SYMBIOSIS LAW SCHOOL, NAGPUR

Constituent of
SYMBIOSIS INTERNATIONAL (DEEMED UNIVERSITY), PUNE
(Established under Section 3 of the UGC Act, 1956)
Re-accredited by NAAC with ‘A++’ Grade, Awarded Category
– I by UGC.

Greenwashing Liability

-: Under the Guidance of :-

Dr. Deepti Khubalkar

Assistant Professor

Symbiosis Law School, Nagpur

-: Submitted by:-

Mrunali Umesh Surve

LLM – II Semester

PRN 239010441022

BATCH: 2023-2024

Submitted in the partial fulfillment of the requirement for the Award of LL.M Degree in
“ Business and Corporate Law ”
 DECLARATION

I, declare that the Research Paper titled “Greenwashing Liability” which is submitted for

award of the degree of LL.M. has not been submitted by me in any other University for any

degree or diploma. The present dissertation has been prepared by me based on my original

research.

DATE : 30th March, 2024

PLACE : NAGPUR

Mrunali Umesh Surve,

LLM II SEMESTER

Business and corporate

PRN: 23010441022,

BATCH : 2023-2024
 ACKNOWLEDGEMENT

I am going to thank Dr. Deepti Khubalkar here for her vitally help, guidance, and support
during all this research. They deep knowledge insight contributed much to both waypoint and
subtitle process
The author is acknowledgeable for granting facilities and resources to Symbiosis Law
School, Nagpur, also these were very valid to do this research.
Lastly, I want to express the acknowledgement and appreciation of all the contributors who
rather willingly and generously lent their time and knowledge to this research project’s
furtherance.

Mrunali Surve

23010441022
Sr. Page
Content
no No.
1. Greenwashing Liability

2. ABSTRACT
3. Introduction / Background of the Research

4. Statement of Problem

5 Research Questions / Hypothesis

6 Research Methodology

7 Research Objectives

8 Literature Review
9 Chaptalization
10 Concluding Remarks

11 Suggestions and Recommendations

12 Bibliography / References
Abstract:
This paper provides a long-term business history perspective on greenwashing and how it
dwells and is interconnected with the contemporary landscape of corporate sustainability, the
phenomenon of greenwashing presents a critical challenge, intersecting with various facets of
corporate conduct and governance. The issue of greenwashing is a significant difficulty in the
current context of corporate sustainability, as it intersects with multiple aspects of corporate
behavior and governance. This study examines the various dimensions of greenwashing
liabilities, including its relationship with Corporate Social Responsibility (CSR), regulatory
frameworks, tort liability, penalties, and its influence on the company's stock and sale. The
correlation between greenwashing and corporate social responsibility (CSR), acknowledging
that CSR programs aim to showcase a company's dedication to social and environmental
accountability. However, greenwashing undermines the genuineness of these endeavors,
gradually undermining the trust of stakeholders. The regulatory framework that governs the
practice of greenwashing, emphasizing the necessity of strong enforcement mechanisms and
more explicit standards to mitigate the occurrence of misleading marketing strategies. The
text underscores the significance of regulatory entities in enforcing penalties and punishments
onto corporations that have been convicted of engaging in greenwashing practices.
The legal responsibility related to greenwashing, examining the previous legal cases and
possible legal actions that occur when consumers or stakeholders experience harm or
financial losses as a result of deceptive or inaccurate environmental assertions made by firms.
Tax implications of greenwashing, specifically focusing on the potential effects of deceptive
environmental assertions on tax incentives and responsibilities related to authentic
sustainability initiatives. Market consequences of greenwashing, specifically investigating
how the exposure of deceitful methods can result in harm to reputation, unhappiness among
shareholders, and variations in the value of stocks and sales performance.
The interrelation of greenwashing liabilities in relation to corporate social responsibility
(CSR), regulatory frameworks, Tort liability, Tax consequences, and market dynamics. The
proposition supports the adoption for a comprehensive approach that integrates legal, ethical,
and financial considerations to mitigate the risks posed by greenwashing, promote
transparency and accountability, and foster genuine sustainability practices within
corporations.

Keywords: Greenwashing, Corporate Social Responsibility, Tort Liability, Market dynamics,

Introduction:
The concept of Corporate Sustainability came under the light when 1960s saw a significant
environmental awakening, leading to the establishment of new institutions and legislation to
protect the environment. The concept of sustainable development emerged, focusing on
meeting current generation's needs without compromising future generations' needs 1. This
shift from "greening" to "sustainability" in the 2000s led to the use of terms like "triple
bottom line" and "eco-efficiency" by major corporations. The twentieth century, marked by
technological advancements and improved living standards, has also seen a significant
increase in energy consumption, resource depletion, and environmental sustainability issues 2,
largely due to industrial capitalism and multinational corporations 3. In light of the increasing
focus on sustainability, the emergence of a phenomena referred to as greenwashing has
become a noteworthy issue. Greenwashing is the act of giving false information to consumers
or stakeholders regarding the environmental friendliness of a company's products, services, or
overall business behaviour. This misleading marketing strategy erodes the trustworthiness of
authentic environmental initiatives and presents ethical, legal, and financial hazards for
organizations.
The deep and remarkable nature of the relationship between greenwashing and Corporate
Social Responsibility (CSR) is evident. Corporate Social Responsibility (CSR) refers to a
company's dedication to ethical, social, and environmental factors in its activities and
engagements with stakeholders. It frequently overlaps with sustainability efforts. Companies
participate in corporate social responsibility (CSR) initiatives to bolster their reputation,
foster consumer trust, and make constructive contributions to society. Nevertheless, when
corporations partake in the practice of greenwashing, they diminish the genuineness of their
corporate social responsibility endeavours, so eroding the confidence of stakeholders and
compromising the credibility of corporate sustainability programs.
There is considerable variation in the regulatory framework pertaining to greenwashing
across different jurisdictions and industries. Certain geographical areas have implemented
rigorous restrictions to mitigate deceptive advertising techniques and promote transparency in
environmental assertions. However, the effectiveness of enforcement measures may be
deficient or inconsistently enforced. Hence, firms may take advantage of regulatory loopholes
to participate in greenwashing without facing consequences, resulting in customer confusion
and disbelief. The concept of tort responsibility holds considerable importance within the
realm of greenwashing. Consumers or stakeholders who experience injury or financial losses
due to firms making false or misleading environmental claims have the option to pursue legal
action through tort claims. These assertions may accuse firms of engaging in fraudulent
misrepresentation, carelessness, or other tortious behaviour, thereby holding them responsible
for the outcomes of their deceitful actions.

1
The Brundtland report in 1987 WCED, 1987
2
McNeill, 2000; the United Nations; 2016 In 2016 the United Nations presented their most authoritative study
ever published–the Global Environmental Outlook (GEO-6): Regional Assessments report–on the state of the
planet’s health, which concluded that environment is deteriorating even faster than previously thought
3
Wright & Nyberg, 2015
Greenwashing has tax consequences for firms, the genuine environmental activities, such as
investments in renewable energy or energy-efficient technologies, often qualify for tax
benefits and credits, in instances where corporations are responsible in greenwashing, they
encounter examination from tax authorities concerning the authenticity of their purported
environmental advantages and the corresponding tax deductions or credits they claim. The
consequences of engaging in greenwashing extend beyond just legal accountability,
encompassing detrimental effects on reputation and financial consequences. The exposure of
greenwashing has the potential to negatively impact a company's brand reputation, undermine
consumer confidence, and result in reduced sales, fluctuations in stock prices, or legal actions
initiated by shareholders. As a result, companies that participate in greenwashing not only
encounter legal and regulatory repercussions but also experience negative effects on their
market performance and long-term sustainability.
It is crucial for corporations to embrace transparent and genuine sustainability measures,
comply with legal obligations, and maintain ethical principles in order to alleviate the
potential hazards linked to greenwashing. In addition, it is imperative for politicians,
regulators, and stakeholders to engage in collaborative efforts aimed at bolstering regulatory
frameworks, improving enforcement mechanisms, and advancing transparency in
environmental marketing assertions. These measures are crucial for cultivating trust and
responsibility within the corporate domain.

