Stoel Rives attorney Jay Eckhardt will give a presentation on April 21 addressing the proposed new FTC Green Guides. The presentation will focus on new FTC guidance and interpretations concerning renewable energy claims and carbon offset claims, as well as claims concerning renewable materials, and the use of green seals and certifications. Going beyond the Guides - the presentation will also review the broader enforcement environment. The program is sponsored by the Sustainble Future and Antitust & Trade Regulation Sections of the Oregon State Bar, and the Green Business Initiative at the University of Oregon School of Law.
For event details and logistics, click here. Admission to the live event in downtown Portland, Oregon is free. A telephone number and passcode will be provided for attendees unable to attend in person.
For more information on reguation of environmental marketing, see the Stoel Rives Green Guides Resource Page.
The Food and Drug Law Institute's ("FDLI") Update Magazine just published our article addressing the FTC's proposed regulations on green marketing: "New Green Guides Lay Out Rules for Environmental Marketing," available here. Authored by Ken Odza, Anne Glazer, and Joseph Eckhardt, the article reviews the scope of the new proposed Green Guides and describes best practices to avoid challenges to green marketing claims.
Just a few weeks after the Federal Trade Commission unveiled its proposed new Green Guides for public comment, environmental consulting firm TerraChoice chimes in with its 2010 report, “Sins of Greenwashing – Home and Family Edition.” In our increasingly green economy, TerraChoice makes a couple unsurprising, if not disappointing, findings. First, using the same survey sample of 24 retailers located in Canada and the United States, TerraChoice found green claims on 4,744 products in 2010, compared to 2,739 in 2009. Clearly, the tidal wave of green marketing in our economy is still on the rise. Second, based on the “seven sins” of misleading green marketing claims defined by the firm, 95% of the green products it examined made some form of false or misleading environmental claim.
The TerraChoice report offers several other interesting insights. TerraChoice found that big box stores do a substantially better job than other retailers when it comes to putting more green products on the shelves, and big box stores do a better job of finding and selling products that are backed up with bona fide green claims. Another interesting finding addresses the problem of false and bogus green certification labels. TerraChoice notes that roughly a third of the greenwashing sins were based on false certifications. TerraChoice even found meaningless certification marks for sale on the internet, including one titled “Green – Certified Environmentally Conscious,” which TerraChoice claims can be licensed by any interested manufacturer or retailer for only $15.
TerraChoice has made a name for itself over the past few years issuing annual “Greenwashing” reports that identify false and misleading green claims on consumer products. TerraChoice is of course not a government agency, but it bases its “seven sins of greenwashing” on the FTC’s Green Guides, rules issued by the Competition Bureau of Canada, and the International Standards Organization (ISO) standard for environmental marketing, ISO Standard 14021. TerraChoice administrates the “Ecologo” program, which was originally developed by the Canadian government, and in August of this year the firm was acquired by Underwriters Laboratories, which offers its own “UL Environment” certification program.
TerraChoice is certainly not a disinterested party in the green labeling game. The organization has a financial interest in selling its consulting services and in the success of the Ecologo and UL Environment certification programs. Given this bias, it’s probably safe to say that not all of the products that TerraChoice finds guilty of greenwashing (95% of all reviewed products) could be successfully challenged by the FTC, state attorneys general, or consumers. That said, the 2010 report is a good indicator of the greenwashing problem that pervades environmental marketing today. More importantly, the efforts of TerraChoice, as well as regulators like the FTC and interested consumer groups, demonstrate that interested stakeholders take green marketing claims very seriously – unlike many other marketing messages, which are tolerated as mere “puffery.” The growth of green marketing claims may be rapid, but scrutiny and regulation of such claims appear to be catching up.
Our previous blog entry discusses last week's release of the Federal Trade Commission's ("FTC") revised, proposed "Green Guides" generally, discussing how the FTC is focused on "deception" and is not taking a radical departure from the 1998 version (the last version) of the Green Guides. But under the new Guides what are the consequences of the FTC's position on sustainability and third-party certification, especially as it relates to food products? The bottom line is that marketers of sustainable food products should re-evaluate (1) what sustainability claims are made and (2) the benefits of proper third-party certification.
The FTC, in its commentary to the revised, proposed Green Guides, reports that it "is unable to provide specific advice on sustainable as an environmental marketing claim. Unlike other claims we tested, the term contains no cue alerting consumers that it refers to the environment."
