Wednesday, October 06, 2010

FTC Seeks Comments on Proposed Revisions to “Green Guides”

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Marketers use unqualified general environmental marketing claims--such as “green” and “eco-friendly”--at their peril, according to the Federal Trade Commission. Consumers could interpret unqualified claims as suggesting that the product had no negative environmental impact.

In an effort to educate marketers, the agency today released a proposed, revised version of its “Green Guides” emphasizing the importance of qualifying general environmental benefit claims.

Examples of qualified-general claims include: “ green--made with renewable materials” and “eco-friendly—made with recycled materials.” The guidance states that marketers must use clear and prominent qualifying language to convey to consumers that a general environmental claim refers only to a specific and limited environmental benefit.

As the FTC works toward issuing final guidelines for environmental marketing claims, the proposed, revised guidelines were released for public comment until December 10. The agency stressed that the guidelines apply to business-to-business transactions and not just business-to-consumer marketing and said that it would attempt to increase businesses' familiarity with the revised guides through various outreach programs.

The revised proposal has been in the works for some time. The agency last revised the Green Guides in 1998. In November 2007, the FTC sought comment on a number of general issues, including the continuing need for and economic impact of the guides, the effect of the guides on the accuracy of environmental claims, and whether the Commission should provide guidance on certain environmental claims--such as carbon neutral, sustainable, and renewable--not previously addressed in the guides. The agency also held three public workshops to explore emerging environmental marketing claims.

In addition, the agency contracted with a private consumer research firm to conduct a study in 2009 to determine how consumers perceive claims such as "green" and "eco-friendly." The Commission's consumer perception study is available here on the FTC website.

Certifications and Seals of Approval

In addition to offering new guidance on "renewable energy" claims, "renewable materials" claims, and "carbon offset" claims, the revised guidelines have a new section devoted to the use of certifications and seals of approval to communicate environmental claims.

The agency cautions marketers against using unqualified seals or certifications. Marketers should accompany seals or certifications with clear and prominent language limiting the general environmental benefit claim to the particular attribute or attributes for which they have substantiation, according to the agency.

Conflicts with Other Federal, State Policies

The agency addressed business concerns that it guidance might conflict with other federal, state, or local laws or regulations. The agency said that while some state laws might be different from the Green Guides, the differences did not necessarily present a conflict.

A company following the Green Guides provisions on biodegradability and compostability could still comply with California's specific requirements that plastic bags and containers labeled as "biodegradable" and "compostable" meet ASTM standards, the agency noted. The Commission explained that it consults with other federal agencies to ensure that it does not issue guidance that duplicates or possibly conflicts with their regulations.

The guidelines do not have the force of law. The agency can challenge under the FTC Act environmental claims that are inconsistent with the guidelines, but it must prove that those claims are unfair or deceptive.

Recent Enforcement Actions

In its announcement about the proposed revisions, the agency noted several recent actions involving false or unsubstantiated environmental claims. Among those were three actions charging marketers with making false and unsubstantiated claims that their products were biodegradable. The agency has also challenged claims that products made of bamboo were manufactured using an environmentally friendly process.

“In recent years, businesses have increasingly used 'green'marketing to capture consumers’ attention and move Americans toward a more environmentally friendly future, said FTC Chairman Jon Leibowitz in a statement accompanying the proposed revisions. "But what companies think green claims mean and what consumers really understand are sometimes two different things. The proposed updates to the Green Guides will help businesses better align their product claims with consumer expectations.”

The FTC notice, which will appear shortly in the Federal Register, is available here.

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