Statement of Problem:
The phenomenon of greenwashing is rapidly creating a danger to the long-term sustainability
of enterprises, the credibility of regulatory systems, and the confidence of customers. In spite
of the increasing acknowledgment of environmental issues and the adoption of Corporate
Social Responsibility (CSR) endeavours, firms persist in employing misleading marketing
tactics that manipulate their environmental credentials. The act of misrepresentation not only
undermines the credibility of genuine sustainability projects, but also has substantial
implications for consumers, stakeholders, and the broader structure of corporate governance.

The problem originates from the lack of clearly defined and effective legislation that govern
the conduct of greenwashing, together with inadequate mechanisms for detecting and
applying sanctions on misleading environmental claims. Corporations take use of regulatory
loopholes and uncertainty to gain advantages from the favourable reputation associated with
sustainability, without giving substantial commitments to safeguard the environment. This
phenomenon results in a decline in consumer trust towards companies, so negatively
impacting their reputation and diminishing their loyalty towards the organization.

The existing legal framework for greenwashing demonstrates fragmentation and

inconsistency, posing challenges for authorities in their efforts to address deceptive marketing
tactics. Greenwashing tort liability cases frequently demonstrate complexity and present
difficulties in providing evidence, hindering legal recourse for consumers and parties
impacted by misleading environmental assertions. The tax consequences of greenwashing
worsen the problem, as companies may gain advantages from tax incentives and credits
allocated for genuine sustainability initiatives while employing deceptive strategies to
overstate their environmental credentials. To tackle this problem, it is imperative to
implement a comprehensive approach that includes regulatory reforms, enforcement
techniques, consumer education programs, and business accountability measures.
Research Questions:
What are the existing regulatory frameworks governing greenwashing, and how effective are
they in deterring deceptive environmental marketing practices?
What are the legal challenges and barriers to holding companies accountable for
greenwashing, particularly in terms of tort liability claims?
What are the financial implications of greenwashing for companies, including its impact on
stock prices, sales performance, and shareholder value?
What are the tax implications of greenwashing, and how do fraudulent environmental claims
affect companies' eligibility for tax incentives and credits?
Companies that exhibit lower levels of transparency in their sustainability reporting processes
are more likely to be engaging in greenwashing as a means to enhance their environmental
reputation. The level of consumer suspicion towards greenwashing is shaped by various
factors, including previous encounters with deceptive marketing practices, concerns over
environmental sustainability, and confidence in the effectiveness of regulatory supervision. In
order to discourage greenwashing, regulatory frameworks that incorporate more stringent
sanctions and enhanced transparency have been found to be more efficacious. Companies that
are confronted with legal action or public scrutiny due the practice of greenwashing are
susceptible to reputational harm, unhappiness among shareholders, and financial setbacks.
Greenwashing has been found to have a detrimental effect on the long-term financial
performance of companies, resulting in a decline in stock prices and sales income.

Research Methodology:
The literature review focuses on Corporate Social Responsibility (CSR), regulatory
frameworks, tort liability, and market consequences related to greenwashing. Key theories,
concepts, empirical studies, and regulatory approaches are identified. A conceptual
framework is developed to outline the interrelationships between CSR, regulatory
frameworks, tort liability, and market consequences in the context of greenwashing, with
variables, hypotheses, and research questions.

Research Objectives:
To assess the effectiveness of existing regulatory frameworks in deterring greenwashing and
promoting transparency and accountability in environmental marketing practices.
To examine the legal implications and challenges associated with greenwashing, including
the potential for tort liability claims and the adequacy of legal remedies for addressing
deceptive environmental claims.
To analyse the financial implications of greenwashing for companies, including its impact on
stock prices, sales performance, and shareholder value.
To investigate the tax implications of greenwashing, including the eligibility for tax
incentives and credits for genuine sustainability initiatives and the potential consequences of
fraudulent environmental claims on tax liabilities.

Literature Review:
Research in the greenwashing field: concepts, theories, and potential impacts on economic
and social value by Francesca Bernini 4. This study explores greenwashing in business
economics, proposing a framework to guide scholars in understanding its various aspects. It
highlights the connection between greenwashing, reputational and relational capital, and a
comprehensive view of value that includes the social aspect. The report also presents a
conceptual framework that elucidates current research concerns and foresees the
ramifications of greenhouse gas misrepresentation.
The study's practical implications are the need for enhanced regulatory measures and robust
legal enforcement mechanisms to enhance required environmental reporting. It aims to
establish an audit procedure for such reporting and proposes recommendations for future
research, such as embracing the legitimacy theory framework to examine the significance of
obligatory environmental, social, and corporate governance (ESG) reporting.
The study explores the complex terrain of greenwashing research, exploring its conceptual
underpinnings, theoretical frameworks, and potential ramifications for economic and social
worth. It uses various theoretical viewpoints to clarify the fundamental mechanics and
dynamics of greenwashing activities. The review primarily examines the potential influence
of greenwashing on both economic and social value. Greenwashing may result in immediate
advantages like improved brand reputation or market positioning, but it can also have adverse
consequences on long-term viability, trust, and relationships with stakeholders.
file:///C:/Users/Mrunali%20Surve/Downloads/16175.pdf
Literature Review on Corporate Social Responsibility by Business School of Sichuan
University, Sichuan, P. R. China published by International Conference on Management
Engineering and Management Innovation (ICMEMI 2015) has stated Corporate social
responsibility (CSR) is a growing concept that has gained attention as corporations become
more aware of their societal responsibilities and potential benefits. CSR is a crucial
component of implementing differentiation strategies and improving consumer connections.
This study aims to demonstrate the definition of CSR, identify empirically test ed dimensions
of CSR, and examine the potential results of implementing CSR through content analysis of
existing CSR literature.
There are two categories of definitions: multi-dimensional definitions and definitions rooted
in social marketing. Multi-dimensional definitions enumerate the primary social obligations
that corporations have, while social marketing evaluates CSR based on its effects on society.

https://link.springer.com/article/10.1007/s10997-023-09686-5#:~:text=Greenpeace
4

