With growing demand for green building and textile products, the Federal Trade Commission on July 15 held a workshop to examine environmental marketing claims in those industries. The workshop was aimed at educating the FTC and the public, as the agency considers revising its “Guides for the Use of Environmental Marketing Claims,” known as the “Green Guides.”

“Deceptive acts or practices” are prohibited by the FTC Act and the FTC’s Bureau of Consumer Protection devotes substantial resources toward stopping false advertising. The Green Guides – issued in 1992 and last updated in 1998 – provide advice to businesses so that they can avoid false advertising charges.

The July 15 workshop was the FTC’s third and likely final workshop as the agency reviews the Green Guides. At a January workshop, the Commission examined carbon offsets and renewable energy certificates. A second workshop, in April, addressed green packaging claims.1 Public comments on the issues addressed by the third workshop can now be submitted, until August 15. The FTC will likely issue revised Green Guides during 2009, after senior agency positions are filled by the next administration.

The Building and Textiles Workshop

Witnesses from the building and textile industries, as well as representatives from environmental groups, highlighted the growing demand for environmentally friendly products and the proliferation of green claims in the market, including many that would appear to be deceptive. The witnesses called on the FTC to provide guidance and to educate consumers. They focused on the use of ambiguous terms such as “organic” and “eco-friendly,” claims relating to specific attributes of products or systems, product lifecycles and third-party certifications.2

The FTC staff emphasized that the agency’s focus is protecting consumers from deceptive claims. The FTC is not an environmental standards organization and its mission is not to protect the environment or promote environmental science. We do not expect the FTC, therefore, to issue detailed standards or guidelines for lifecycle analysis or certification organizations, but rather to revise the Green Guides to clarify the substantiation required for claims in order to prevent deception.

In the meantime, companies should be careful not to overstate the environmental attributes of their products. And if competitors may be using misleading claims, companies should consider bringing these claims to the attention of the FTC or the National Advertising Division of the Better Business Bureau.

The Market is Growing

The consensus at the workshop was that the “green market” has increased in recent years, in both the building and textile industries. The Forest Stewardship Council (FSC), a non-profit organization that promotes sustainable forest management, for instance, reported that chain of custody certificates, which the FSC gives to companies that obtain their wood from forests that are managed in an environmentally friendly manner, have increased more than four-fold over the last five years. The Organic Exchange, a non-profit organization that promotes the use of organically grown fibers such as cotton, similarly reported that the global organic textile market has been growing at 35 percent per year and is worth $1.9 billion. And such dramatic growth is expected to continue, given high energy costs, growing awareness of global warming concerns and new technologies.

Misleading and Vague Claims

Panelists from both the building and textile industries said that misleading and vague claims are widespread and problematic given the growing demand for “green” products.

Problems of “green washing” – when companies mislead consumers about their environmental practices, ranging from hidden trade-offs, claims made without proof, claims that are vague and claims that are irrelevant – received substantial attention. Participants gave examples of exaggerated claims such as “up to 70 percent recycled content,” meaningless claims such as “environmentally engineered” and demonstrably false claims such as “no chemicals,” as well as many vague claims, such as “environmentally friendly,” “earth-friendly,” “eco-safe,” and “nature’s friend,” all of which may mislead consumers. Others expressed concern about arguably truthful claims that may lead consumers to believe that environmentally harmful products are beneficial, such as “PVC-free” claims that do not disclose other harmful ingredients.

Panelists uniformly urged the FTC to either define terms or detail how terms can be used to increase consumer understanding, require additional disclosure when certain terms are used, and require substantiation for environmental claims when the agency revises the Green Guides.

Some of the concerns expressed by the panelists are already addressed by the agency’s current Green Guides, and the FTC may need to focus on education or enforcement to encourage compliance. For instance, the Green Guides already advise: “An environmental marketing claim should not be presented in a manner that overstates the environmental attribute or benefit, expressly or by implication. Marketers should avoid implications of significant environmental benefits if the benefit is in fact negligible.”

