brought several actions arising out of alleged ESG and climate-related misconduct .[ 2 ]
Shareholder lawsuits have also alleged greenwashing , such as in Perri v . Croskrey , a derivative suit filed in the U . S . District Court for the District of Delaware in 2021 by the shareholders of Danimer Scientific Inc . who claimed that the company had overstated sustainability claims .[ 3 ] Numerous other consumer class action complaints have been filed related to greenwashing , including against Keurig Green Mountain Inc ., 7-Eleven and H & M , among others .
AI washing can also be compared to the recent trend of " cloudwashing ," where , during the rapid rise of cloud-based products and services , companies promoted products as cloud-based when they were merely delivered over the internet and did not truly fit the characteristics of cloud computing .
Emphasizing that securities laws require " full , fair and truthful " disclosures , Gensler warned , " Don ' t do it ," reiterating that " one shouldn ' t greenwash , and one shouldn ' t AI wash . I don ' t know how else to say it ."
Many " AI " Products Are Mischaracterized
AI washing may occur when a company misleads investors regarding its true AI capabilities . According to Gensler , misleading investors concerning AI is governed by the same " set of basic laws , but also the same basic concept " as misleading the public on other topics .[ 4 ] Indeed , " AI " as a term embraces many iterations of the technology , and a business may promote itself as leveraging AI , even when utilizing only a small amount of AI — or almost no AI at all .
A recent TechTarget article recently noted that " AI-washing is rampant ," and that " AI vendors are able to get away with these exaggerations because artificial intelligence is such a large umbrella term ."[ 5 ]
As one example , The Wall Street Journal reported in 2019 that employees of engineer . ai — a startup that said it used AI to automate the development of mobile applications — came forward with allegations that the company had exaggerated its AI capabilities to attract investors and customers . According to those employees , instead of AI , the company relied upon human engineers to do most of the work .[ 6 ]
Given generative AI ' s nascent stage , and potential ambiguity in the term " artificial intelligence ," it is not difficult to see how companies could find themselves in regulatory crosshairs for overstating , or misstating , their AI capabilities .
In this regard , technology generally qualifies as AI only if it exhibits some level of learning , adapting and autonomy . Technologies providing advanced automation and statistical analysis are not necessarily considered AI .
For example , while chatbots have become ubiquitous on consumer-facing websites , such technology generally is not AI but consists of automated preprogrammed answers in response to common questions . Similarly , targeted online advertising is not AI , but merely utilizes an algorithm to analyze online search queries to generate matching ads .
Gensler pointed to this very issue during his Dec . 5 remarks , stressing the gap between what companies promise regarding their AI capabilities versus what they are capable of implementing in their products and services .