Yet the FTC acknowledges that sellers of food (and non-food) products are using the term “sustainable,” and consumer awareness of sustainability issues is growing rapidly. The FTC seems to be leaving itself room for action against marketers of "sustainable" products if it’s clear that consumers are meant to believe that “sustainable” is an environmental marketing claim. And, as discussed in our previous entry, marketers need to be wary of compliance with not only the FTC but also state consumer protection laws, which often reach further than federal law on the marketing of food products.
FTC has also chosen for the first time to address in the Green Guides what it calls "Certifications and Seals of Approval." FTC makes clear that "It is deceptive to misrepresent, directly or by implication, that a product, package, or service has been endorsed or certified by an independent third-party." And, even
"third-party certification does not eliminate a marketer’s obligation to ensure that it has
substantiation for all claims reasonably communicated by the certification."
Food manufacturers and retailers who use a seal or logo to designate sustainability should evaluate whether the seal or logo could be read by the FTC, a consumer or a plaintiff’s lawyer to imply third-party certification or endorsement. In other words, if independent third-party certification isn't used, you should ask yourself the following questions:
- Is it clear to anybody reading your label (FTC, consumers, plaintiffs, bar, etc.) that the claim is only your claim and not a third-party claim?
- Do you have substantiation (i.e., science) to back up any claims of environmental sustainability (whether yours or a third party’s)?
If you as a food manufacturer or seller can't answer both questions affirmatively, your marketing may be a liability. The SC Johnson Company, for example, is the subject of a consumer class action alleging that the company's own "greenlist" certification program was deceptive. Often, the realistic choice may be a) not to market the product as environmentally sustainable or b) to switch to a substantiated third-party certification.
For food, your best choice may be Food Alliance certification, which is now the most comprehensive certification for sustainable food and the gold standard.*
*In the interests of full disclosure, I serve on the non-profit Board of Directors for Food Alliance and am a staunch advocate of the organization.
Following several years of development, and much anticipation in recent months, the Federal Trade Commission has finally released “Proposed, Revised Green Guides.” The new Green Guides will be open for public comment until December 10, 2010. Thereafter, according to the agency’s press release, the FTC will determine if and how to issue the new Guides.
The current official Green Guides, last updated in 1998, provide non-binding “interpretations” of federal consumer protection laws, including Section 5 of the FTC Act (15 U.S.C. § 45), which is the law that empowers the agency to punish deceptive practices. In general, the Guides establish that false or deceptive environmental marketing claims can be challenged under the FTC Act. The Green Guides also provide instruction and interpretations of marketing buzz words that were popular in 1998, such as “biodegradable,” “compostable,” “recyclable,” “refillable,” and “ozone safe.”
The proposed new Green Guides address the terms found in the 1998 edition, but also address several new issues that arise in present-day green marketing, including:
- environmental seals of approval,
- “free-of” and “non-toxic” claims,
- carbon offsets,
- claims concerning renewable energy, and
- claims about renewable materials.
The proposed Green Guides reinforce and restate the FTC’s reasonable policy position that environmental marketing claims should be supported by credible scientific evidence. In addition, the proposed Guides expressly discourage sweeping unqualified claims. For example, the Guides explain that an unqualified claim that a product is “eco-friendly” is inherently deceptive. In contrast, a simple clarification – if it can be substantiated – may be acceptable. The proposed Guides state that a claim such as “eco-friendly: made with recycled materials” is not deceptive if the clarification is prominent, and can be proven.
For the most part, the proposed Green Guides do not represent a radical shift from the 1998 version of the Guides. And on a careful reading of the revised Guides and the preceding 186 pages of analysis and comment provided by the FTC, it’s clear that the fundamental issue is deception. It’s deceptive to say your product has 50% more recycled contents than it used to, when your product only increases recycled content from 2 to 3 percent. It’s deceptive to mark your product with your own green “seal of approval” and not disclose that you made up the seal yourself. It’s deceptive to claim that you’ll plant trees to offset carbon emissions from your products, when it will take 10 years for the trees to get big enough to actually offset those emissions.
Ultimately, it does not appear that the FTC is proposing a major shift in regulations. The key question for any environmental marketing claim remains: is the claim “deceptive” under Section 5 of the FTC Act? The bigger question is, how will enforcement change? Last February, The New York Times reported that the FTC has filed seven complaints concerning environmental marketing claims since President Obama took office (compared to zero during the prior administration). If enforcement remains at that level, there cannot be substantial application of the new Green Guides. Then again, given the rapid growth of environmental marketing claims in recent years, the FTC’s renewed interest in this subject, and the threat of state consumer fraud actions, it would be imprudent to disregard the new Guides.