The current Green Guides also advise that it is “deceptive to misrepresent, directly or by implication, that a product, package or service offers a general environmental benefit. … [E]very express and material implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product or service must be substantiated … or qualified, as necessary, to prevent deception.” The Green Guides cite examples of the terms “environmentally friendly” and “eco-safe.”

Certifications

Panelists argued that certifications upon which consumers can rely are essential to making environmental claims but expressed concern that their legitimacy may be undermined by the widespread proliferation of certifying organizations. One panelist argued, for instance, that organizations often have a structural incentive to issue lax standards and maintain lenient enforcement, and encouraged FTC evaluation and oversight of certification organizations. Another advocated the use of international standards to govern certification programs. Others argued for greater transparency in the standards applied by certification programs.

Three types of certifications were discussed: first-party certifications or self-declarations; second-party certifications by industry groups that have a pre-existing relationship with the seller; and third-party certifications by independent groups.

Notably, the FTC already advises that “seals-of-approval should be accompanied by information that explains the basis for the award” and urges that “if the seal-of-approval implies that a third party has certified the product, the certifying party must be truly independent from the advertiser and must have professional expertise in the area that is being certified.” The FTC has also advised that third-party certifications do not insulate an advertiser from Commission scrutiny or eliminate an advertiser’s obligation to ensure for itself that claims communicated by the certification are substantiated.

Green Claims in the Building Industry

Workshop panelists discussed elements of a “green home” including energy and water efficiency, efficient use of materials, emissions reduction and indoor air quality.

Panelists noted the importance of distinguishing between how a product functions, the product’s content and its manner of production. They also distinguished between the entire system, such as a house, and particular elements, and the need for claims to be clear and not overstated. Panelists also discussed the need for lifecycle analyses. While panelists agreed that even products with superior attributes may be damaging to the environment over the product’s life cycle, some said it can be difficult, if not impossible, to do a lifecycle comparison from “cradle to grave” – from the beginning of a product’s existence to when it is discarded – because products can have different uses.

One panelist even endorsed having labels for building products equivalent to nutritional labels for food, identifying attributes such as the carbon dioxide equivalent that a product produces, an idea that is likely ahead of its time.

Green Claims in the Textile Industry

The liberal use of the term “organic” appears to be among the most controversial in the textile industry. Textile panelists called for labels that distinguish between whether a product was made organically, was produced from organic raw materials, or both.

The U.S. Department of Agriculture currently regulates the term “organic” as it applies to agricultural products, including raw natural fibers such as cotton, wool and flax, through its National Organic Program (NOP). The NOP develops production and handling standards, and accredits certifying agents who inspect operations to certify that they meet USDA standards. Only textiles with 100 percent organic content and organic processing aids certified to NOP production and process standards may be identified as “100 percent organic,” and only those with 95 percent organic fiber content, 5 percent non-organic substances and no non-organic fiber may be identified as “organic.” A textile product, however, may be labeled as “made with organic …” if the identified fibers were produced and certified to NOP standards. Such products need not contain a minimum percentage of organic fibers, unlike processed foods like soup, which much contain at least 70 percent organic ingredients to use the label “made with organic” ingredients. Panelists urged greater clarity in the use of the term “organic” to avoid consumer confusion, including clarifying whether a “made with” label refers to all or part of the product’s content. One participant also recommended that standards address such features as zippers and buttons.

Panelists also addressed issues surrounding marketing of bamboo-derived cellulose fibers, which have become quite popular. Panelists noted that bamboo requires little water, grows quickly, naturally regenerates, can live in many climates, reduces greenhouse gases and is pest-resistant, without the use of pesticides and fertilizers. On the other hand, panelists said that bamboo is often processed with toxic chemicals that can harm the environment. Panelists urged FTC action to educate consumers and prevent marketers from misrepresenting the environmental benefits of their products.