Navigating Corporate Social Responsibility Claims

Companies are embracing corporate social responsibility (CSR) more and more; it is a way for companies and brands to incorporate the company’s values into their business model, and engage with customers and employees on a different level. It is not without risk, however, and our readers should be cognizant of the risks when the company’s values make their way to their product labels – whether it’s food, cosmetics, personal care products, or any other product for sale.

What does “sustainable” mean, anyway?

If you were to ask me five years ago what “sustainable” meant, I would have given you some response that likely included the words “environment” and “recyclable”.   Today, a quick Google search shows “sustainable” encompasses the management of environmental, social and financial demands and concerns to ensure responsible, ethical and ongoing success of a company. That is a whole lot wrapped into one word, a great deal of which is the subject of litigation.  It encompasses recycling and biodegradability (see FTC Green Guides, the EPA’s guidance, and more and more state laws), fair trade, animal welfare claims (happy cows, anyone?), ethical sourcing, child and slave labor (on the Supreme Court docket, oral arguments on December 1, 2020), worker’s rights, fair labor practices, and responsible land management, among many other things.  Given the breadth of concepts, and the importance that companies and consumers are placing on these types of claims, what should companies consider when conveying these concepts on their product labels?

The “reasonable consumer”:  While the marketing and advertising departments may focus on millennials or the target demographic du jour, you should keep the “reasonable consumer” front of mind.  The “reasonable consumer” is sometimes the recipient of scorn (the lack of fruit in Froot Loops), but is the standard that governs whether a label claim is misleading.

Location, location, location.  Any self-respecting HGTV binge watcher knows location matters.  Regulatory lawyers know the same thing.  CSR statements on product packaging may increase a company’s risk of litigation, as courts may presume that consumers relied on those statements when pulling products from the store shelves.

Go beyond the label.  Statements on websites may also present some risk, in particular if there are online sales.  Adding disclaimer language with classic “waffle” words, like “should,” “expect,” or “endeavor” may help to keep the CSR statements aspirational.  But do know that courts are likely to review a claim in context with all the other things on a label – as well as things off the label, like advertising and the company websites.

Do your research.  This cannot be emphasized enough. Understand how that “reasonable consumer” will interpret the claims on your label and your website. Be familiar with the CSR statements on the company websites, public filings, and other public statements.  Know what words are defined in regulations, and more importantly, what words are not defined.  Know what terms have been the subject of litigation. Know everything about any third party “seals of approval” and what they may – or may not – cover.

Do even more research.  Talk to your supply chain experts.  Know where your ingredients come from.  Find out where the fish are caught, where the cows are raised, where the mica and cobalt are mined.  Know where the ingredients are produced, and whether the risk of labor abuse is high. You want to know more about your product and your claims than anyone else.