Six Tips for Companies Making “Climate-Smart Agriculture” Claims
Agriculture is on the very frontlines of our changing climate. Climate change directly affects many of the most fundamental aspects of agricultural production: the length of crop growing seasons; the ranges of insects, weeds, and crop diseases; the availability of water; the threat of wildfires; and the health of agricultural workers and livestock. At the same time, many farms are uniquely positioned to help respond to and combat climate change. Through various approaches, commonly called “Climate-Smart Agriculture” (CSA), growers are adopting sustainable farming practices, reducing greenhouse gas emissions, conserving natural resources, and enhancing productivity and resilience.
Identified as an early priority of the Biden Administration and frequently promoted by the U.S. Department of Agriculture (USDA), the federal government has already invested billions of dollars in CSA projects encouraging farming, ranching, or forestry practices that reduce greenhouse gas emissions or sequester carbon. President Biden referred to the adoption of CSA practices as those that “produce verifiable carbon reductions and sequestrations” and “create new sources of income and jobs for rural Americans.” USDA has identified a range of climate-smart “mitigation activities” and, in the context of its funding opportunities, defined a “climate-smart commodity” as “an agricultural commodity that is produced using farming, ranching or forestry practices that reduce greenhouse gas emissions or sequester carbon.” Yet neither the wider scope of eligible CSA practices nor any specific standards or criteria for substantiating a CSA claim has been legally established to date.
As CSA receives greater attention, some public advocacy groups are taking a more critical eye toward the array of “climate-smart” claims increasingly found in corporate sustainability commitments, marketing campaigns, and product labeling. In certain instances, advocates have argued that CSA may present a new way to “greenwash” the agriculture industry, particularly if it encompasses approaches that achieve carbon reduction and other CSA goals through the increased use of pesticides, fertilizers, or genetic engineering.
Companies that appear to be using CSA claims to misrepresent, overstate, or obfuscate the environmental impacts of their products and practices may face a risk of enforcement from federal agencies or lawsuits from plaintiff groups. The Federal Trade Commission (FTC) enforces environmental claims in advertisements, marketing material, and even sustainability reports through Section 5 of the FTC Act, which prohibits “unfair or deceptive acts or practices.” In addition, states and the District of Columbia have consumer protection laws prohibiting false advertising. Some have relied on these statutes to aggressively pursue enforcement relating to environmental claims. Competitors may also bring unfair competition lawsuits against one another under the Lanham Act based on allegations of misleading or deceptive advertising.
With this in mind, here are six important tips for agribusinesses to keep in mind before promoting CSA claims:
1. Be truthful, and be specific: tailor claims carefully and remove any statements that cannot be substantiated with data and evidence
General claims promoting “climate-friendly” or “sustainable” practices are difficult, if not impossible to substantiate and tend to be misinterpreted by consumers. Regulators can also perceive them as misleading even when there is no intention to do so. When making a CSA claim or marketing any other environmental benefits, it is better to be as specific as possible and qualify claims if needed.
Substantiation often requires “competent and reliable scientific evidence.” Per FTC regulations, this evidence consists of “tests, analyses, research or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.” 16 C.F.R. 260.2.
Environmental claims can also be perceived as deceptive if the environmental benefits promoted are not significant. Avoid highlighting small, unimportant benefits or where the environmental costs outweigh those benefits.
2. Images matter
The same rules that apply to written material also apply to images. Carefully evaluate images to identify the environmental benefits they might convey and ensure those benefits are clear, specific, and substantiated.
3. Follow the FTC Guide for the Use of Environmental Marketing Claims (Green Guides)
The FTC Green Guides provide useful advice for developing claims and understanding how consumers might view those claims. In particular, claims concerning net zero emissions, carbon offsets, and the promotion of climate goals are increasingly drawing attention and need to be carefully scrutinized. As an example, broad claims describing net zero GHG emissions can be interpreted to encompass Scope 1 (direct emissions), Scope 2 (indirect emissions such as electricity, heating, and cooling), and Scope 3 emissions (all other indirect emissions in the value chain both upstream and downstream). If Scope 3 emissions are significant, but are not intended to be included in the net zero goals, FTC will perceive the broad claim as misleading.
The FTC is planning to revise the Green Guides and is currently taking comments on potential updates, including consumer perception of claims such as “net zero,” “carbon neutral,” “low carbon,” and “carbon negative.” See link.
4. Evaluate CSA claims from the consumer’s perspective
The FTC and states enforcing truth-in-advertising laws evaluate claims based on consumer perception. Many of the recommendations in the Green Guides originate from consumer perception surveys. Despite the best intentions of the marketer, statements that are not well defined and subject to interpretation can be viewed as misleading to consumers.
5. Pay attention to other applicable regulatory frameworks
Additional federal and state agency rules may apply to CSA claims concerning specific types of products. For example, a pesticide product regulated by the U.S. Environmental Protection Agency (EPA) under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) will be considered “misbranded” if its labeling is false or misleading in any particular. When evaluating pesticide claims, EPA frequently reviews associated advertising materials, including product websites. Keep in mind that globally distributed products may also be subject to different claims substantiation criteria in foreign jurisdictions.
6. Incorporate legal review on an ongoing basis
Protect your company from potential legal action by incorporating legal review of environmental claims included in include marketing materials, ESG reporting, and even public presentations where corporate officers are explaining CSA goals. Many of the drafting decisions rely on judgment calls. Developing a strong connection between the legal and marketing departments will develop the expertise needed in both departments to improve compliance.
Beveridge & Diamond’s Agriculture industry group works with clients to identify, establish, and implement effective regulatory, commercial, and legislative strategies to achieve or exceed business objectives. We represent both large and small companies that develop, manufacture, distribute, or use seeds, crops, trees, livestock, and pesticides. Our Air and Climate Change practice group helps clients navigate all aspects of compliance and climate change programs. Our Sustainability and ESG practice group supports clients in substantiating environmental marketing claims, litigating claims regarding state consumer protection laws, and making carbon offsets decisions. For more information, contact the authors.