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FTC Proposes Updates to "Green Guides" for Environmental Marketing

Beveridge & Diamond, P.C., October 7, 2010

The Federal Trade Commission ("FTC") released its much anticipated proposed revisions to the Guides for the Use of Environmental Marketing Claims ("Green Guides" or "Guides") on October 6, 2010.  The Green Guides were last updated in 1998 and establish general principles, guidance, and examples to help companies avoid misleading and deceptive statements in environmental marketing materials.  Most notably, the revisions would: (1) enhance the FTC’s existing guidance on general environmental benefit claims, the use of environmental certifications and seals, and other specific claims such as "compostable," "recyclable," and substance "free"; and (2) expand the guidance to include new sections on claims regarding the use of renewable materials, renewable energy, and carbon offsets.  The release marks the FTC’s most significant step toward clarification of the legal boundaries for environmental claims since the Commission began its review of the Guides in 2007. 

The FTC is currently seeking comment on the proposed revisions and specific issues raised in the notice.  Comments are due December 10, 2010.  A copy of the Federal Register notice containing the proposed revisions and issues for comment is available here.

Background

The FTC first issued the Green Guides (16 C.F.R. Part 260) in 1992, with subsequent revisions in 1996 and 1998, outlining general principles to help companies avoid misleading and deceptive statements in environmental marketing materials.  Although the Guides do not have the force of law, they indicate how the FTC will apply Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts, to environmental marketing claims.  The FTC considers actions that are inconsistent with the Green Guides to be potential Section 5 violations, and has exercised its enforcement authority to address false and unsubstantiated environmental claims.  In addition, the National Advertising Division of the Better Business Bureau actively considers such claims and refers cases to the FTC when necessary.  Additional information on prior FTC environmental enforcement actions is available here.

The FTC initiated review of the existing Green Guides in 2007.  Recognizing that consumers are increasingly concerned about the environmental impacts of products and services they use, and that companies increasingly seek to promote the environmental attributes of their products and services, the FTC concluded that claims contemplated and addressed in the 1990’s were no longer the claims most prevalent in today’s marketplace.  As a result, the FTC sought public comment on the guides, hosted a series of public workshops, and conducted a consumer perception study.  Stakeholder input from this process has been incorporated into the proposed Green Guides revisions.   

Summary of Proposed Revisions

The FTC’s proposal includes two categories of substantive revisions to the Green Guides: revisions to strengthen, add specificity to, and clarify issues that are currently addressed in the Guides; and new guidance on emerging claims not currently addressed in the Guides.  The lengthy preamble also provides critical insight into how the FTC will interpret and enforce the Guides and contains numerous examples of appropriate qualification and substantiation for particular environmental claims.   

I.  Enhanced Guidance on Issues Currently Addressed in the Guides

A.  General Environmental Benefit Claims

The proposed revisions would strengthen the FTC’s guidance regarding general environmental benefit claims such as "green," "environmentally friendly," and "eco-friendly."  Unqualified general environmental claims are discouraged in the current Guides, since very few products are likely to have all of the attributes that consumers may perceive from such claims.  The proposed revisions emphasize that marketers should not make unqualified general environmental benefit claims, and provide additional guidance on how to qualify and substantiate such claims.  For example, the proposed revisions direct marketers to: 

  • Use clear and prominent qualifying language to convey to consumers that a general environmental claim refers only to a specific and limited environmental benefit.
  • Substantiate any additional claims conveyed by the qualification itself. 
  • Ensure that the context of a general environmental claim does not imply other deceptive claims.

The proposed revisions also note the FTC’s concern that a general environmental benefit claim, in combination with a claim about a particular environmental attribute (e.g., "green - made with recycled materials"), may imply that the particular attribute provides the product with a net environmental benefit.  The FTC specifically requests comment on this issue. 

B.  Environmental Certifications, Labels, and Seals of Approval

The proposed revisions add further detail on the use of environmental certifications and seals of approval.  While the current Guides include one example noting that environmental certifications and seals of approval may imply that a product is environmentally superior to other products, the proposed revisions add a new section devoted to the subject.  This section includes the following additional guidance on environmental certifications and seals of approval: 

  • Use of the name, logo, or seal of approval of a third-party certifier is an "endorsement" and must meet the criteria set out in the FTC’s Endorsement Guides (16 C.F.R. Part 255).  
  • Where certifications or seals convey an unqualified general environmental benefit, clear and prominent language should accompany the certification or seal limiting the claim to the particular attribute(s) for which substantiation is available.
  • Marketers should disclose any "material connections" between the endorser and the retailer or manufacturer of the product (e.g., membership in the endorsing association).

The FTC’s proposed revisions do not identify environmentally preferable industry practices or provide guidance on the development of third-party certification programs, nor do they require public disclosure of standards or criteria used to support certifications.      

C.  Enhanced Guidance on Specific Claims

The proposed revisions enhance the guidance for a number of specific claims that are addressed, to some extent, in the current Guides.  Several examples are highlighted below.  

Degradable.  The current Guides state that degradable claims should be qualified unless a marketer can substantiate that the entire product or package will breakdown within a "reasonably short period of time."  The proposed revisions clarify that a "reasonably short period of time" is no more than one year after customary disposal.  Marketers are advised not make unqualified "degradable" claims for products destined for landfills, incinerators, or recycling facilities, since products disposed through these channels are not likely to decompose within one year.  This guidance would appear to significantly limit the circumstances in which this claim would be acceptable under the revised Guides.

