A new decision from the National Advertising Division (“NAD”) of the BBB National Programs raises some interesting questions for brands in the business of making “net zero” claims. In a decision this month, the NAD dove into claims that American food processing company JBS USA Holdings made about its commitment to being “net zero by 2040.” The matter got its start when the Institute for Agriculture & Trade Policy (“IATP”) initiated an NAD proceeding, challenging an array of statements that JBS made on its website and social media accounts, as well as in publicly accessible corporate reports and in media articles, which, according to IATP, convey the objective – and unsubstantiated – message that it has “an operational plan in place to achieve its net zero goals and is implementing such a plan.”
In its NAD complaint, IATP challenged the following claims made by Greeley, CO-headquartered JBS: (1) “JBS is committing to be net zero by 2040”; (2) “Global Commitment to Achieve Net-Zero Greenhouse Gas Emissions by 2040”; (3) “Bacon, chicken wings and steak with net zero emissions. It’s possible;” and (4) “Leading change across the food industry and achieving our goal of net zero by 2040 will be a challenge. Anything less is not an option.” These statements make it seem like JBS has “an operational plan in place to achieve its net zero goals” and is “actively reducing its emissions and building more sustainable operations,” when it does not, IATP argued.
In response to IATP’s complaint, JBS argued that its “net zero” claims are aspirational and intended to communicate that it has set a carbon emissions goal. In furtherance of its goal, JBS cited evidence of how it is working to achieve it, including by issuing a $1 billion Sustainability-Linked Bond, linked to its net zero climate goals; signing an agreement to purchase verified emission reductions (i.e., carbon offsets); and partnering with experts to research and study supply chain considerations to address Scope 3 reductions and help it reach its “net-zero by 2040” goal, among other things.
With the foregoing in mind, the NAD determined that not only do JBS’ claims “reasonably create consumer expectations that [its] efforts are providing environmental benefits,” its claim about achieving “‘net zero’ emissions by 2040 [is] a measurable outcome.” Specifically, the NAD asserted that “net-zero” is “a recognized standard that guides companies in defining and establishing short and long-term science-based greenhouse gas emission reduction goals aligned with the legally binding 2015 Paris Agreement.”
While the company has made a “significant preliminary investment” toward reducing emissions and has “undertaken steps to begin learning how to address the operational and scientific challenges it will face” (which are steps that “may be helpful towards achieving net-zero by 2040”), the NAD found that this is not enough to “support the message conveyed by the [company’s] claims.” In particular, the NAD maintained that the evidence provided by JBS “did not support the broad message conveyed that [it] has a plan that it is implementing today to achieve net zero operational impact by 2040.”
As a result, the NAD has recommended that JBS discontinue its use of each of the challenged “net zero” claims. At the same time, it noted that “nothing in its decision precludes JBS from making narrower truthful and not misleading claims regarding its efforts at researching potential methods for reducing emissions and any efforts it is undertaking to reduce emissions.”
The advertising body’s decision falls in line with its enduring crack-down on aspirational environmental benefit claims, with Davis+Gilbert’s Ronald Urbach and Alexa Meera Singh stating last year that the NAD has been “seemingly going further” than others “in requiring that advertisers demonstrate that their goals and aspirations are not merely illusory and provide evidence of the steps being taken to reach their stated goals.” They point to NAD decisions in challenges involving Chipotle, Butterball, and Everlane as examples.
JBS has since announced that it will appeal the NAD decision based on its disagreement that “the challenged aspirational claims communicate a message that it has a detailed plan in place today to achieve net-zero by 2040 – 17 years from now” and in light of its belief that “its claims are substantiated by the foundational work it has done to date.”
Reflecting on NAD’s decision, Kelley Drye’s Gonzalo Mon and and Katie Rogers state that it “raises a lot of questions,” including whether “consumers really expect that companies have all the details worked out when they make an aspirational claim? What separates a good foundation from a good plan? And what more narrow and less definitive statements can a company make while it formulates its plan?”
THE BIGGER PICTURE: The matter is worthy of attention in light of the enduring practice by companies across industries to tout their plans for achieving “net zero” status. It is also the latest indicator of rising attention to companies’ claims on the ESG front, including ones that are aspirational in nature. Not limited to NAD actions, a number of companies have been the target of lawsuits claiming that they failed to live up to aspirational marketing statements. It is worth noting that the outcome in at least one of those cases – the one that Earth Island Institute waged against Coca-Cola – “suggests that advertisers may have some breathing room to make aspirational statements” depending on where the challenges take place (i.e., before the NAD or certain courts), per Mon.
(In a Nov. 2022 decision, the Superior Court of the District of Columbia granted Coca-Cola’s motion to dismiss this case, finding that Earth Island Institute failed to allege that Coca-Cola’s ESG-centric advertisingstatements were provably false or plausibly misleading.)
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