Green issues - social and legal considerations for companies making products more environmentally safe

Business Horizons, Jan-Feb, 1996 by J. Stephen Shi, Jane M. Kane

"It's not easy being green."

-- Kermit the Frog

As industry voluntarily "greens" into the twenty-first century, a host of related terms beg practice and definition. Producers must distinguish between product and package when claiming environmental benefits in advertising; consumers must be able to distinguish between honest and deceptive environmental claims when disposing of a product or package. Meanwhile, state governments fashion laws that are at once flexible and effective. Some, such as California's Proposition 65, place the burden of proof on the alleged offending company or manufacturer, while at the federal level the EPA holds manufacturers responsible for researching their product process in the hunt for ozone-depleting and other environmentally hazardous substances.

The task of becoming green calls for aware and educated producers selling to like-minded consumers, with care for the planet bonding one to the other in environmentally friendly commerce. This article is offered in the hope that the clarification of even just a few of the issues can assist companies with regulatory compliance.

GREENER MARKETING THROUGH PACKAGING AND LABELING

With the "greening" of America, many businesses today are trying to promote their positive environmental qualities. The New York consulting and research firm FIND/SVP promotes four criteria as key success factors for any environmental-minded business: product, packaging, practice, and promotion. FIND/SVP considers a product to be "green" if it runs cleaner, works better, or saves money and energy through efficiency. Businesses practice being green when they voluntarily recycle and attempt to reduce waste in their daily operations. Practicing green is inherently proactive; it means finding ways to reduce waste and otherwise be more environmentally responsible, before being forced to do so through government regulations. Green promotion, however, requires businesses to be honest with consumers and not mislead them by overpromising.

Packaging is perhaps the most noticeable step a company can take in going green. Examples of green packaging include the use of recycled content in packaging materials, source reduction, refill alternatives, and aerosol replacements.

Evidence of a move toward these types of environmental measures abounds. A quick trip to the store reveals that non-aerosol pump hair spray has all but replaced the almost extinct can of aerosol spray. Shelves once lined with huge bottles of fabric softener now contain neat rows of smaller-sized, milk carton-shaped refill containers. Similarly, fast-food chains are substituting paper containers for foam plastic and other non-biodegradable materials.

When companies embark on a green campaign, they usually include such efforts in advertising to consumers because these efforts are very important in the face of tightening markets and stiff competition. How they deliver that message to consumers, however, is subject to governmental oversight, primarily the Federal Trade Commission. For example, the FTC has recently published "Guidelines for the Use of Environmental Marketing Claims," which attempts to interpret the laws regarding labeling and packaging using real world examples. The regulations apply to labeling, advertising, promotional materials, and other forms of marketing. All claims through words, symbols, emblems, logos, depictions, or product brand names are regulated whether they are made directly or implicitly. This includes any claims of environmental attributes in connection with the sale or marketing of a product or package sold for personal, commercial, institutional, or industrial use.

One element of the regulations that may be confusing to companies wishing to highlight their environmental attributes is the distinction between product and packaging. Any environmental claim must clearly state whether it pertains to the product or to its package. If the particular environmental quality that is lauded applies only to a portion or component of the product or packaging, this fact must also be clearly indicated. For example, a manufacturer of aluminum foil displays a "recyclable" claim on a box of aluminum foil with no qualifications. But if only the foil and not the box is recyclable, the claim is deceptive. The manufacturer must instead distinguish between the product and the packaging in claiming such recyclability.

The exception to this rule is when only a minor, incidental component of the product or packaging is not recyclable. In such a case, the company making the claim does not have to qualify it. For example, a soft drink bottle is made entirely from recycled materials, but the bottle cap is not. The bottler can still make the claim that the packaging is "recycled" with no qualifications because the average consumer would view the bottle cap as a minor, incidental component of the package. However, the exception does not apply if a manufacturer labels a product or packaging as "recyclable" if even a minor component of the item significantly limits the ability to recycle the product. An example of this type of product is beverage bottles made out of recyclable plastic but which have a glued-on base made out of a different type of plastic that cannot be recycled. In this case, the FTC would rule that the claim is deceptive.