achieve. That being said, regardless of how clear an advertiser is about how it is doing its calculations, would a regulator really be okay with a "net zero" claim that ignores a substantial portion of the omissions?

Third, as this lawsuit also makes clear, regulators are going to look very skeptically at your aspirational claims, even far-off ones, unless they are based on current science and realistic, achievable plans.

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