On October 1, 2012, the Federal Trade Commission (FTC) released the long-awaited revised Guides for the Use of Environmental Marketing Claims (Green Guides). This is a very important development and clients and friends marketing products in the 'green' space need to be fully aware of the significant marketing, business, and legal implications of this document.
FTC intends the Green Guides to help marketers ensure that the claims they make about the environmental attributes of their products are 'truthful and non-deceptive.' FTC issued draft Green Guides for comment in 2010, and states that it received 'nearly 340 unique comments and more than 5,000 total comments.' FTC modified sections on general environmental benefit, compostable, degradable, ozone, recyclable, and recycled content. FTC added new sections concerning carbon offsets, certifications and seals of approval, free-of claims, non-toxic claims, made with renewable energy claims, and made with renewable materials claims. While the Green Guides are administrative interpretations of law, and are not independently enforceable, they describe the types of environmental claims FTC may find deceptive under Section 5 of the FTC Act. Under Section 5, FTC can take enforcement action against deceptive claims, which could lead to FTC orders prohibiting deceptive advertising and marketing and fines if those orders are later violated. The Green Guides are available online, and a summary is available online. FTC posted a video online that highlights changes to the Green Guides. FTC will publish a Federal Register notice announcing the availability of the Green Guides, and a pre-publication version of the notice is available online.
FTC notes that the availability of environmentally friendly products 'is a win for consumers who want to purchase greener products and producers who want to sell them.' FTC has added sections to the Green Guides to address environmental claims that were not common when FTC last reviewed the Guides. FTC states that the revisions include cautioning marketers not to make 'broad, unqualified claims that a product is 'environmentally friendly' or 'eco-friendly' because the FTC's consumer perception study confirms that such claims are likely to suggest that the product has specific and far-reaching environmental benefits. Very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate.'
Below is FTC's summary of revised sections of the Green Guides and the ways in which the guidance has been modified since the October 2010 proposed guidance.
General Environmental Benefit Claims
- Marketers should not make broad, unqualified general environmental benefit claims like 'green' or 'eco-friendly.' Broad claims are difficult to substantiate, if not impossible.
- Marketers should qualify general claims with specific environmental benefits. Qualifications for any claims should be clear, prominent, and specific.
- When a marketer qualifies a general claim with a specific benefit, consumers understand the benefit to be significant. As a result, marketers shouldn't highlight small or unimportant benefits.
- If a qualified general claim conveys that a product has an overall environmental benefit because of a special attribute, marketers should analyze the trade-offs resulting from the attribute to prove the claim.
Claiming 'Green, made with recycled content' may be deceptive if the environmental costs of using recycled content outweigh the environmental benefits of using it.
To clarify this guidance, the final Guides include new examples illustrating how marketers may make general environmental benefit claims through the combination of images and text.
- Marketers who claim a product is compostable need competent and reliable scientific evidence that all materials in the product or package will break down into -- or become part of -- usable compost safely and in about the same time as the materials with which it is composted.
- Marketers should qualify compostable claims if the product can't be composted at home safely or in a timely way. Marketers also should qualify a claim that a product can be composted in a municipal or institutional facility if the facilities aren't available to a substantial majority of consumers.
Although FTC had considered, and some commenters supported, adopting ASTM D6400 and D6868 standards to validate a plastic material's ability to convert to compost in large-scale facilities, FTC did not incorporate them, finding that those protocols 'likely do not typify compost facility operations nationwide.'
- Marketers may make an unqualified degradable claim only if they can prove that the 'entire product or package will completely break down and return to nature within a reasonably short period of time after customary disposal.' The 'reasonably short period of time' for complete decomposition of solid waste products? One year.
- Items destined for landfills, incinerators, or recycling facilities will not degrade within a year, so unqualified biodegradable claims for them shouldn't be made.
Although some commenters challenged the proposed one-year guideline for unqualified degradable claims, FTC found that the available consumer perception evidence supports this guidance. FTC states further: 'The Guides advise it is deceptive to make an unqualified degradable claim on solid waste items unless the items completely decompose within one year of customary disposal. This advice is based on evidence that customary solid waste disposal methods severely inhibit decomposition and that consumers expect an item labeled biodegradable without qualification to decompose in one year or less. Notwithstanding this advice, neither Section 5 nor the Guides can prohibit a marketer from making an unqualified degradable claim if it has substantiation for all reasonable interpretations of such claim.'
Ozone-Safe and Ozone-Friendly
- It is deceptive to misrepresent that a product is ozone-friendly or safe for the ozone layer or atmosphere.
FTC states that only a few commenters addressed ozone-safe and ozone-friendly claims, and those comments focused on two issues: (1) the utility of the proposed 'environmentally friendly' example; and (2) how consumers currently understand 'No-CFCs' claims. In response, FTC deleted the 'environmentally friendly' example to clarify that there are no special rules for substantiating general environmental benefit claims when those claims are based on a manufacturer's elimination of ozone-depleting substances. Regarding 'No-CFCs' claims, FTC stated that it would not advise marketers not to make such claims, even though CFCs have been banned for years, because consumers may not realize this is the case and thus find these claims still useful.
- Marketers should qualify recyclable claims when recycling facilities are not available to at least 60 percent of the consumers or communities where a product is sold.
- The lower the level of access to appropriate facilities, the more a marketer should emphasize the limited availability of recycling for the product.