%20defines%20greenwashing%20as%20%E2%80%9Ca,misleading%20consumers
%20regarding%20the%20environmental
CSR can be conceptualized from two perspectives: the stakeholder perspective and the social
perspective.
Empirical studies use several dimensions of CSR, such as community engagement, diversity,
environmental preservation, social initiatives, treatment of international employees, CSR
towards the government, employees, society, environmental conservation, and consumer
satisfaction. Homegrown literature includes research on the correlation between CSR and
financial success, consumer purchase intention, engagement in philanthropic endeavours,
market accountability, employee accountability, and public accountability.
The findings of CSR studies are analysed, with constraints addressed and potential avenues
for further research proposed. In general, CSR plays a pivotal role in advancing societal
welfare and bolstering enterprise prosperity. Research has established a direct correlation
between CSR and financial performance, with 5 out of 33 studies showing a positive
correlation. Consumer support of CSR moderates the relationship between CSR and their
answers.
Strategic implications of CSR include the cognitive linkage consumers establish between a
company and sustained competitive advantage. Porter and Kramer argue that corporate
resources allocated to CSR should be utilized to enhance operational effectiveness. Future
studies should focus on developing dimensions and scales that align with actual conditions in
China and investigate the impact of various dimensions on different stakeholders.
https://www.researchgate.net/publication/
324888911_'How_corporate_social_responsibility_can_be_integrated_into_corporate_sustai
nability_a_theoretical_review_of_their_relationships'
'How corporate social responsibility can be integrated into corporate sustainability: a
theoretical review of their relationships' M. Ashrafia, M. Adamsa, T. R. Walkeraand G.
Magnan has explained Corporate social responsibility (CSR) and corporate sustainability
(CS) are concepts that corporations are expected to meet while maintaining social and
environmental performance standards. The relationship between the two terms has been
debated, with some viewing them as the same concept and others as separate concepts. This
study proposes a relationship model to better understand how CSR can be integrated into CS
as a transitional stage or ultimate goal for a corporation.
The term 'sustainable' was first used in 1978 in the context of eco-development and has
evolved over time, with various models developed to elaborate on the roles and
responsibilities of corporations towards shareholders and stakeholders. The modern CSR
model emphasizes responsibilities beyond what the law or legislation requires, moving
towards the triple bottom line theory. CSR definitions emphasize that social responsibilities
are not limited to making profits and complying with legislation.
Corporate sustainability (CS) is the application of sustainable development at the microlevel,
focusing on the short-term and long-term economic, environmental, and social performance
of a corporation. To be considered sustainable, corporations need to embed sustainability
strategies into their business model, adopting new governance strategies and performances
that involve stakeholders consciously and contribute to the continuous improvement of social,
environmental, and economic conditions on a regional and/or global scale.
Both CSR and CS share the core concepts of generating value or benefit, balancing different
stakeholder and shareholder interests, and being accountable to stakeholders. However, CS is
more fully encompassing than CSR, involving both internally and externally facing
responsibility and a temporal focus that encompasses both short-term and long-term views.
Integrating CS into corporate strategy is a long-term survival strategy that goes beyond
immediate responsibility, recognizing the necessity for being socially, environmentally, and
financially sustainable to survive over time.
https://news.bloomberglaw.com/environment-and-energy/the-legal-risks-of-greenwashing-
are-real

The Legal Risks of Greenwashing Are Real by Shawn Collins and Lisa M. Northrup states
Greenwashing as a growing issue where companies misrepresent their sustainability or eco-
friendly policies, leading to consumer activism. The advertising landscape is filled with
buzzwords like "eco-friendly," "sustainable," "net zero," and "reusable" as companies
prioritize environmental, social, and governance initiatives. The clean beauty market is
estimated to reach $22 billion by 2024, making it one of the fastest-growing categories within
the cosmetics industry. Companies like Whole Foods, Burt's Bees Cosmetics, Dasani, and
KLM face class action lawsuits, and recent court decisions have shed additional insight into
how courts may analyse these claims and how companies can proactively take action to
minimize their legal risk.

Defendants facing allegations of false advertising often mount successful defences by

showing the statements were mere puffery. Nevertheless, it is important to highlight the
potential hazards that organizations face when they depend on context to establish the
veracity of widely disseminated advertising claims. Precise information is crucial when
presenting an advertising message as objectively true to a rational buyer.
It is advisable for companies to proactively consider upcoming legal guidance and the
presence of multiple greenwashing advertising cases that are currently pending motions to
dismiss this year. Meanwhile, corporations can expect that plaintiffs will persist in pursuing
various forms of deceptive advertising allegations. It is advisable to continuously evaluate
and analyse advertising in order to reduce and comprehend a company's legal and regulatory
liability.
1. Greenwashing:

Greenwashing is an advertising strategy utilized by organizations to portray themselves as

environmentally responsible or socially aware, often magnifying or distorting their
commitment to sustainability. The term "whitewashing" is derived from the idea of
fabricating a misleading appearance of purity or cleanliness to conceal flaws or wrongdoing.
Greenwashing, in the context of environmental or social responsibility, refers to the
deliberate creation of a false image of sustainability in order to attract consumers, investors,
or other interested parties, without effectively addressing the actual environmental or social
issues at hand.
Greenwashing is a problem that involves misleading claims, symbolic activities, selective
disclosure of information, manipulation of advertising, and labeling products as
environmentally friendly. It can be achieved through vague, unsubstantiated, or exaggerated
claims about environmental or social initiatives without concrete evidence or comprehensive
documentation. Marketers can use visual depictions, language selections, or endorsements to
establish a link with sustainability, regardless of whether the product or service offered
matches these values. Greenwashing negatively affects confidence and transparency in
business sustainability initiatives, diverting attention and resources from genuine
sustainability initiatives and cultivating a climate of doubt towards corporate social
responsibility. It is crucial to confront this phenomenon to ensure corporate accountability
and substantial advancements towards sustainability goals.
Vulgar or unclear language in marketing materials can make it difficult for consumers to fully
understand the true environmental impact of a specific product or service. The terms "eco-
friendly" and "sustainable" are often used without exact definitions or scientific data, creating
a deceptive perception of the company's commitment to environmental integrity. The
intentional and strategically spread of information can lead to a distorted depiction of a
company's overall environmental performance, undermining confidence and corporate social
responsibility claims. Tokenism is another characteristic of greenwashing, where firms
engage in cosmetic gestures or symbolic actions to create the impression of environmental
responsibility without making significant changes to their operational processes.
Greenwashing sometimes involves the use of green symbols or imagery to create a perception
of ecological sustainability. By linking their offers with nature or environmentalism,
companies aim to capitalize on consumers' predisposition towards sustainable products.
However, without empirical evidence to substantiate these claims, the use of symbols might
be considered a deliberate marketing tactic aimed at misleading consumers and enhancing the
company's brand image.

In conclusion, greenwashing is a problem characterized by a lack of transparency, concrete

actions, and genuine commitment to social or environmental responsibility. Consumers,
investors, and regulators must recognize these characteristics to identify instances of
greenwashing and hold companies accountable for their misleading claims. Establishing
robust regulatory frameworks and measuring transparency are essential to combat misleading
marketing strategies and promote genuine sustainability efforts in the business sector.
1.1 Examples:
Greenwashing is a widespread issue in various industries, exploiting consumer preferences
for environmental and social responsibility. In the fashion industry, clothing firms may
promote their products as "green" or "sustainable" without providing sufficient proof to
support these claims. They may disregard worker exploitation in their supply chains or the
ecological consequences of large-scale manufacturing. In the food and beverage sector,
companies may use misleading visual representations to appeal to health-conscious
consumers, despite their reliance on labour-intensive farming practices or unsustainable
sourcing strategies.
In the automotive sector, manufacturers may advertise their electric vehicles as
environmentally beneficial alternatives to traditional automobiles, but they may
underestimate the environmental impact of battery production or fail to notice concerns about
energy-intensive manufacturing processes. Companies can also engage in deceptive
marketing tactics that amplify the environmental benefits of electric vehicles while neglecting
concerns pertaining to vehicle emissions and sustainable transportation infrastructure.
In the energy sector, some companies may use marketing tactics that focus on promoting
their products as "clean" or "renewable" energy sources while failing to provide detailed
information about their concrete environmental impacts. They may commit resources to
renewable energy programs while operating power plants that rely on fossil fuels, which can
undermine the overall sustainability of their activities. By strategically highlighting specific
components within their energy portfolios, these corporations create a cosmetic facade of
environmental responsibility, obscuring the broader consequences of their activities.
Greenwashing practices are prevalent in numerous industries, capitalizing on customer
concerns on environmental and social issues. This highlights the need for more transparency,
accountability, and scrutiny in business sustainability endeavors across all industries.

