FTC Cracks Down on Greenwashing

Is it the end of greenwashing? Not quite. The Federal Trade Commission (FTC) has proposed changes to Guides for the Use of Environmental Marketing Claims (Green Guides) that would make greenwashing more difficult. The Green Guides interpret laws governing such claims; the proposed changes would offer new guidance and strengthen existing guidelines. The proposal omits some key terms—“sustainable,” “natural,” and “organic”—that FTC does not have the authority or the information to regulate. Along with new additions and revisions, the Green Guides have also been reorganized and simplified so they are easier to understand and use.

The Green Guides detail appropriate use of product certifications and seals of approval; carbon offset claims; and the word “renewable” in conjunction with energy or material claims. According to FTC Chairman Jon Leibowitz, “The proposed updates to the Green Guides will help businesses better align their product claims with consumer expectations.” A consumer study, along with public workshops, found that, for most consumers, the terms “environmentally friendly” and “eco-friendly” implied “far-reaching environmental benefits” that may not exist. The Green Guides caution against using such blanket claims, since consumers would likely interpret them as having broader or more meaningful implications than could be substantiated.

The Green Guides caution marketers to avoid certifications or seals of approval that don’t have transparent requirements because they may constitute general environmental claims. When citing a certification, the Green Guides advise stating a product’s qualifications prominently, clearly, and specifically. For example, if a certification implies that a third party has evaluated a product when in fact it only represents that a company is a dues-paying member of the organization awarding the certification, the marketer is required to make this relationship clear.

According to the Green Guides, common understanding among consumers of some environmental claims—degradable, recyclable, compostable, free of, and non-toxic—diverges from the definitions used by industry experts. For example, many people believe that if something is “degradable” it will break down under any conditions. The Green Guides state, however, that “customary methods of disposal [including landfill, incinerator, and recycling] do not present conditions for decomposition in a reasonably short period of time,” (usually defined as under a year). According to the Green Guides, marketers should only use the term if decomposition—the breaking down of a product into elements found in nature—will occur under standard disposal conditions. If “degradable” trash bags only decompose when buried in soil, using the word “degradable” on packaging is deceptive because trash bags are usually destined for a landfill or an incinerator. Marketers must qualify degradable claims that won’t occur under typical conditions or within a “reasonably short period of time,” (typically defined as under a year).

Marketers should also include qualifying statements for “recyclable” if something cannot be recycled by a “substantial majority” (about 60%) of consumers or communities. Most “compostable” claims refer to composting that happens within a commercial facility. Although, according to the Green Guides, most consumers believe claims of compostability imply access to composting facilities, such facilities are uncommon in the U.S.—90% of consumers have no access to them or are unaware that they exist. The Green Guides propose that “compostable” only be used if a product will become usable compost in about the same time as other materials in the compost, like plant matter. The current Green Guides specify that disclosure is required when less than a “substantial majority” (about 60%) of consumers or communities have access to composting facilities.

The Green Guides allow the term “free of” to convey the “general benefits” or superiority (with substantiation) of a product that does not contain a substance; in some cases, the claim can be used when there is a negligible amount of the substance present. For example, labeling a product as “free of added urea-formaldehyde” implies the general benefits of a product that does not contain a known human carcinogen. The Green Guides advise against using “free of” when the product contains other equally risky substances or if the mentioned substance wouldn’t be in the product anyway. Finally, the Green Guides propose a definition of “non-toxic,” stating that it implies safety for humans and the environment.

When using the terms “renewable energy” and “renewable materials,” marketers should provide specific information about the energy and materials used—marketers should not claim “renewable energy” if the manufacture of the product included fossil fuel derivatives. Carbon offset claims are also under scrutiny; the Green Guides recommend marketers disclose any emission reductions that will not occur in two years. The Green Guides also limit advertising of carbon offsets to those going beyond legal requirements—essentially if the law requires offsets, then they shouldn’t be advertized as such.

The Green Guides omit the term “sustainable” because, though marketers may intend to imply environmental benefit, consumers do not recognize “sustainable” as having an environmental meaning—some think the term means “durable or long-lasting.” To make matters worse, the term only implies environmental benefits when combined with phrases and imagery that suggest endless possible benefits, so it is impractical to provide general guidance on how to use it.

The Green Guides also leave out “natural” because consumer perception of the claim is unclear and the term is used in too many varied applications, making general guidance inappropriate. “Natural” can be used properly in accordance with federal guidelines set by FTC, the U.S. Department of Agriculture (USDA), and the Food and Drug Administration (FDA). Marketers must still substantiate “natural” claims to the extent appropriate in a given context. For example, if “natural” could be perceived as meaning “without artificial ingredients,” the marketer must be able to back up the claim.

The Green Guides do not address “organic” because USDA’s National Organic Program (NOP) already covers agricultural products. Non-agricultural products have an insufficient record for specific guidance to be appropriate.

The Green Guides originated in 1992 and have since been updated twice, in 1996 and 1998. The proposed 2010 Green Guides update seeks to ensure that marketers’ claims are true and appropriately substantiated through guidance on: general environmental marketing principles, how consumers interpret claims, and how claims can be substantiated to avoid misleading consumers.

Public comment is welcome until December 10, 2010. Anyone can submit comments in writing through the “Request for Comment” section of the Federal Register notice or online through FTC’s website.

– Emily Catacchio

For more information:

Federal Trade Commission
www.ftc.gov/green

November 21, 2010

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