FTC launches review of environmental marketing guidelines: explosion in eco-claims leads to regulatory review of Green Guides

Nonwovens Industry, July, 2008 by Peter Mayberry, Jessica Franken

From air freshener to appliances, carpet cleaner to vacuums, ink cartridges to writing instruments, it seems everywhere you look these days, someone is marketing a product to capitalize on the burgeoning "green" movement. Frankly, it is not surprising given the value Americans say they place on green credentials. A recent survey, for instance, revealed that U.S. consumers expect to double their expenditures on green products and services this year--spending about $500 billion, or $43 billion per month. Similarly, 85% of survey respondents said they would switch brands or product affiliation "because of a company's negative corporate responsibility practices," and 90% said they view companies that have strong environmental commitment more positively.

But, while companies that cater to the environmentally conscious stand to reap big rewards in today's green climate, those that mislead consumers regarding the environmental benefits of their products and services--commonly referred to as "greenwashing"--whether intentional or not, risk dangerous consumer backlash and, potentially, enforcement action from the U.S. Federal Trade Commission (FTC, the Federal agency responsible for, among other things, ensuring fairness and accuracy in consumer advertising).

The advent of websites like Greenwashing.com ups the ante even further by giving users a place to very publicly post, discuss and rank green advertising and eco-claims. Moreover, in late 2007, the FTC announced it was launching a regulatory review of its "Guides for the Use of Environmental Marketing Claims," or "Green Guides," a full year early because of the explosion in eco-claims. The guides, which outline voluntary environmental marketing guidelines to help industry conform to FTC laws against deceptive advertising, were last reviewed in 1998.

While FTC is still evaluating whether revisions should be made, it already held two public workshops on specific Green Guide issues earlier this year and recently announced a third, suggesting things are indeed moving in that direction. With that in mind, this article will provide an overview of the FTC Green Guides with an eye towards anticipating what could be coming down the pike.

Background

While it may seem like public interest in all things environmental is a relatively new phenomenon, consumer interest in green products and FTC oversight has in fact been around for sometime. During the 1970s and 1980s, concerns about things like gasoline, air pollution, the growing hole in the ozone layer and overflowing landfills generated significant media and public interest and created demand for eco-conscious products. The market responded with a rapid proliferation of environmental marketing claims, some of which were legitimate but many of which were either unintentionally misleading or patently false. This prompted the FTC to launch a number of investigations and the federal and several state governments to consider adopting legislation to address the deceptive practices and protect consumers.

Concerned that states would implement conflicting environmental marketing standards, U.S. business interests began to press the FTC for national industry-wide guidance to promote the use of truthful and substantiated green marketing claims. The Commission, working with the U.S. Environmental Protection Agency and the state Attorneys General, responded to these concerns by issuing the 1992 Guides for the Use of Environmental Marketing Claims, which were later revised in 1996 and 1998.

The "Green Guides," as they came to be known, both outline general principles for all green marketing and contain examples about how to handle specific claims. Among the general principles, the guides note that marketers should always be clear about whether a specific claim applies to the product, the package, or a component of either and should not overstate an environmental attribute or benefit, expressly or by implication. Further, any kind of qualifying or disclosure language should be sufficiently unambiguous and visible on any product or package and comparative claims should make the basis for the comparison as clear as practical to avoid consumer deception.

The guides also focus on common environmental claims, like "environmentally friendly," "degradable," "recyclable," "ozone friendly" and explain how these claims are likely to be interpreted by consumers and the basic elements necessary to substantiate claims. The examples also provide specific options for qualifying a claim, providing a "safe harbor" for marketers who follow the guidelines.

Looking Ahead

While FTC is using the current review to answer standard questions about costs, benefits, and effectiveness of the Green Guides, it is also focusing on specific claims such as "sustainable" and "renewable," as well as whether it would be prudent to develop guidance on carbon offsets and renewable energy claims.

As noted, FTC has held workshops tackling these specific issues, and recently announced a workshop on environmental claims in the building and textiles sectors on July 15 in Washington, DC. FTC notes there has been an increase in the use of green marketing in the textile industry to sell products made from organic cotton and bamboo fiber, while green claims are prevalent for a wide range of building products, including flooring, carpeting, paint, wallpaper, insulation, and windows.