1.2 Impact on consumers:

Greenwashing is a marketing strategy that undermines consumer trust and the authenticity of
sustainability efforts. It leads to individuals believing they are indirectly supporting
environmentally and socially responsible companies, causing uncertainty and disillusionment.
This can impact broader perceptions of corporate responsibility and damage the industry's
brand. Greenwashing also deceives customers, leading to apathy towards environmental and
social concerns. The legitimacy of CSR declarations may be scrutinized by customers,
hindering the adoption of sustainable practices and deterring customers from supporting
legitimate sustainability initiatives.
Greenwashing also diverts resources away from genuine sustainability efforts, diverting
resources from operational or supply chain improvements. Companies that engage in
greenwashing may allocate significant resources towards marketing and branding initiatives
instead of large investments in operational or supply chain improvements. It also undermines
the credibility of sustainability certifications and labeling, making it difficult for customers to
make informed choices about environmentally and socially responsible products.
 To address these challenges, it is crucial for firms, regulatory authorities, and consumers to
work together to promote transparency, accountability, and honesty in corporate
sustainability efforts. Identifying and addressing the problem of greenwashing is crucial for
regaining customer confidence and fostering a culture of genuine sustainability that results in
positive environmental and social transformation.

2. Corporate Social Responsibility:

In recent years, the notion of Corporate Social Responsibility (CSR) has garnered substantial
importance within the Indian context. The implementation of the Companies Act of 2013 in
India introduced provisions for Corporate Social Responsibility (CSR). These provisions
mandate that companies with a net worth of Rs. 500 crores or more, a turnover of Rs. 1000
crores or more, or a net profit of Rs. 5 crores or more must allocate a minimum of 2% of their
average net profit from the preceding three years towards CSR initiatives. This initiative has
resulted in a heightened acknowledgment among companies regarding their impact on society
and the environment, motivating them to actively engage in initiatives that advance societal
and environmental welfare. Submit electronic form CSR-2 to prevent potential legal
consequences imposed by the Ministry of Corporate Affairs.
In order to prevent potential penalties imposed by the Ministry of Corporate Affairs, it is
required that all qualified companies allocate funds towards regulated corporate social
responsibility (CSR) expenditure, as outlined in Section 135 of the Companies Act, 2013 in
conjunction with the Companies (CSR Policy) Rules, 2014. Please disregard if it has already
been completed.
Corporate Social Responsibility (CSR) is a framework that encompasses various dimensions,
including environmental sustainability, ethical corporate practices, and community
development. These dimensions are crucial for achieving a positive impact on society and the
environment. Environmental sustainability involves adopting renewable energy sources,
waste reduction measures, and preserving natural resources. Ethical business practices, such
as anti-corruption regulations, fair labor practices, and diversity and inclusion initiatives, are
essential for promoting transparency and integrity in a company's activities.
The United Nations Global Compact serves as a comprehensive framework for companies to
engage in ethical and sustainable practices, including human rights protection, fair labour
standards advancement, and deterrence of corrupt behaviours. By following these principles,
firms can demonstrate their commitment to ethical behaviour, strengthen their reputation, and
cultivate trust among stakeholders. Community development is another crucial aspect of
CSR, which can be achieved by supporting community-based initiatives like educational and
healthcare projects. Businesses can fund educational facilities, contribute to medical
facilities, or provide vocational training to underprivileged youth. Employee volunteer
programs also allow employees to participate in community service activities, such as
building homes for homeless individuals or organizing food distribution campaigns for
economically disadvantaged households. These programs not only benefit the community but
also employees by promoting leadership and teamwork skills while making a significant
contribution to a cause deeply connected to them. Overall, understanding and implementing
CSR is essential for businesses to contribute positively to society and the environment.
 2.1 Decoding the interconnection:
The influence of a committed business and to run it ethically and to contribute to sustainable
economic development along with an improved quality of life of stakeholders and their
families along with the society at large 5. Corporate sustainability, greenwashing, and CSR are
interconnected concepts that influence corporate behaviour, stakeholder perceptions, and
societal impacts. Corporate sustainability involves integrating environmental, social, and
economic considerations into business strategies to create long-term value while preserving
resources and promoting social well-being. It involves reducing carbon emissions, limiting
waste, preserving resources, fostering social equity, and contributing to communities. CSR,
on the other hand, involves ethical, responsible, and transparent commercial conduct,
addressing social and environmental issues, and generating mutual benefits. CSR cultivates
trust, strengthens reputation, and fosters connections with customers, workers, investors, and
society. Greenwashing is a deceitful strategy used by companies to distort their
environmental claims, diminishing the credibility of genuine sustainability initiatives, erode
consumer confidence, and harm reputation and legal obligations. Companies may use
greenwashing to exploit market demand for sustainable products and services without
demonstrating genuine commitment to environmental stewardship.

3. Deceptive Advertisement:

Deceptive advertising is illegal, especially in countries with lenient enforcement or unclear

definitions. In the era of global warming, urbanization, and technological advancements,
Corporate Social Responsibility (CSR) has become a legally binding principle to enhance
well-being. Whistleblowers play a crucial role in ensuring business executives adhere to
socially acceptable actions. In the age of advanced technology, modernization, and health
consciousness, pragmatic CSR measures may be adequate to avoid adverse public responses,
such as reduced demand, legal ramifications, and business closure. To effectively tackle
deceptive advertising, it is essential to possess a thorough understanding and commitment to
the core tenets of CSR, which span various dimensions, including legal, economic, ethical,
and charitable aspects. Following these principles can help reduce illegal and unethical
actions, promote charitable initiatives, and improve economic results. Engaging in fraudulent
advertising can result in legal repercussions, such as financial fines, termination of
commercial activities, and incarceration. Businesses that engage in deceptive advertising may
be perceived as immoral by the public, resulting in decreased support and demand, leading to
diminished economic returns on investment and profit.
Delusional advertising cases incur significant financial costs for all parties engaged and
impacted. In specific instances, such as the nitrogen oxide gas emission scandal involving
Volkswagen, the repercussions encompass fatalities and the development of chronic illnesses
among both human beings and other organisms6. The perpetrators of the crime of deceptive
advertising and its adverse consequences may face legal consequences such as imprisonment,
monetary penalties, and the closure of their businesses. Alternatively, the adverse effects of

5
WBCSD (World Business Council for Sustainable Development)
6
Impact of the Volkswagen emissions control defeat device on US public health Impact of the Volkswagen
emissions control defeat device on US public health (iop.org)
misleading advertising can be converted into favourable results, such as the development of
electric and other eco-friendly vehicles, as exemplified by the Volkswagen emission crisis 7.

