November 23, 2023
Interested in environmental law and greenwashing? Whether you’re an aspiring solicitor or barrister, the recent Pepsi lawsuit is excellent content to discuss in your upcoming law applications.

ESG & Greenwashing

Before looking at the details of this specific lawsuit, it is useful to outline some wider context about the issues at play.

Environmental law is an incredibly interesting (and important) practice area of the law. Often the most specialist firms and chambers in this space will be more specialised, boutique organisations such as Leigh Day, though other big-name firms such as Allen & Overy or Clifford Chance (Magic Circle law firms) also feature in the compiled rankings. Other firms will often run environment-related cases as part of their pro bono commitments, which are themselves another excellent point to mention during applications to law firms or chambers.

At the heart of much of this work is the idea of ESG (environment, social, governance issues), which has in recent years been an incredibly significant aspect of commercial awareness – virtually every organisation is conscious of its importance (whether out of genuine commitment or simply rising public pressure). This has been reflected in the law, too – in the UK, for example, the Companies Act 2006 includes a passage (fairly radical at the time) under directors’ duties stating that:

‘A director of a company must act in a way that he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard to inter alia the impact of the company’s operations on the (…) environment’ (s172(1)(d)).

A specific element of ESG causing controversy recently is the idea of ‘greenwashing’. This is a process whereby organisations attempt to falsely market themselves as being particularly eco-friendly in order to mislead consumers. In the UK, the CMA (Competition and Markets Authority) issued its ‘Green Claims Code’ in 2021, outlining strict rules for advertising in the ESG space. Claims made must:

  • Be truthful and accurate
  • Be clear and unambiguous
  • Not omit or hide material information
  • Only make fair and meaningful comparisons
  • Consider the full lifecycle of the product or their service
  • Be substantiated

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What Are The Facts Of The Pepsi Lawsuit?

In the story at hand, PepsiCo are being sued by the state of New York for the environmental impact of plastic pollution stemming from their bottles – and specifically also the ‘greenwashed’ claims they have made around their packaging. 

The European Commission is already looking into complaints that PepsiCo (as well as Nestle) have been participating in greenwashing in regard to their plastic bottles, but this further development in New York is even more significant for tackling the product head-first.

The New York lawsuit itself attacks PepsiCo both in terms of the greenwashing complaints around packaging, and observable damage to the Buffalo River through microplastics in the water, where the plaintiff (Attorney General Letitia James on behalf of the people of New York state) claim that ‘PepsiCo is the single largest identifiable contributor to this plastic waste’. On the greenwashing point, James argues:

‘PepsiCo has: i) misled the public and consumers regarding the efficacy of plastic recycling and its own efforts to combat plastic pollution, and ii) failed to include a warning on its plastic packaging stating that the packaging is a potential source of plastic pollution and presents a risk of harm to human health and the environment’.

Four causes of action have been brought before the court as a result of these allegations – repeated and persistent illegality in violation of New York executive law, violation of New York General Business Law, failure to warn (strict products liability), and public nuisance.

What Should Law Students Know About This Case?

This recent lawsuit acts as great source material for aspiring lawyers to use within their application forms and interviews

Here are some points you could discuss:

  • Law firms need to be very aware of the increasing amount of legislation in areas such as ESG and greenwashing in order to advise their clients properly and keep them compliant (particularly in relation to large corporate firms that tend to have similarly large corporate clients, like the Magic Circle or elite US names).
  • Lawyers need to balance concerns of ethics with the law when approaching issues such as these (there are plenty of wider philosophical conversations to be had here).
  • Focusing on the law itself is not enough – truly excellent lawyers use their wider understanding of business in practice (commercial awareness) to advise clients on issues like PR – it might be possible according to a legal textbook for your client to sue for a certain libel issue against it relating to greenwashing, for example, but how would that be picked up in the media?
  • The balance between contentious and non-contentious law is worth considering here – clients will not only need advising (as with PepsiCo now) when litigation begins, but also need to take a proactive approach by asking lawyers to carefully review their marketing materials (in light of greenwashing regulations) before they are published.
  • Understanding the broader public sentiment around these issues is key – try to have a look at some relevant articles from the FT or Economist before your interview to have a few examples of the climate which you can then apply to the scenario at hand (and then finally link to the law firm or chambers themselves).

Key Takeaways

In short, aspiring lawyers interested in the fascinating intersection between law and environmental issues should certainly consider keeping up-to-date with this important lawsuit, which provides excellent opportunities to showcase your deeper interest in legal practice during the application cycle. While the outcome of the case remains unpredictable for now, the legal issues it throws up are certain to be extremely significant for some time.

Commercial Awareness Questions

Test your knowledge and analytical skills with our commercial questions to challenge you to think about the wider themes and implications associated with this topic:

  • Considering the evolving landscape of environmental law and corporate accountability, how might law firms adapt their practices to address the increasing demand for expertise in ESG regulations and related litigations?
  • How does the PepsiCo lawsuit exemplify the growing importance of ESG regulations in corporate responsibility?
  • How might law firms advise multinational corporations like PepsiCo to ensure compliance with evolving ESG standards, considering the legal implications of their environmental impact?

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