Takeaway:  If your company makes any kind of environmental claims to customers, whether it sells to consumers or to other businesses, you need to review the FTC’s revised Green Guides and evaluate your environmental marketing claims to ensure they are in compliance.

Introduction

On October 12, 2012, the Federal Trade Commission (“FTC”) released the final revised “Guides for the Use of Environmental Marketing Claims,” known as the “Green Guides” (16 C.F.R. Part 260).  The Green Guides are designed to help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act (15 U.S.C. § 45).  The Green Guides were originally issued in 1992 and were subsequently revised in 1996 and 1998.  This latest version is the result of a review and analysis process that started in 2007, culminating in new guides nearly five years later.  Click here for the full text of the Green Guides, available on the FTC’s website.

Background

The Green Guides apply to claims about the environmental attributes of a product, package, or service in connection with the marketing, offering for sale, or sale of such item or service to individuals or in business-to-business transactions.  They apply to environmental claims in labeling, advertising, promotional materials, and all other forms of marketing in any medium, through words, symbols, logos, depictions, product brand names, or any other means.

While the Green Guides are non-binding, the FTC can take action under the FTC Act if a marketer makes an environmental claim inconsistent with the guides.  In such an enforcement action, the FTC must prove that the challenged act or practice is unfair or deceptive in violation of the Section 5 of the FTC Act.

The Green Guides consist of general principles, specific guidance on the use of particular environmental claims, and many examples.  The examples provide the FTC’s views on how reasonable consumers would likely interpret certain claims. The FTC is concerned that what companies think their claims mean and what consumers understand may very well be two (or more) different things.  The examples show how marketers can qualify their claims to avoid deceiving consumers.  Marketers must ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims.  In the context of environmental marketing claims, a reasonable basis often requires competent and reliable scientific evidence.  Such evidence could consist of tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons.

Summary of Key Provisions of the 2012 Green Guides

Business-to-Business Marketing

The FTC added new language to the guides to clarify that they apply to business-to-business transactions.  Accordingly, claims about environmental attributes made in business-to-business transactions should comply with the Green Guides.

General Environmental Benefit Claims

The FTC emphasizes that marketers should not make unqualified general environmental benefit claims as they can be susceptible to various interpretations by consumers.  These claims include broad terms, such as “green,” eco-friendly,” and “environmentally friendly,” and images that might convey broad environmental benefits, such as a forest or the earth. Broad claims are difficult, if not impossible, to substantiate.  To avoid deception, marketers should use clear and prominent qualifying language that limits the claims to specific benefits.  Marketers should not imply that any specific benefit is significant if it is, in fact, negligible.  And marketers should ensure that the advertisement’s context does not imply deceptive environmental claims.

Carbon Offsets

The FTC added a new section to the 2012 Green Guides that addresses environmental claims concerning carbon offsets.  Companies must use competent and reliable scientific and accounting methods to properly quantify claimed emission reductions.   Marketers should disclose whether the offset purchase pays for emission reductions that won’t occur for at least two years.  It is deceptive to claim that a carbon offset represents an emission reduction if the activity that causes the reduction is already required by law.

Certifications and Seals of Approval

Depending on the circumstances, a certification or seal may be an endorsement, with criteria for endorsements in the FTC’s Endorsement Guides (16 C.F.R. Part 255).  If a seal is awarded to a product by the marketer itself rather than by an independent, third-party certifier, then the marketer, in order to avoid a deceptive claim, must indicate in its advertisement that it awarded the seal to its own product.  Marketers should disclose any material connections to the certifying organization.  A material connection is one that could affect the credibility of the endorsement.

A third-party certification does not eliminate a company’s obligation to substantiate all claims.  Marketers can qualify general environmental benefit claims in environmental certifications and seals to prevent deception about the environmental benefit asserted.  Marketers should use clear and prominent qualifying language that limits the claim to the benefits for which there is substantiation.

Compostable Claims

In order to claim an item is compostable, a marketer needs reliable scientific evidence that all materials in the item will break down into usable compost, in a safe and timely manner, in a composting facility or in a home compost pile or device.  A compostable claim must indicate if there is limited availability of composing facilities in the particular geographic area where the item is sold.

