The Federal Trade Commission (FTC) has long regulated false and misleading advertising claims generally and green marketing claims specifically since at least 1992. The increasing societal emphasis on providing market-driven incentives to manufacturers to produce more “sustainable” products inevitably results in the necessity of using “green marketing” claims. That is, if consumers are provided adequate and accurate information on a product’s impact on the environment, the public can use its purchasing power to reward manufacturers who develop more “sustainable” products.

On October 5, 2010, the FTC took a significant step toward developing a coherent set of guidelines for manufacturers and retailers concerning sustainable products. In its new guidance, the FTC proposed the following guidelines, in several areas.

Renewable Materials and Energy Claims

  • Claims that a product is made with renewable materials should provide specific information about the renewable material (what it is, how it is sourced, why it is renewable). Additionally, the claim should be qualified if the item is not made entirely with renewable materials (excluding minor, incidental components).  
  • Claims that the product is made with “renewable energy” should not be unqualified if the power used to manufacture any part of the product was derived from fossil fuels. In addition, the claim should specify the source of renewable energy (e.g., wind or solar) and should be qualified if less than all, or virtually all, of the significant manufacturing processes involved in making the product and/or package were powered with renewable energy or conventional energy offset by renewable energy certificates (RECs).
  • Companies that generate renewable energy (e.g., by using solar panels) but sell RECs for all of the renewable energy they generate should not represent that they use renewable energy. It is not entirely clear why this stringent interpretation should be adopted when the administration is seeking to encourage the production of energy from renewable energy sources.

Carbon Offset Claims

  • Companies making carbon offset claims must have “competent and reliable scientific evidence” to support their claims, including using appropriateaccounting methods to ensure they are properly quantifying emission reductions and are not selling those reductions more than once. Also, they should disclose if the offset purchase funds emission reductions that will not occur for two or more years.
  • Companies should not advertise a carbon offset if the activity that forms the basis of the offset is already required by law.

‘Free-Of’ / Non-Toxic Claims  

  • Even if a claim that an item is free of a substance is true, it may be deceptive if: (1) the item has substances that pose the same or similar environmental risk as the substance not present (a concept currently covered by the FTC), and (2) the substance has never been associated with the product category (new in this proposed guidance). Also, under certain circumstances, “free-of” claims may be appropriate even in cases in which an item contains a de minimis amount of a substance (new to this proposed guidance). “Free-of” claims may convey information about additional environmental advantages, including general benefits or comparative superiority claims.
  • Claims that an item is non-toxic represent to the consumer that the item is non-toxic both for humans and for the environment generally. Thus, substantiation must support both meanings of the claim.

General Environmental Benefits and Biodegradability Claims

  • Companies should not make unqualified general environmental benefit claims. Qualifications should be clear and prominent, and should limit the claim to a specific benefit.
  • Companies using environmental certifications and seals of approval must disclose material connections to the certifier and must use clear and prominent language limiting the certification/seal of approval to particular attribute(s) for which they have substantiation.  
  • Unqualified biodegradation claims for solid waste products (other than those destined for landfills, incinerators, or recycling facilities) must be supported by data that demonstrate that the waste decomposes within one year after customary disposal.
  • Unqualified degradable claims for items destined for landfills, incinerators, or recycling facilities must not be made because decomposition will not occur within one year. (FTC, Green Guides, Summary of Proposal (October 2010), available at http://www.ftc.gov/os/2010/10/101006greenguidesproposal.pdf).

These proposed rules are consistent with the underlying philosophy of all FTC advertising guidelines to limit the scope of claims to avoid misleading the general public (i.e., the literal truth of a claim is not a defense because the FTC rules are designed based on consumer perception). When addressing sustainability claims, the ideal policy balance is less clear than for general advertising claims because the administration’s overall sustainability policy favors encouraging the development and marketing of sustainable products, which may be in tension with the traditional FTC false advertising policy favoring narrow claims.

The FTC is seeking comments on the proposed changes. The comment period will close Dec. 10, 2010, after which the FTC will issue final rules. It is likely that these guidelines will be revised. If a company’s comments generally favor sustainability guides, the comments should document how changes it suggests bolster the administration’s sustainability policies without undercutting the FTC’s historic policy.