Compostable.  The current Guides advise that all materials in a product or package must break down into usable compost in a safe and “timely manner” in order to claim that a product is "compostable."  The proposed revisions clarify that the product must break down within the same approximate timeframe as other materials with which it is composted.

Recyclable.  The proposed revisions highlight and emphasize the key provisions in the current Guides on disclosing the limited availability of recycling programs.  If a "substantial majority" of consumers have access to recycling facilities, unqualified recyclable claims are permitted.  Recyclable claims should be qualified if a "significant percentage" or less than a significant percentage of consumers have access to recycling facilities.  This guidance raises questions about claims that are targeted at national or large regional markets.

Substance Free.  The proposed revisions advise that substance-free claims may be deceptive if a product contains substances that pose the same or similar risk as the substance that is not present, or if the substance has never been associated with the product category.  However, the revisions would allow the use of substance-free claims where the product contains a “de minimis” amount of the substance.   This proposed guidance thus intersects with growing attention to regulatory and voluntary pressures relating to the presence of substances of concern in manufactured articles.          

II.  New Guidance on Emerging "Hot Topic" Claims

The FTC’s proposed revisions include new guidance on several categories of "hot topic" claims that have emerged since the 1998 revisions.  Although the FTC review process for the Guides identified five categories of environmental claims that may warrant further guidance, the proposed revisions address only three — claims that a product was made with "renewable materials," claims that a product was made with "renewable energy," and claims relating to carbon “offsets.”     

Renewable Materials.  The proposed revisions advise that claims relating to "renewable materials" should be qualified with specific information about the material and the quantity of renewable materials for products containing less than 100 percent renewable materials (excluding minor, incidental components).

Renewable Energy.  The proposed revisions advise that marketers should not make an unqualified "made with renewable energy" claim if an item was manufactured with energy produced using fossil fuels.  In addition, the FTC proposes that marketers disclose the type or source of the renewable energy (e.g., solar, wind) and qualify claims unless all, or virtually all, of the significant manufacturing processes used to make the product are powered by renewable energy or by conventional energy offset with renewable energy certificates ("RECs").  The proposed revisions also advise that marketers should not represent that they use renewable energy if they have sold RECs for all renewable energy generated. 

Carbon Offsets.  The FTC’s proposed revisions provide limited guidance on carbon offset claims but emphasize that substantiation in the form of competent and reliable scientific evidence is required to support such claims.  In addition, marketers should not advertise carbon offsets if the activity that forms the basis of the offset is already required by law.  The proposed revisions further advise disclosure where offset purchases would fund emissions reductions that will not occur for at least two years.   

The FTC declined to provide general guidance on the remaining two categories — "sustainable" claims and "organic" or "natural" claims — but noted that the general principles set forth in the Guides would nonetheless apply to such claims.  In addition, to the extent that reasonable consumers would perceive sustainable, organic, or natural claims to be general environmental benefit claims or comparative claims, the Guides require substantiation for those claims and all other reasonably implied claims.     

III.  Other Noteworthy Points

  • Scope.  The FTC is proposing to clarify that the Guides apply to business-to-business marketing claims as well as business-to-consumer marketing claims.
  • Use of Websites to Qualify Claims.  The preamble to the proposed revisions states that websites cannot be used to qualify otherwise misleading claims that appear on labels or in other advertisements because consumers would likely not see that information before their purchase.  Accordingly, the FTC advises that any disclosures must be clear and prominent and in close proximity to the claim being qualified.
  • Harmonization with International Standards.  The FTC notes that the proposed Guides do not necessarily align with international standards due to the different purposes of ISO and the Green Guides.  For claims that have transboundary reach, it will therefore be important to consider how these guides interact with a variety of international and other national standards (see below). 
  • Life Cycle Analysis.  The proposed revisions do not include guidance on the use life cycle analysis ("LCA") in marketing or as substantiation for environmental claims.  The FTC also declined to recommend that marketers follow any particular LCA methodology.  However, the FTC noted that it will continue to analyze claims involving LCA on a case-by-case basis.      

International Guidance and Standards for Green Marketing Claims

Outside the United States, several extensive guidelines on green marketing claims are available.  Marketers may want to consider these international sources as a supplement to the pending revisions to the Green Guides.  Examples include:

  • ISO 14021, Environmental labels and declarations — Self-declared environmental claims (Type II environmental labelling).
  • Canadian Standards Association, Environmental claims: A guide for industry and advertisers (2008).
  • European Commission, Guidelines for Making and Assessing Environmental Claims (2000).
  • United Kingdom Green Claims Code for Products (updated 2000) and Green Claims Practical Guidance (2003).

Next Steps

The FTC invites comment on any aspect of the proposed revisions as well as on the specific questions posed in the Federal Register notice.  According to the notice, the FTC will take all suggestions into account as it works to finalize the revised Guides.  Although the timeframe for final adoption will depend on the volume of comments received, issuance of the final revised Green Guides is not likely in 2010.

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For a printable PDF of this article, please click here.

Beveridge & Diamond actively counsels clients on environmental marketing.  For further information on this topic, please contact Russ LaMotte (rlamotte@bdlaw.com), Mark Duvall (mduvall@bdlaw.com), or Lauren Hopkins (lhopkins@bdlaw.com). 

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