3.1 Regulations:
Deceptive advertisements are misleading statements that mislead consumers about products
or services. They can be classified into two types: those that violate customers' right to
knowledge and choice, potentially causing financial loss and psychological distress, and
those that promote uncertain health remedies and medications, affecting consumer well-being
and safety. It is crucial for advertisers to provide accurate and relevant information to
consumers, and regulations surrounding greenwashing are closely linked to deceptive or
misleading advertising practices. Numerous legislative measures have been enacted to
establish regulations, penalties, and standards pertaining to misleading advertising 8.

The Advertising Standards Council of India (ASCI) is an authoritative entity responsible for
the regulation of the advertising sector within the Indian market. Its primary responsibility is
to ensure the veracity, precision, and absence of deception in advertisements. ASCI can be
notified if an advertisement is determined to be deceptive or morally questionable. The ASCI
promotes consumer engagement by encouraging them to lodge complaints anytime they
encounter such commercials.

Greenwashing can undermine corporate social responsibility (CSR) by compromising

transparency, stakeholder confidence, regulatory and legal consequences, and the potential
for authentic CSR and sustainability leadership. Companies can create enduring value by
allocating resources towards transparent reporting, engaging stakeholders, and implementing
significant environmental and social projects. Responsible advertising is crucial for
evaluating a company's actions and their effects on various societal dimensions.
Organizations must evaluate the consequences of their decisions across various domains and
activities, including information technology, operational processes, sales, human resources,
and marketing. Self-regulatory advertising norms, such as CSR efforts, are implemented
globally to promote ethical company conduct. Advertising Self-Regulatory Organizations
(SROs) play a crucial role in facilitating firms' effective oversight of their responsible
marketing commitments.
https://gsmi-ijgb.com/wp-content/uploads/IJHED-V6-N2-P01-Samuel-Bonsu-Deceptive-
Advertising.pdf

The Global Reporting Initiative (GRI) has established criteria for CSR reporting, including
examining marketing and labeling activities. ICAS aims to improve these references to
accurately consider organizations' performance in relation to advertising standards. A new
approach involves assessing a company's compliance with advertising standards and self-
regulation systems by identifying factors such as membership or support for Self-Regulated
Organizations (SROs), compliance rate, complaints received, and compliance with SRO
decisions. CSR reports can also include information on preventive measures like pre-
clearance and copy advice.

7
IJHED-V6-N2-P01-Samuel-Bonsu-Deceptive-Advertising.pdf (gsmi-ijgb.com)
8
https://consumeraffairs.nic.in/sites/default/files/file-uploads/consumer_information/
MisleadingAdvertisements.pdf Ministry of Consumer Affairs, Food and Public Distribution
Government ministry
4. Greenwash regulations:

The Prevention and Regulation of Greenwashing, 2024, is a legislative framework

established by the Central Consumer Protection Authority to address and prevent deceptive
advertising practices9. Greenwashing encompasses the act of disseminating false or deceitful
information, such as deliberately hiding facts or overstating environmental assertions. These
standards are universally applicable to all forms of advertising, encompassing advertisements
produced by service providers, product sellers, advertisers, and endorsers. The regulations
restrict the practice of greenwashing and demand that all advertising that make environmental
claims comply with specific accountability criteria. They prioritize the utilization of easily
understandable language and clarifications for technical concepts such as Environmental
Impact Assessment (EIA), Greenhouse Gas Emissions, and Ecological Footprint.
Environmental claims must be accurate and include thorough information, either through
commercial or digital platforms such as QR Codes or URLs. The deliberate selection of
research data to highlight favourable discoveries while suppressing negative ones should be
avoided. Environmental statements should be based on verifiable and relevant evidence,
which should be publicly conveyed to customers. It is crucial to provide evidence for various
environmental claims, including but not limited to carbon offsets, carbon neutrality,
composability, degradability, absence of harmful substances, sustainability claims, non-
toxicity, 100% naturalness, ozone safety and friendliness, recyclability, renewability, and
similar assertions. Companies must furnish ample qualifiers and evidence to deter deceit, and
claims should be clear and relevant, concentrating on specific characteristics, elements, or
stages of a product. It is recommended to refrain from placing reliance on endorsements
provided by environmental organizations or professionals, as such endorsements may be
biased or lack recognition from credible authority.
The preliminary recommendations for preventing and regulating greenwashing are currently
being sought by the Central Consumer Protection Authority (CCPA) in order to get public
feedback. The regulations, anticipated to be published within a timeframe of 30 days, will be
derived from counsel provided by a group of delegates from several organizations.
Greenwashing is a deceitful or misleading strategy that entails hiding crucial information,
exaggerating environmental assertions, and employing ambiguous terminology. The
restrictions will be applicable to all entities engaged in the promotion of goods or services,
encompassing advertisements, service providers, product dealers, advertisers, advertising
agencies, and endorsers. In order to establish credibility, companies that make green claims
are required to furnish specific details. These details encompass the inclusion of all
environmental claims in advertisements, the avoidance of selective data presentation, the
explicit delineation of the scope of claims, the provision of verifiable evidence to substantiate
them, the comparison of products or services, and the reliance on credible certification,
reliable scientific evidence, and independent third-party verification. It is imperative to
formulate comprehensive and practical plans when making aspirational or futuristic
environmental statements.

https://consumeraffairs.nic.in/sites/default/files/file-uploads/latestnews/Draft%20Guidline
9

