Consumers are demanding more from their brands and increasingly basing their purchasing decisions on the sustainability of products and companies. In response to this, the Baker McKenzie Consumer Goods & Retail industry group has produced the “CG&R and Sustainability Video Chat Series” in which experts provide short, practical insights into some of the legal considerations that companies need to keep in mind when undertaking green innovation.
In the second episode of the series, Julia Hemmings, a Partner in our Digital Commerce, Advertising & Marketing practice in London, and Rebecca Lederhouse, a Counsel in IP and Technology based in our Chicago office, discuss the role of marketing in green innovation and the increasing regulatory scrutiny around green claims in advertising.
- The increasing attention on green claims as a key area of regulatory focus.
- Tips to consider when using green claims in advertising.
- What’s next in the pipeline from a US, UK and EU lens.
We are increasingly seeing the desire for brands to include references and claims about their sustainability credentials, which stems from the demand by consumers to know more about the brands they engage with. This, in turn, is driving the trend for green & sustainability claims to be increasingly featured and promoted.
Green and sustainability claims are becoming a key area of regulatory focus in the US, the UK and the EU.
- In March 2022, the US Securities and Exchange Commission announced the Proposed Rules to Enhance and Standardize Climate-Related Disclosures for Investors.
- Also in the US, the Federal Trade Commission’s (FTC) environmental guides, called the Green Guides, have been available for a number of years to provide instruction on what sorts of environmental claims may be considered deceptive.
- In the EU, the European Green Deal requires substantiation of green claims against a standard methodology to assess their impact on the environment.
- In March of this year, the EU also announced plans to introduce and amend legislation to strengthen consumer rights for green transition and to protect consumers against untrustworthy or perceived false environmental claims, banning greenwashing and practices that mislead consumers about the durability of a product.
- The UK has the Green Claims Code, which sets out a checklist for businesses to consider when making green claims.
Enforcement by Regulators
Enforcement action by regulators is also on the rise, particularly in the UK and the EU, where regulators are of the view that greenwashing misleads the market and does not give due advantage to those companies that are making an effort to ‘green’ their products and activities, ultimately leading to a less green economy.
In the US, although the FTC has not been very active in enforcing the Green Guides recently, competitors, consumers, environmental organizations and state regulators have stepped in, applying the same sorts of principles regarding deceptive advertising and unfair competition.
Top tips to consider when using green claims in advertising
In the US, it is important to qualify environmental claims to limit or explain them. The claims should be considered in the broader life-cycle context and there must be substantiation to support those claims. Under the Green Guides, it is deceptive to misrepresent that a product or service offers a general environmental benefit because such claims likely convey that the product, package or service has specific and far-reaching environmental benefits and may convey the misimpression that it has no negative environmental impact.
In the UK and the EU, there are some key principles that businesses need to keep front of mind when communicating its products’ green credentials. Specifically, any such claims must:
- Be truthful and accurate.
- Be clear and unambiguous.
- Not omit or hide important information.
- Must be fair and meaningful.
- Must consider the full life cycle of the product.
- Must be substantiated, that is, brands should be able to back up their claims with robust, credible and up-to-date evidence.
What to expect next
In the US, there are signs that the FTC may again take a more active role in enforcing its Green Guides, whereas the expectation in the UK and the EU is that we are only going to see more activity by regulators in this space.