A couple of weeks ago, the Federal Trade Commission issued its revised Guides for the Use of Environmental Marketing Claims, http://www.ftc.gov/os/fedreg/2012/10/greenguidesfrn.pdf. Colloquially referred to as the “Green Guides,” they represent the latest in FTC thinking regarding the appropriateness of making certain claims related to environmental benefits. For the most part, the Green Guides simply apply traditional consumer protection principles to these kinds of claims. Thus, the FTC admonishes against making claims that would mislead a reasonable consumer where the claim is material to a consumer’s decision. Additionally, before making a claim, a company should identify all express and implied messages that the advertisement reasonably conveys and ensure that all reasonable interpretations of such claims are truthful, not misleading, and supported by a reasonable basis. This last point is particularly important because the FTC requires for many of these claims that a company possess “competent and reliable scientific evidence” prior to making the claim. What constitutes “competent and reliable scientific evidence” is a hotly debated (and litigated) topic, but the FTC standard is that it consists of “tests, analyses, research, or studies that . . . are generally accepted in the profession to yield accurate and reliable results [and] should be . . . based on standards generally accepted in the relevant scientific fields . . . to substantiate that each of the marketing claims is true.”
The Green Guides set forth guidance with respect to 14 types of claims, including claims related to or referencing:
- General Environmental Benefit
- “Ozone-safe” and “Ozone-friendly”
- Carbon Offsets• “Recyclable”
- Certifications and Seals of Approval
- “Recycled content”
- Refillable Claims
- “Renewable energy”
- “Renewable materials”
- Source Reduction
Some of the notable highlights of the Green Guides include:
General environmental benefits: Claims with a broad, unqualified focus – e.g., “green” or “eco-friendly” – are disfavored. Rather, the specific environmental benefits should be clearly conveyed.
Carbon offsets: Competent and reliable scientific evidence must support the claim and an appropriate accounting method must be used. The company must clearly disclose if the offset purchase pays for emission reductions that will not occur for at least two years. Companies can’t claim emission reductions through carbon offsets if the activity that caused those reductions was required by law.
Certifications or seals of approval: Because a certification or seal of approval can be considered an endorsement, companies should refer to the FTC’s Endorsement Guides, http://ftc.gov/os/2009/10/091005revisedendorsementguides.pdf prior to using any such certification or seal of approval.
Compostable: In order to tout that a product is compostable, all of the materials in the product or package should break down into usable compost safely, in about the same time as the materials with which it is composted. Any limits, such as it can’t be composted at home, must be disclosed.
Degradable: Claims that a product is degradable can only be made if the company can prove that the entire product or package will completely break down within one year.
“Free-of”: While a product need not be 100% free of the offending substance, the product cannot contain anything more than trace amounts. The Green Guides provide that the amount that is present can’t cause the harm that people typically associate with the substance and the substance cannot have been intentionally added. Also, never use a “free of” claim if the substance was never associated with that product type or if the product includes another substance that poses an environmental risk similar to the one caused by the substance itself. Otherwise, the ad will likely be considered deceptive.
Recyclable: To make an unqualified recyclable claim, recycling facilities must be available to at least 60% of the consumers where the product is sold. If fewer consumers of the product have access to recycling facilities, then the marketer must modify the claim accordingly.
Renewable energy: Unqualified renewable energy claims can only be made if the company retains or purchases renewable energy certificates (RECs) to match the energy use. Additionally, an unqualified claim can be made only when all, or virtually all, the significant manufacturing processes involved in making the product or package are powered with renewable energy or non-renewable energy that is matched by RECs. Importantly, companies that generate renewable energy – e.g., through solar panels installed on-site – but sell all of that electricity and the associated RECs to the utility cannot claim they "use" renewable energy.
Companies intending to market products that contain environmental claims should consider general advertising and consumer protection principles, as well as consult the Green Guides. Consider qualifying the claim or making a more specific claim, if consumers might otherwise misinterpret the broader claim. Additionally, maintain accurate records regarding the substantiation of any claims.