%20with%20approval.pdf
The Department of Consumer Affairs (DoCA) has taken measures to tackle the problem of
greenwashing by forming a group including diverse stakeholders. The committee, comprising
National Law Universities, Law Firms, Government and Voluntary Consumer Organisations,
and significant industry associations, has proposed the standards for preventing and
regulating greenwashing in 2024. The primary objective of the proposed Guidelines is to
protect consumer interests by implementing limitations on the enforcement of greenwashing
strategies employed by enterprises and service providers in order to enhance sales and
revenue. The rules aim to address the issue of unsupported environmental assertions made by
companies and service providers in their ads, wherein they state that they are more
ecologically sustainable than their rivals.
The interim Guidelines impose a limitation on companies' involvement in greenwashing,
which is the act of deceiving consumers and stakeholders by spreading false or exaggerated
assertions regarding a company's environmental capabilities or products. The concepts are
relevant to all enterprises involved in advertising or service supply, including product sellers,
advertisers, advertising agencies, and endorsers, who utilize their services to promote goods
or services. Additionally, advertisements or communications that do not incorporate
customisation for a specific product or service are excluded, unless they directly result in the
acquisition of these products or services.
The concept of greenwashing refers to the deceptive or deceptive strategies adopted by firms,
whereas environmental claims encompass the deliberate or implicit utilization of suggestive
or imaginative assertions regarding products or services. Greenwashing refers to the act of
firms employing deceitful or misleading strategies, such as concealing, omitting, or
eliminating crucial information by exaggerating or making ambiguous, incorrect, or baseless
environmental assertions. The term "environmental claim" refers to a tactic used to make
suggestive or imaginative statements about items or services.
The inclusion of precise and reliable material data is vital due to the mandated obligation for
the disclosure of environmental allegations. This data can be provided either directly within
the advertisement or communication, or through the inclusion of a QR code, link, or other
digital media that contains the relevant information supporting the environmental claim. It is
incumbent for the corporation to reveal all relevant information, irrespective of its potential
benefits or drawbacks to the organization.
The Central Consumer Protection Authority shall undertake a review and resolution of
challenges and ambiguity and lack of clarity pertaining to the interpretation of any provisions
delineated in the proposed Guidelines. The Consumer Protection Act of 2019, referred to as
"the Act," will be responsible for regulating any breach of the restrictions specified in the
preliminary Guidelines.
The assertion of deception or misstatement typically leads to a demand for
compensation.
Under section 463 of the Companies Act, a director of a company may incur liability to
provide compensation to the company for any losses incurred due to a misstatement or
omission in a company communication, including but not limited to a corporate governance
statement, a director’s report, a strategic report, or a directors remuneration report. If a
director possesses knowledge that a statement is false or misleading, or demonstrates
recklessness regarding its truthfulness or misleadingness, or if they are aware that the
omission constitutes a dishonest concealing of a significant fact, they will be held
accountable. While the director's responsibility under section 463 is restricted to the
corporation, an investor has the potential to file a derivative lawsuit against the director for
violating their duty.
Potential liability may arise under section 90 of the Financial Services and Markets Act 2000
for representations made in a prospectus or listing particulars. Furthermore, as stipulated in
section 90A and Schedule 10A of the Financial Services and Markets Act (FSMA), entities
engaged in the issuance of securities for trading on a regulated market may bear
responsibility for providing compensation to investors who suffer financial losses as a result
of false or deceptive representations, omissions, or deceptive delays in the dissemination of
information.
The standard known as IS/ISO 14024:1999 has been formulated by the British Institute of
Standards (BIS), as stated by the Bureau of Indian Standards (BIS). The purpose of this
standard is to define the criteria for using eco-labels and provide instructions to companies
that make environmental claims in their advertising.
The enactment of the Consumer Protection Act of 2019 involves the establishment of a
centralized regulatory body responsible for supervising and controlling unfair trade practices,
including the dissemination of inaccurate or misleading environmental claims.
The Green Good Deeds movement, launched by the Ministry of Environment, Forest and
Climate Change (MoEFCC), aims to inspire individuals and businesses to take specific
actions to reduce their environmental impact. In addition, the program provides guidelines for
firms that choose to make environmental claims in their advertising.
In 1986, the Environment Protection Act was enacted. This Act enacts provisions aimed at the
prevention and management of environmental contamination, while also ensuring the
protection and preservation of the environment. The legislation includes provisions for
imposing fines in cases of violations of environmental standards and laws.
A code of self-regulation for advertising has been created by the Advertising Standards
Council of India (ASCI) in India. Environmental assertions must comply with the code's
stipulation of being accurate, dependable, and free from any misleading information.
The Centre for Science and Environment (CSE) administers the Green Rating Project (GRP),
which aims to evaluate and assess the environmental performance of companies operating in
India. An assessment of the organization's environmental management systems, policies, and
overall performance determines the prizes.
In the Republic of India, the Indian Green Building Council (IGBC) is a non-profit
organization that is committed to advancing sustainable building practices. The International
Green Building Council (IGBC) has developed a rating system for green buildings, providing
a structured approach for businesses to make environmental claims regarding their
constructions.
The phenomenon of greenwashing has attracted significant interest in India following the
release of a circular by the Securities and Exchange Board of India (SEBI) regarding green-
debt securities. SEBI has defined greenwashing as the intentional manipulation of
information to make false, misleading, unsubstantiated, or insufficient claims about the
sustainability of a product, service, or business operation. Although there is a lack of
comprehensive rules expressly targeting greenwashing practices, there are strategies available
to address this issue indirectly, as elaborated below in more depth. The Securities and
Exchange Board of India (SEBI) has implemented stringent regulations concerning
advertisements, requiring them to comply with the principles of veracity, equity, and
transparency. The promotional materials should faithfully replicate all the information
presented in an offer document and include all relevant details. Deceptive statements are ones
that do not include sufficient explanations or qualifications regarding the company's
performance or activities.
https://www.icsi.edu/media/webmodules/CSJ/April/11ArticleManojSonawala.pdf
The current regulatory frameworks play a crucial role in addressing greenwashing by
implementing norms and laws related to business transparency and advertising strategies. The
effectiveness of these frameworks depends on factors such as scope of coverage, enforcement
methods, standards for transparency and accountability, consumer welfare protection systems,
and adaptability to evolving trends. Comprehensive guidelines for corporate social
responsibility reporting and advertising obligations are essential for businesses, but
deficiencies may arise when these frameworks lack precision or comprehensive rules tailored
to the business. Enforcement methods, such as monetary sanctions, penalties, or legal
consequences, can be effective as deterrents, but potential limitations may arise due to
disparities in enforcement approaches or insufficient resources or power of regulatory
agencies.
Promoting transparency and responsibility is essential, but challenges may arise when there is
a lack of uniformity or clarity in disclosure criteria, which can facilitate firms manipulating or
obscuring information to minimize negative consequences or amplify sustainability efforts.
Consumer protection measures aim to protect customers from deceptive marketing activities,
but their effectiveness may be compromised due to inconsistent implementation, inadequate
consequences for non-compliance, and low consumer knowledge about regulatory norms and
entitlements.
Enhancing legal frameworks for mitigating greenwashing and promoting authentic corporate
responsibility requires adaptability and partnerships among regulators, industry stakeholders,
and civil society organizations to detect and rectify deficiencies in current rules and ensure
ethical standards and transparency in sustainability efforts.
This paper aims to conduct a comparative analysis of legal precedents and case law
concerning deceptive marketing methods and responsibility of corporations.

Legal cases have also been initiated in India regarding the issue of
greenwashing.
In 2012, the Advertising Standards Council of India (ASCI) fined Godrej Industries Rs. 5
lakh for spreading false and misleading claims about their Good Knight Fast Card mosquito
repellent. The company claimed that the product was entirely organic and devoid of any
chemical substances.
In 2011, the Ministry of Environment and Forests of the Indian government commenced legal
action against Hindustan Unilever Limited (HUL) for perpetuating false information in its
advertising campaigns pertaining to the environmental benefits of their Surf Excel Easy Wash
detergent. The firm claimed that the detergent was entirely natural and environmentally
benign, but in reality, it contained synthetic components. HUL was fined Rs. 10 lakhs by the
Central Pollution Control Board.
Case of Voltas AC Greenwash: The year 2013 witnessed claims against Voltas Limited, a part
of the Tata Group, pertaining to the dissemination of misleading information concerning the
energy efficiency of their air conditioning equipment. The corporation claimed that its air
conditioners were environmentally advantageous and had a "5-star energy rating," but in
reality, they had a lower energy rating. Voltas was fined Rs. 50,000 by the ASCI. In 2015,
Godrej Consumer Products Limited was accused of participating in greenwashing by
spreading false claims about the environmental benefits of its Godrej No. 1 soap. The firm
claimed that the soap exhibited characteristics of being "entirely natural," "biodegradable,"
and "environmentally friendly," despite the fact that it really contained synthetic components.
ASCI assessed a fine of Rs. 15 lakhs against Godrej.
Assessing the feasibility of holding companies responsible for misleading Corporate Social
Responsibility (CSR) claims requires skilfully navigating several legal barriers and
considerations. The task of defining and providing evidence for greenwashing in legal
contexts poses a significant challenge. Greenwashing is a term used to describe the practice
of employing deceptive marketing tactics in order to portray a company as being more
socially or ecologically conscious than it truly is. However, ascertaining the intention to
deceive and the importance of the deception can be complex, requiring substantial evidence
and legal expertise. Furthermore, the lack of specific legal definitions and criteria pertaining
to greenwashing poses difficulties in the detection and legal pursuit of fraudulent claims
about corporate social responsibility (CSR).
Legal concepts and approaches can help enforce corporate accountability for greenwashing.
One approach is to use consumer protection laws and regulations to evaluate corporate social
responsibility (CSR) claims. These laws address false advertising and deceptive trading
practices, allowing regulatory entities and litigants to hold companies accountable for
misleading representations of their environmental or social achievements. The theoretical
framework of corporate accountability, including fiduciary duty and corporate governance
norms, can assign liability to firms involved in deceitful CSR initiatives. Courts can interpret
corporate commitments to include the explicit disclosure of CSR programs and the reduction
of deceptive marketing tactics.
Additionally, legal doctrines like negligence or fraud can be employed to prove corporate
accountability in relation to greenwashing. Negligence charges suggest that companies
breached their obligation to protect consumers by making misleading or incorrect claims
about their CSR, resulting in negative outcomes or financial harm. Fraudulent claims argue
that companies intentionally disseminated false information to deceive stakeholders.
Despite factual challenges, successful legal actions can result in significant legal and
reputational consequences for firms engaged in greenwashing. To ensure openness,
accountability, and integrity in reporting and communication of CSR, the effective
 application of legislation requires collaboration between regulators, legal experts, and civil
society members.