Degradable Claims

The guidance for degradable claims also applies to biodegradable, oxo-degradable, oxo-biodegradable, and photodegradable claims. In order to make an unqualified degradable claim, the marketer should have reliable scientific evidence that the entire item will completely break down and return to nature within one year after customary disposal.  Items destined for landfills, incinerators, or recycling facilities will not degrade within a year, so unqualified degradable claims for them should not be made.

Free-Of Claims

While the FTC did not address the terms “organic,” “sustainable,” or “natural,” it did address “free-of” and “non-toxic” claims.  Marketers can make a free-of claim for a product that contains some amount of a substance if: (1) the product does not have more than trace amounts of background levels of the substance; (2) the amount of substance present does not cause harm that consumers typically associate with the substance; and (3) the substance was not added to the product intentionally.  It would be deceptive to claim that a product is free-of a substance if it is free of one substance but includes another that poses a similar environmental risk.  It would also be considered deceptive if a product is claimed to be free-of a substance that has never been associated with the product.

Non-Toxic Claims

Marketers that claim that their product is non-toxic need competent and reliable scientific evidence that the product is safe for both people and the environment.  Marketers should qualify their non-toxic claims to the extent necessary to avoid deception.

Ozone-Safe and Ozone-Friendly Claims

A product, package, or service labeled ozone-friendly cannot contain any ozone-depleting substance.

Recyclable Claims

A product or package can be marketed as recyclable if it can be collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.  Companies must qualify their recyclable claims when recycling facilities are not available to at least 60 percent of the consumers or communities where the product is sold.  The lower the level of access to appropriate recycling facilities, the more a marketer should emphasize the limited availability of recycling for the product.

Recycled Content Claims

A product or package contains recycled content if it is composed of materials that have been recovered or otherwise diverted from the waste stream, either during the manufacturing process (pre-consumer) or after consumer use (post-consumer).  If a product or package is made of partially recycled materials, the marketer should clearly and prominently qualify the claim by the amount or percentage, by weight, of recycled content in the finished item.

Refillable Claims

Marketers should not make unqualified refillable claims unless they provide a way to refill the package.  The company can either provide a system for the collection and refill of the package or offer for sale a product that consumers can purchase to refill the original package.

Renewable Energy Claims

Marketers should not make unqualified renewable energy claims, directly or implicitly, if power derived from fossil fuels is used to manufacture any part of the item or used to power any part of the advertised service -- unless the marketer has matched such non-renewable energy use with renewable energy certificates (RECs).  Marketers should qualify claims by specifying the source of renewable energy (for example, wind or solar energy).  If a company produces renewable energy but sells its RECs, then it should not represent that it uses renewable energy.

Renewable Materials Claims

The FTC advises that consumers may interpret renewable materials claims differently than marketers may intend.  Accordingly, marketers should qualify renewable materials claims with specific information about the material used and why it is renewable.  Marketers should qualify any “made with renewable materials” claim unless the product or package, excluding minor, incidental components, is made entirely with renewable materials.

Source Reduction Claims

Marketers should qualify a claim that a product or package is lower in weight, volume, or toxicity clearly and prominently to avoid deception about the amount of reduction and the basis for comparison.

Conclusion

The Green Guides are designed to help marketers avoid making claims about the environmental attributes of a product, package, or service that are unfair or deceptive.  They provide specific guidance, with numerous examples, for a variety of particular environmental claims.  The FTC advises that, even though it provides many specific claims and options for qualifying claims, the examples do not illustrate all permissible claims or qualifications under Section 5 of the FTC Act.

It is incumbent on any company that markets and promotes the environmental attributes of its products, packages, or services to become familiar with the revised Green Guides and to review and evaluate its environmental claims for compliance with the new Green Guides.  Environmental claims should be supported by proper substantiation and closely scrutinized to ensure they are clear, specific, and understandable.

While modifying or changing labeling, packaging, and advertising can be expensive and time-consuming, it would be less onerous than unwanted enforcement proceedings or legal scrutiny from the FTC and other entities for failure to comply with the Green Guides.