What the Apple Watch ruling means for climate claims and carbon credits

Increasingly, companies are facing a tricky choice: stay quiet about climate progress and avoid scrutiny, or speak up and risk being sued. A new decision in the Dib v Apple case offers something businesses have been missing: clearer guardrails for greenwashing litigation.

The judge recently granted Apple’s motion to dismiss the lawsuit, noting that the plaintiffs provided “no objective information to explain why their work was reasonable or accurate.” In doing so, this decision upholds the ability for companies and consumers to rely on the body of science underpinning credible actors in the credit marketplaces.

Here’s what the decision means for businesses.

The decision, which is supported by Environmental Defense Fund, can give companies more confidence to stay the course on credible climate action – decarbonizing operations, supplementing with high-integrity carbon credits, and communicating these efforts responsibly. Now that plaintiffs have appealed, it’s important to understand exactly what the decision means for climate claims and what’s at stake for ambitious companies.

The lawsuit in brief: what was challenged

Last year, Environmental Defense Fund filed an amicus brief in support of Apple’s motion to dismiss in Dib v. Apple, a class action greenwashing suit challenging carbon neutral claims Apple made in connection with Apple Watch Series 9.

This case challenged not only Apple’s efforts, but also posed legal theories that would undermine credit buyers’ right to rely on the body of science underpinning existing carbon crediting methodologies and issuance rules.

According to Apple’s Product Environmental Report issued at the 2023 product launch, Apple decarbonized the product by 78% and purchased carbon credits to compensate for the remaining 22% of hard-to-abate emissions.

Plaintiffs alleged Apple’s carbon neutral representations were false and deceptive because the carbon credits Apple purchased were inflated or miscalculated the actual amount of carbon reduced or removed from the atmosphere.

While plaintiffs challenged the science underpinning the carbon crediting methodology, the court didn’t rule on whether the credits were good or bad, or whether they in fact represented a metric ton of carbon. Instead, the court answered questions of law regarding what evidence a greenwashing plaintiff needs to provide in order to bring a successful challenge.

On February 20, Judge Noël Wise of the United States District Court for the Northern District of California granted Apple’s motion to dismiss, finding that “every layer of plaintiffs’ allegations about Apple’s sales of Apple Watches are based on unsubstantiated assumptions” and that parties are “not required to defend against claims devoid of plausible support.”

Why business leaders should be paying attention

Greenwashing risk is a significant issue. While green claims can drive internal alignment on sustainability, build the business case for climate action, and allow companies to connect with customers on issues they care about, these claims face heightened scrutiny, from regulators, investors, and customers – and increasingly from litigants.

Just in the last five years, over 2,700 environmental claims-related cases were filed globally – more than double the number documented in 2020. Some of these cases rightly challenge false and misleading statements that undercut legitimate climate efforts. But some complaints have also overreached, contributing to a “greenhushing” trend where companies aren’t speaking publicly about what they are doing – or, worse, pullback from critical climate investments.

“While some greenwashing litigation rightfully targets misleading claims, responsible companies shouldn’t have to defend against baseless lawsuits that only deter climate action at a time we need it the most.”

– Holly Pearen, Lead Counsel, Carbon Pricing, EDF

Businesses need clearer rules of the road so they can keep doing right by the environment and keep communicating with confidence.

Our takeaways from the decision, and what it means for claims

The court’s decision offers four practical takeaways that will matter for greenwashing litigation and climate-related claims beyond this case:

1. Broad attacks on “the carbon market” don’t substitute for specifics. Plaintiffs can’t rely on broad critiques of the market, or allegations pertaining to “nearly all credits,” but instead must make particularized arguments pertaining to the exact credits and calculations used to substantiate each claim.
2. An alternative way to measure carbon impact isn’t enough – consumer expectations matter. Even if plaintiffs can support a plausible alternative way to measure carbon impacts, they must also show that a reasonable consumer would expect that method over the approach the company used to substantiate its claim. Disagreeing with a methodology does not automatically make a claim false, deceptive, or misleading.
3. Credible claims need science-backed evidence. To win, plaintiffs must prove that their alternative calculations are more accurate than the body of science relied on by carbon credit issuing bodies and, in turn, carbon credit buyers. It is not sufficient to simply advance competing calculations or methodologies. Plaintiffs must additionally submit evidence from scientists, other credible third-party sources to support their alternatives.
4. Conclusory statements are not enough. Plaintiffs must submit “objective information” demonstrating why their calculations are reasonable and accurate. The court suggested two types of evidence more persuasive than the unsupported, conclusory statements put forth in Dib v Apple: (1) evidence regarding the illegitimacy of carbon offset body upon which the credit purchaser required; and (2) specific, relevant testimony from a whistleblower.

What this means in practice for companies

“In the absence of updated U.S. Federal Trade Commission Green Guides, case law provides important guidance for companies that want to do right by the environment and communicate accurately about their corporate climate strategies.”

– Holly Pearen, Lead Counsel, Carbon Pricing, EDF

In practical terms, the decision reinforces steps many leading companies are already taking:

• Leverage high-integrity carbon credits as part of a credible and holistic strategy to reduce operational and value chain emissions in line with science and mitigate climate risk.
• Clearly disclose how carbon credits are used in a decarbonization strategy and related claims, as well as key information about the carbon credits used – such as host country, project or program, methodology and standard, and vintage. This is line with best-practice disclosure guidance (and required in jurisdictions like California).
• Anchor claims in high-integrity carbon credits issued by credible carbon crediting bodies (e.g., those deemed CCP-eligible by the Integrity Council for the Voluntary Carbon Market). These carbon credits must be verified by an independent third-party and backed by peer-reviewed methodologies.
• Document the basis for claims. With increasing expectations from regulators, it’s more important than ever to establish robust controls and oversight of sustainability data across the business, conduct third-party assurance of data and claims, and maintain documentation that claims are backed with scientific evidence.
• Align internal sustainability, legal, and communications teams early and often to ensure what you do and what you say are consistent.

More certainty, clearer expectations, better incentives

Greenwashing litigation is not likely to disappear, and companies should expect scrutiny. That’s not a bad thing when it helps ensure claims are credible.

What’s helpful with this lawsuit’s dismissal is that the court provided clearer guardrails – not a verdict on the underlying climate science, but a pathway for credible claims to stand up to scrutiny.

By setting clearer expectations for what it takes to challenge claims in court, the ruling gives companies more confidence to stay ambitious, stay transparent, and keep investing in the credible climate solutions we need at scale.