In the current corporate environment, where transparency and ethical conduct are paramount, in-house lawyers navigate the complex terrains of AI washing and greenwashing. These phenomena, though distinct—AI washing relates to artificial intelligence claims, and greenwashing to environmental sustainability—both involve misleading stakeholders about a company’s practices or capabilities. 

This confluence underscores the urgent need for in-house counsel to elevate legal advice and governance practices and embed actionable insights into their strategies.

Understanding the Challenges

 AI Washing is the practice of overclaiming a company’s use of AI, suggesting a level of technological sophistication that doesn’t exist. The SEC’s focus on AI washing, evident from recent regulatory actions (SEC Press Release), signals a crackdown on deceptive AI-related claims.

 

Greenwashing is misleading stakeholders about the environmental impact of a company’s products or practices. This practice is equally scrutinized, with regulatory bodies keen to enforce transparency and accuracy in environmental claims.

 

Legal Implications and Governance Strategies

 

For in-house corporate lawyers, these issues are not just about legal compliance; they represent deeper ethical and governance challenges. Addressing them requires a multifaceted approach:

 

1. Conduct Rigorous Verification: Before making public claims about AI capabilities or environmental impact, verify these claims in-depth. This involves internal reviews and potentially third-party validations to ensure credibility and compliance. Resources like the Environmental Protection Agency’s guidelines on green marketing can provide valuable insights into establishing verification processes.

 

2. Establish Clear Compliance Frameworks: Develop compliance frameworks that are robust and flexible enough to adapt to the rapidly evolving regulatory landscape surrounding AI and environmental claims. This includes creating policies that ensure all claims are substantiated and that there’s a clear chain of responsibility for this substantiation.

 

3. Prioritize Transparent Communication: Develop a communication strategy that prioritizes transparency with stakeholders, including clear, accessible disclosures about how AI technologies or environmental practices are implemented. For AI transparency guidelines, referring to frameworks such as those proposed by the AI Now Institute can be beneficial.

Actionable Insights for In-House Counsel

 

1. Foster an Ethical Corporate Culture: Lead by example in promoting a culture that values integrity over marketing spin. Encourage departments across the company to prioritize factual accuracy and ethical considerations in their operations and external communications.

 

2. Implement Ethical Guidelines and Training: Create and enforce ethical guidelines addressing AI and environmental claims. Organize regular training sessions for employees at all levels to ensure they understand the importance of these guidelines and how to apply them in their work.

 

3. Stay Informed and Adaptive: The regulatory environment for AI and environmental claims is constantly changing. In-house counsel must stay informed about these developments and be ready to adapt corporate policies accordingly. Engaging with legal and industry-specific forums can provide early insights into regulatory trends and enforcement actions.

 

4. Engage Stakeholders in Dialogue: Open lines of communication with stakeholders, including investors, customers, and regulatory bodies, to understand their concerns and expectations. This dialogue can inform more responsible and transparent practices and help avoid potential missteps.

 

5. Leverage External Audits and Certifications: Consider third-party audits or certifications for your company’s AI systems and environmental practices. This not only adds credibility to your claims but also demonstrates a commitment to transparency and ethical practices.

 

6. Document and Disclose Methodologies: Be open about the methodologies used to validate AI and environmental claims. Providing stakeholders with access to this information can enhance trust and mitigate skepticism.

 

By integrating these actionable insights into their strategies, in-house corporate lawyers can lead their companies to navigate the pitfalls of AI washing and greenwashing and champion a culture of transparency and ethical innovation. This proactive approach safeguards against regulatory risks and builds a foundation of trust and credibility with stakeholders, positioning the company as a leader in ethical corporate practice.

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Olga V. Mack is a Fellow at CodeX, The Stanford Center for Legal Informatics, and a Generative AI Editor at law.MIT. Olga embraces legal innovation and had dedicated her career to improving and shaping the future of law. She is convinced that the legal profession will emerge even stronger, more resilient, and more inclusive than before by embracing technology. Olga is also an award-winning general counsel, operations professional, startup advisor, public speaker, adjunct professor, and entrepreneur. She authored Get on Board: Earning Your Ticket to a Corporate Board Seat, Fundamentals of Smart Contract Security, and  Blockchain Value: Transforming Business Models, Society, and Communities. She is working on three books: Visual IQ for Lawyers (ABA 2024), The Rise of Product Lawyers: An Analytical Framework to Systematically Advise Your Clients Throughout the Product Lifecycle (Globe Law and Business 2024), and Legal Operations in the Age of AI and Data (Globe Law and Business 2024). You can follow Olga on LinkedIn and Twitter @olgavmack.