If recycling facilities for a product are not available to at least 60 percent of consumers or communities, a marketer can state, 'This product may not be recyclable in your area.' If recycling facilities for a product are available to only a few consumers, a marketer should use stronger qualifying language: 'This product is recyclable only in the few communities that have appropriate recycling programs.'
FTC states that '[b]ased on the comments and the lack of additional consumer perception evidence, the Commission issues the majority of the guidance on recyclable claims as previously proposed.'
- Marketers should make recycled content claims only for materials that have been recovered or diverted from the waste stream during the manufacturing process or after consumer use.
- Marketers should qualify claims for products or packages made partly from recycled material -- for example, 'Made from 30% recycled material.'
- Marketers whose products contain used, reconditioned, or re-manufactured components should qualify their recycled content claims clearly and prominently to avoid deception about the components.
FTC states that it did not substantively amend its guidance because, although it asked questions pertaining to recycled content claims for pre-consumer materials, it did not receive many comments and it did not receive any supporting consumer perception evidence.
New Sections Added to the Green Guides
FTC provides the following summary of the new sections added to the Green Guides:
- Marketers should have competent and reliable scientific evidence to support carbon offset claims. They should use appropriate accounting methods to ensure they measure emission reduction properly and don't sell them more than once.
- Marketers should disclose whether the offset purchase pays for emission reductions that won't occur for at least two years.
- Marketers should not advertise a carbon offset if the law already requires the activity that is the basis for the offset.
Certifications and Seals of Approval
- Certifications and seals may be endorsements. According to the FTC's Endorsement Guides:
- Marketers should disclose any material connections to the certifying organization. A material connection is one that could affect the credibility of the endorsement.
- Marketers shouldn't use environmental certifications or seals that don't clearly convey the basis for the certification, because the seals or certifications are likely to convey general environmental benefits.
- To prevent deception, marketers using seals or certifications that don't convey the basis for the certification should identify, clearly and prominently, specific environmental benefits.
- Marketers can qualify certifications based on attributes that are too numerous to disclose by saying, 'Virtually all products impact the environment. For details on which attributes we evaluated, go to [a website that discusses this product].' The marketer should make sure that the website provides the referenced information, and that the information is truthful and accurate.
- A marketer with a third-party certification still must substantiate all express and implied claims.
- Marketers can make a free-of claim for a product that contains some amount of a substance if:
1. The product doesn't have more than trace amounts or background levels of the substance;
2. The amount of substance present doesn't cause harm that consumers typically associate with the substance; and
3. The substance wasn't 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.
- If a product doesn't contain a substance, it may be deceptive to claim the product is 'free of' that substance if it never has been associated with that product category.
- Marketers who claim that their product is non-toxic need competent and reliable scientific evidence that the product is safe for both people and the environment.
Made with Renewable Energy
- Marketers shouldn't make unqualified renewable energy claims based on energy derived from fossil fuels unless they purchase renewable energy certificates (RECs) to match the energy use.
- Unqualified renewable energy claims may imply that a product is made with recycled content or renewable materials. One way to minimize the risk of misunderstanding is to specify the source of renewable energy clearly and prominently (say, 'wind' or 'solar energy').
- Marketers should not make an unqualified 'made with renewable energy' claim unless all, or virtually all, the significant manufacturing processes involved in making the product or package are powered with renewable energy or non-renewable energy, matched by RECs.
- Marketers who generate renewable energy -- say, by using solar panels -- but sell RECs for all the renewable energy they generate shouldn't claim they 'use' renewable energy. Using the term 'hosting' would be deceptive in this circumstance.
Made with Renewable Materials
- Unqualified claims about renewable material may imply that a product is recyclable, made with recycled content, or biodegradable. One way to minimize that risk is to identify the material used clearly and prominently, and explain why it is renewable.
- Marketers should qualify renewable materials claims unless an item is made entirely with renewable materials, except for minor and incidental components.
'Our flooring is made from 100% bamboo, which grows at the same rate, or faster, than we use it.'
'This package is made from 50% plant-based renewable materials. Because we turn fast-growing plants into bio-plastics, only half of our product is made from petroleum-based materials.'
Claims Not Addressed by the Green Guides
In its press release concerning the Green Guides, which is available online, FTC states that, either because it 'lacks a sufficient basis to provide meaningful guidance or wants to avoid proposing guidance that duplicates or contradicts rules or guidance of other agencies, the Guides do not address use of the terms 'sustainable,' 'natural,' and 'organic.'' FTC notes that organic claims made for textiles and other products derived from agricultural products are covered by the U.S. Department of Agriculture's National Organic Program.
FTC states that hundreds of public comments were submitted and taken into account in the final Green Guides. That said, and interestingly, the Guides are not significantly revised since the October 2010 proposed guidance. FTC has stated that because the Guides are based on consumer understanding of environmental claims, consumer perception research provides the best evidence upon which to formulate guidance. FTC notes that it did not receive supporting consumer perception evidence with regard to several sections of the draft Guidelines. This may explain, in part, why the final Guidelines are not significantly different from the draft in many respects. Although it may have been helpful to address terms such as sustainable, natural, and organic, the changes in the Guides with regard to other terms, as well as additional guidance to ensure that companies not make broad, unqualified general environmental benefit claims, should assist companies in avoiding claims that FTC would regard as deceptive.