5. Greenwashing is a Tort Liability:

A tort is a form of civil violation that arises when an individual or collective violates the
rights of others, rather than the rights of society at large. The action under consideration is
commonly interpreted as an infringement upon an individual rather than an infringement
upon society at large. A legal remedy for a tort is a legal action initiated by a civil court to
protect the rights of the plaintiff. Under such conditions, punitive measures such as
incarceration or placement in reintegration facilities are not used; rather, reparations in the
form of financial compensation or alternative methods of redress are provided.
The legal framework of tort law is designed to safeguard the interests and rights of
individuals while upholding a prescribed level of acceptable conduct. A legally safeguarded
interest engenders a legal right, which in turn engenders a corresponding legal obligation.
The term "wrongful act" is used to describe a breach of legal rights, which may lead to the
possibility of receiving compensation for the damages suffered from the party accountable for
the violation. Torts do not encompass all activities that are considered wrongful. To establish
a tort, there must be a purposeful and illegal conduct or omission to act that causes harm or
injury, and the action must be of a nature that permits legal action to be pursued in order to
compensate for the incurred damages.
It is the obligation of the government to ensure that corporations comply with corporate
social responsibility (CSR) regulations through the examination of information available on
the MCA 21 site. The competence to take action against firms that violate CSR laws is
granted to it in accordance with the firms Act of 2013. This measure is implemented
following a comprehensive evaluation of the company's records and legal protocols. Since
January 22, 2021, non-compliance with CSR rules has been officially recognized as a civil
wrong. Thus, Greenwashing can also be considered a form of tort liability.

5.1 Greenwashing is intricately linked to the field of Law of Tort.

Tort law is a sector within the realm of private law that specifically addresses cases of
misbehaviour involving individuals in private. Contract law and tort law differ in that
contract law does not pertain to voluntary obligations, whereas tort law does not necessarily
involve the state as a participant in a tort lawsuit. Tort law is a foundational field that forms
the basis for several private contracts, encompassing negligent injury, battery, fraud, and
defamation, among others. The determination of a legal right breach is not contingent upon
the preceding actions of the aggrieved party; rather, all individuals possess entitlements to be
protected against such behaviour. Tort law pertains to matters concerning morality and
societal existence, with a particular emphasis on interpersonal conduct and the allocation of
accountability for ethical transgressions. The concept of greenwashing is intricately linked to
the attributes of tort, as it offers substantiation and endorsement for diverse strategies
performed in the act of greenwashing.
The concept of "greenwashing" refers to a marketing tactic employed by corporations to
create a perception of environmental stewardship or societal consciousness, frequently
masking their genuine dedication to sustainability. The phenomena in question can be
attributed to the practice of whitewashing, which involves the creation of a misleading facade
of innocence in order to conceal flaws or faults. Greenwashing is a complex phenomenon that
encompasses different tactics, including spreading false claims, using symbolic gestures,
intentionally withholding information, employing manipulative advertising methods, and
categorizing products or services as environmentally sustainable. The matter at hand has been
noted to have adverse effects on both trust and openness in business sustainability
endeavours. It diverts attention from authentic initiatives and cultivates mistrust towards
corporate social responsibility. The deliberate employment of ambiguous language and
purposeful dissemination of information has the potential to mislead consumers, resulting in
the misleading sense that items or services are more environmentally sustainable than they
truly are. Tackling the problem of greenwashing is essential to guarantee corporate
responsibility and promote substantial progress towards sustainability goals.

5.2 Tort Theories:

In tort law, the principle of fairness states that the primary objective is to achieve equality or
justice among the parties involved in civil disputes. This concept lays considerable emphasis
on the role of the legal system in correcting instances of injustice and offering compensation
to individuals who have suffered suffering or injury due to the actions or negligence of
others.
The core principles that underpin the fairness theory of tort law include:
Compensation for Damage: Tort law aims to provide compensation to individuals who have
suffered harm or injustice due to the actions of another person, in line with this theoretical
framework. The main focus is on restoring the injured individual to their pre-injury condition,
to the maximum extent possible. Compensation refers to the provision of financial reparation
with the purpose of resolving various aspects such as medical expenses, economic detriment,
emotional anguish, and any other damages that may arise as a result of the wrongful conduct.
The concept of fairness in tort law plays a crucial role in deterring unjust action. It serves as a
deterrent for individuals and organizations to engage in activities that have the potential to
cause harm to others. The primary objective of tort law is to prevent acts of negligence or
wrongdoing and promote socially responsible behaviour by the imposition of legal
responsibility and the potential for financial consequences.
Fair distribution of risk: The fairness hypothesis also emphasizes the equitable allocation of
risk among parties. Tort law seeks to assign responsibility for harm and financial losses by
considering elements such as culpability, predictability, and causation. It is ensured by this
phenomenon that both individuals and entities have responsibility for the consequences of
their activities and are held accountable for the reasonably foreseeable dangers they create.
The idea of fairness in tort law also underscores the importance of restoring the autonomy
and dignity of those who have suffered injury. The basic aim of tort law is to provide
individuals with the opportunity to regain their autonomy and pursue their interests without
unjustified interference or restriction, through the provision of compensation and restoration
for the injury they have suffered.
Broadly speaking, the fairness theory of tort law exemplifies a commitment to the
fundamental tenets of justice, equity, and accountability in the realm of civil conflicts. The
aforementioned remark underscores the importance of the legal system in promoting fairness
among persons and providing resolution for those who have experienced harm, hence
cultivating a just and structured society.
The concept of negligence holds significant importance in the field of tort law, as it involves
the failure to exercise a reasonable level of care, resulting in harm being caused to another
individual or entity.
1. Negligence: Negligence in the context of deceptive corporate conduct can occur when a
company fails to use a reasonable degree of caution in its messages or actions related to
corporate social responsibility (CSR). In instances where a corporation disseminates
erroneous or exaggerated claims pertaining to its environmental initiatives without
conducting thorough inquiry or verification, and this erroneous information leads to adverse
consequences or financial harm for consumers or investors, the company may be deemed
liable for negligence.
2. Misrepresentation: Misrepresentation is the deliberate act of one party making a false
statement of fact or omitting important information in order to deceive another party, who
then uses the false statement to their disadvantage. In the context of corporate social
responsibility (CSR), misrepresentation refers to a firm making deceptive or inaccurate
claims about its social or environmental accomplishments to enhance its reputation or gain a
competitive advantage. If stakeholders, such as consumers or investors, rely on these
misrepresentations to make decisions and suffer harm as a result, the corporation may be held
responsible for fraudulent or careless deception.
3. Duty to guarantee safety: The duty of care is a legally mandated obligation that
individuals or organizations must adhere to in order to mitigate reasonably foreseeable harm
to others by the exercise of a prescribed standard of care. In the context of deceitful corporate
conduct, it is essential for companies to maintain a responsibility to protect their many
stakeholders, including consumers, investors, employees, and the wider community.
Corporations have a responsibility to provide accurate and truthful information about their
corporate social responsibility (CSR) initiatives and avoid engaging in deceptive strategies
that could potentially harm stakeholders. Liability may be shown if there is a violation of the
duty of care, if harm occurs as a reasonably predictable result of the corporation's actions or
failures to act.
Courts possess the authority to assess the accountability of companies engaged in deceptive
corporate social responsibility (CSR) conduct and determine the appropriate legal recourse
for those affected by these principles within the realm of tort law. This paradigm serves to
promote accountability and fairness in situations where companies manipulate their corporate
social responsibility (CSR) initiatives or engage in greenwashing practices.
Tort law encompasses various elements, such as negligence, misrepresentation, and duty of
care, which play a significant role in determining liability in cases involving deceptive
business conduct.
6. Roles and Responsibilities of various stakeholders in combating
greenwashing:

