The chemical industry is seeing green – that is, a growing market of “green” consumers in the United States and abroad, who prefer buying products that are recyclable, energy efficient, ozone safe or otherwise environmentally friendly. To inform consumers about the environmental attributes of their products, the sales team is increasingly interested in adding environmental marketing claims to product advertising. However, this desire is earning the attention of regulatory bodies and consumer protection groups who are concerned that these environmental marketing claims could be misleading consumers.
Generally, environmental marketing claims, just as other types of advertising claims, are covered by a country’s consumer fair advertising laws. Consequences of violating these statutes or regulations can range from injunctive relief to substantial monetary damages and, in rare cases, criminal sanctions. Beyond the definitions provided by these regulations, companies may also consider an increasing number of independent environmental labels that are sponsored by independent consumer protection groups, industry associations, government agencies and, now, retailers.
FTC’s Green Guides
As a primary enforcer of US consumer fair advertising laws under §5 of the Federal Trade Commission (FTC) Act, the FTC in 1992 issued its guidelines for environmental marketing claims. A summary of the “Green Guides” for several environmental marketing claims is set forth at the end of this article. Many states have followed suit, integrating the FTC’s Environmental Guides into their own consumer fair advertising laws. However, there is still a great deal of variation between the laws of different states.
The challenge in launching a green marketing campaign is often filling in the gaps left by federal and state regulations. Outside of specific terms addressed by FTC’s Environmental Guides, more general environmental marketing claims, such as “eco-smart,” “environmentally safe” or “earth friendly,” are much less defined. In these instances, the FTC recommends that companies determine which attributes consumers may “reasonably” believe are conveyed by a claim. Then each of those attributes must be substantiated by facts including scientific evidence. This approach, however, has created significant ambiguity, both in terms of defining consumers’ expectations of environmental marketing claims as well as in determining how to substantiate those claims. As a result, legal counsel frequently find they are on their own when recommending the use of general environmental claims in a marketing campaign.
Environmental Marketing Outside the United States
While the FTC’s Green Guides and corresponding state legislation leave significant gaps, this area of law is actually better developed in the United States than in other countries. For example, the European Union Commission had considered vigorous standards for environmental marketing claims in the Unfair Commercial Practice (UPC) Directive passed in 2005. However, these standards were not expressly incorporated into the final version of the UPC. In light of REACH and the EU’s other environmental initiatives, the EU appears likely to adopt specific regulations for environmental marketing claims.
In China, there are no specific provisions regarding environmental claims in advertising. However, there is a general stipulation against making false statements in advertising. Chinese law provides that marks on products or product packages shall be true and any claims in advertising may not be exaggerated to mislead the public.
Independent Environmental Labels
In an effort to help consumers make purchase decisions based on products’ environmental impact, independent environmental labels are proliferating both domestically and internationally. Independent environmental labels are voluntary award schemes with developed criteria for a type of product or a specific environmental benefit. An accreditation body then measures products against those criteria, awarding products meeting certain high environmental standards the right to display their label. Some organizations also require a fee, either upfront for conducting the evaluation, or as an annual maintenance fee once the label is awarded.
Several independent environmental labels have sprouted in the US market. US consumer protection groups are sponsoring environmental labels to better educate consumers. For instance, Green Seal, much like Consumer Reports, selects different product categories and then evaluates all of the brands in that category according to selected environmental factors. Industry associations have also jumped onto the stage, developing labels to demonstrate their industry’s commitment to the environment. Even large retailers such as Wal-Mart and Home Depot have realized that helping consumers with purchasing decisions that are good for the environment is also good for business. One example of this is Home Depot’s new Eco Options label.
Probably one of today’s best known environmental labels is the US Environmental Protection Agency’s Energy Star® energy efficiency program, which has been adopted recently by Australia, the EU, Japan and Korea. Products in more than 50 categories are eligible for the Energy Star® certification. This rating identifies products that use 25 to 50 percent less energy, reduce energy costs without compromising quality or performance, extend product life and decrease maintenance.
National programs for environmental labels, referred to as “eco-labels,” have been supported by individual EU Member States for a long time. National eco-labels include the Nordic Swan in Finland, Sweden and Denmark and the Blue Angel in Germany (information about various EU eco-labels is available at http://ec.europa.eu/environment/ecolabel/other/int_ecolabel_en.htm). The EU is also pursuing a harmonized Community eco-label that applies throughout the EU; however, to date, use of the Community eco-label is still minor.
Governments in Asia are the most recent to offer environmental labels. The China State Environmental Protection Administration (SEPA) has created the Green Mark to promote the use of energy saving products and environmental protection across products’ life cycles. In addition, the Korean Eco-Label and the Green Mark in Taiwan serve as marks for products that meet resource conservation and pollution prevention goals.
Finally, the International Organization for Standardization has developed environmental management standards under ISO 14000, which is awarded to organizations that have successfully implemented procedures that comply with environmental laws and regulations and minimize how their operations affect the environment. ISO 14000 is similar to the ISO 9000 quality management standards in that both address the manufacturing process rather than the product itself.
Recommended Best Practices
While there is still ambiguity in the regulatory environment concerning the use of environmental marketing claims, there are several ways legal counsel may guide marketers in developing statements about a chemical product’s environmental benefits:
- Be Specific. Be as specific as possible when making environmental claims. For example, if the product is labeled “recyclable,” it is deceptive if any part of the product, other than minor incidental components, cannot be recycled. It is also easier to substantiate a specific claim, such as “made out of recycled material,” than a more general claim like “earth friendly.”
- Apply a Reasonableness Standard. For more general claims that include terms such as “environmental choice,” “ecologically friendly,” “earth friendly,” “environmentally friendly,” “ecologically sound,” “environmentally safe,” “ecologically safe,” “environmentally lite” or “green product,” apply a reasonableness standard. A useful model is California’s statute, which suggests documenting the following information in a record to support environmental marketing claims:
- The reasons why the representations are true.
- Any significant adverse environmental impacts directly associated with the production, distribution, use and disposal of the product.
- Any measures that are taken to reduce the environmental impacts directly associated with the production, distribution, and disposal of the product.
- Violations of any federal, state or local permits directly associated with the production or distribution of the product.
- If applicable, whether or not the product conforms to the uniform standards contained in the FTC Guides for the use of the terms “recycled,” “recyclable,” “biodegradable,” “photodegradable” or “ozone friendly.”
- Exercise Caution Regarding Independent Labels. Independent labels carry the credibility of a third party’s assessment; however, they do not create a safe “green” haven. It may be appropriate to include your own clear description of the environmental benefits of a product, even if it has received another organization’s endorsement. Also, keep in mind that labels from industry-supported associations are more likely to be scrutinized by the FTC because of their decreased independence.