NAD Finds Advertiser Can’t Support Aspirational Net Zero Claims
If you tell your friends about your new year’s resolutions, odds are that most of those friends won’t push you for too much detail on how you plan to achieve your goals. But if those friends work at NAD, you might expect some pointed questions about whether you have a solid plan, whether you’ve started to work on that plan, and whether your goals are realistic. They’re not going to let you get by on good intentions alone.
As we’ve noted in previous posts, NAD has held that “when aspirational claims are tied to measurable outcomes, an advertiser must be able to demonstrate that its goals and aspirations are not merely illusory and to provide evidence of the steps it is taking to reach its stated goal.” In several recent cases involving aspirational claims – including cases involving claims by Chipotle and Georgia Pacific – NAD found that the advertisers had provided enough evidence.
In a case announced last week, NAD came to a different conclusion, and advertisers that make aspirational claims about their environmental efforts should take note. The decision covers a lot of ground, but here are some of the key themes.
JBS – the second-largest food company in the world – made several aspirational claims about its commitment “to be net zero by 2040” on its website, social media, newspapers, YouTube, and publicly accessible corporate reports. Those claims were challenged by the Institute for Agriculture & Trade Policy (“IATP”), who argued that the claims convey an unsupported message that “JBS has an operational plan in place to achieve its net zero goals and is implementing such a plan.”
According to IATP, JBS’s claim is definitive and it gives the net impression that JBS is “actively reducing its emissions and building more sustainable operations,” when this is not currently the case. In response, JBS argued that its claim is aspirational and intended to communicate the message that it has set a goal. The company presented evidence of how it is taking concrete steps to carry out this goal. For example, JBS noted that it had:
- Signed a contract with Carbon Trust Advisory Limited to provide a detailed “Global Footprinting and Net Zero” plan for JBS with steps the parties will take together to set targets in line with SBTi’s Net-Zero Standard inclusive of Scope 1, 2, and 3 emissions across JBS’s operations to reduce overall emissions;
- Issued a $1 billion Sustainability-Linked Bond, linked to its net zero climate goals;
- Partnered with experts at the University of Minnesota and Colorado State University to research and study supply chain considerations to address Scope 3 reductions and help it reach its net-zero by 2040 goal;
- Partnered with science-based companies and research centers to develop and expand the use of feed additives to help reduce methane emissions in the beef value chain;
- Signed an agreement with a company to use a feed additive for cows that would reduce methane emissions; and
- Signed an agreement to purchase verified emission reductions (i.e., carbon offsets).
NAD acknowledged that JBS had made a “significant preliminary investment” toward reducing emissions, that it had “undertaken steps to begin learning” how to address the operational and scientific challenges it will face, and that these steps “may be helpful towards achieving net-zero by 2040.” Nevertheless, NAD found that these steps were not enough to “support the message conveyed by the claim.” NAD thinks the message is “that JBS has a plan it is implementing today to achieve net zero operational impact by 2040.”
NAD also reviewed JBS’s claim that “the SBTi recognized the Net Zero Commitment of JBS,” which NAD said conveyed the impression that SBTi had reviewed and approved the company’s net zero goals and objectives. However, because the claim was based only on JBS’s submission of an SBTi Commitment Letter, the NAD found the claim conveyed a broader message than JBS could support.
According to SBTi, companies that have “Commitments” have “demonstrated their intention to develop targets and submit these for validation within 24 months.” This is in contrast to companies with “SBTi Targets” which mean that there are “clearly-defined pathways . . . to reduce greenhouse gas (‘GHG’) emissions.” Again, the efforts the company had taken were too preliminary, according to the NAD, and did not include an approved strategy or plan to allow it to achieve net-zero climate impact by 2040.
Does that mean an advertiser has to stay silent until it has that plan in place? Not necessarily. NAD writes that the decision doesn’t stop 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 decision raises a lot of questions. For example, do 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? JBS has indicated that it will appeal the decision, so we may have more clues when the NARB weighs in. In the meantime, we expect to see a lot more activity in this area.