Greenwashing is a growing ethical concern that requires companies, regulatory bodies,

environmental organizations, consumers, investors, and other stakeholders to take precautions
when making public statements. Companies must avoid deceptive advertising techniques and
manage the delicate balance between bolstering their brand and mitigating threats to their
reputation. Investors who believe in greenwashing claims can increase their real risks, while
stakeholders in companies participating in greenwashing are at risk of long-lasting negative
consequences. Corporates that engage in greenwashing can face several challenges, including
causing damage to their reputation and eroded consumer trust. Legal liability may arise from
companies that propagate false or misleading environmental claims, leading to financial
penalties or legal actions. Increased regulatory scrutiny may result from conspicuous or
extensive claims, leading to monetary fines, legal actions, and negative public image.

Greenwashing also intensifies competition, as companies engaging in this technique may face
more competitiveness from organizations that truly strive to reduce their environmental
impact. People may choose to purchase goods or services from businesses that demonstrate
higher levels of environmental stewardship. Increased expenses may be associated with
greenwashing, such as rebranding or repositioning their products or services. To mitigate
potential future accusations of greenwashing, organizations should invest resources towards
the implementation of more rigorous sustainability initiatives and reporting mechanisms.
Stakeholders who see greenwashing statements as deceptive may opt to patronize other
companies, leading to a decline in sales and revenue for the company. Environmental
organizations have the potential to publicly denounce firms that engage in greenwashing
practices and initiate campaigns aimed at increasing public awareness. Investors may exhibit
reduced inclination to provide funds to companies that partake in greenwashing, particularly
if they harbour apprehensions regarding the company's standing or potential legal
ramifications.
Regulatory authorities have the jurisdiction to initiate inquiries into businesses that engage in
greenwashing activities and can impose fines or sanctions upon identifying signs of deceptive
or false claims. Competitors who genuinely strive to reduce their environmental impact may
openly denounce companies engaging in greenwashing and exploit this issue to differentiate
themselves in the marketplace. Greenwashing can have significant adverse effects on
organizations, resulting in reduced sales, damage to their reputation, legal liability, increased
costs, and intensified regulatory scrutiny.
https://www.mcgill.ca/business-law/article/who-responsible-addressing-
greenwashing#:~:text=Firms%20they%20invest%20in%20might,from%20paying%20for
%20green%20stocks.

7. Recommendations:

To effectively address Greenwashing, a comprehensive approach that involves various

stakeholders, including consumers, corporations, government entities, and non-governmental
groups, is necessary. There are several strategies that can be employed to mitigate the
phenomenon of Greenwashing and promote sustainable practices.
1. Enhancing Consumer Awareness: By providing customers with comprehensive knowledge
about Greenwashing and equipping them with resources to identify it, awareness campaigns
can augment their understanding of Greenwashing and their capacity to identify trustworthy
environmental claims. This may involve providing information on common Greenwashing
tactics and offering assistance in understanding and evaluating environmental claims.
Additionally, it is essential to provide improved guidance on the most effective strategies for
environmental marketing and the proficient dissemination of sustainability initiatives.

2. Collaboration and Partnership Formation: Participating in cooperative endeavors with

companies that share similar values helps cultivate consumer confidence and enhance
credibility. The establishment of collaborations among diverse stakeholders, such as
governmental entities, commercial enterprises, and civil society organizations, can enhance
the progress and implementation of sustainable practices and policies. NGOs can exert a
pivotal influence by advocating for stricter legislation and promoting sustainable practices.

3. Improving Transparency and Disclosure: Companies can enhance transparency and

openness by ensuring that their environmental impact data is publicly accessible. This can
facilitate the attainment of this objective, as well as the ability to set quantifiable targets,
pursue external validation to substantiate claims, and consistently provide updates on their
progress towards sustainable objectives. Implementing this plan has the potential to cultivate
consumer trust and demonstrate a commitment to transparency and accountability.

4. Advertising Campaigns: Leveraging advertising and social media platforms can

significantly augment public awareness regarding Greenwashing and cultivate a climate
characterized by transparency and accountability. Enacting stricter government regulations
and enforcement measures can help reduce and punish Greenwashing. Governments have the
power to require companies to provide accurate and well-substantiated environmental claims
and enforce penalties for non-compliance.

5. The use of third-party certifications and standards: Third-party certifications and standards
provide a systematic framework for organizations to demonstrate their commitment to
sustainability while also offering consumers more accurate and dependable information. Eco-
labels, Environmental Management System (EMS) certifications, and Life Cycle
Assessments (LCAs) are impartial assessments carried out by external entities to analyze the
environmental impacts linked to a product or service throughout its entire life cycle.

6. Integrating sustainability into business strategies: Prioritizing the long-term impacts of

sustainability initiatives rather than solely focusing on short-term advantages can cultivate
consumer confidence and demonstrate a resolute commitment to enduring sustainability. This
strategy can streamline the incorporation of sustainability factors into the decision-making
process, augmenting the precision and importance of environmental claims.

Fostering innovation by promoting cutting-edge technology and business models that

effectively address environmental concerns is crucial for fostering sustainability. Companies
can cultivate a culture of sustainability and mitigate the occurrence of Greenwashing through
the implementation of a comprehensive strategy that includes increasing awareness, offering
educational initiatives, acquiring third-party certifications, promoting collaboration and
partnerships, ensuring transparency and accountability, conducting media campaigns,
enforcing stricter government regulations, and integrating sustainability into overall business
strategies.

References: