October 15, 2010

FTC Proposes New Green Guides for Environmental Marketing

On October 6, 2010, the Federal Trade Commission (FTC) proposed revisions to its Guides for the Use of Environmental Marketing Claims, commonly known as the "Green Guides." Originally published in 1992, the Green Guides provide guidance to help companies avoid making deceptive environmental claims about their products and place companies on notice as to situations in which the FTC may bring an enforcement action.

 If adopted, the proposed revisions will strengthen the FTC's existing prohibitions on environmental marketing and impose limitations on new categories of environmental claims not previously addressed by the Green Guides.

Proposed Revisions to Guidance on Claims Already Addressed by the Green Guides

The proposed revisions impose additional limitations on several types of environmental marketing claims already covered by the Green Guides.

  • Claims of general environmental benefits. This category includes broad, unqualified claims, such as claims that a product is "eco-friendly" or "environmentally friendly." The proposed Green Guides take the position that these claims inaccurately suggest that the product has no negative environmental impacts. Although the existing Green Guides permit such unqualified, general claims if accurate, the FTC now believes that these claims are nearly impossible to substantiate and therefore should not be made at all.
  • Use of environmental seals of approval or certifications. Any seals of approval or certifications should be accompanied by clear, prominent, and specific qualifications clarifying who evaluated the product and on what basis.
  • Claims that a product is "degradable," "compostable," or "recyclable." Such statements should not be included in advertising unless the product conforms to certain requirements regarding the time it takes the product to degrade or compost or the availability of recycling facilities.

Proposed Guidance for Environmental Marketing Claims Not Currently Addressed by the Green Guides

In addition to strengthening the existing guides, the proposed revisions include guidance on new areas of environmental marketing.

  • Claims that a product is made with "renewable energy" or "renewable materials." Marketers who make these types of claims are advised to provide specific information about the materials and energy used in production, and should not make unqualified "renewable energy" claims if the power used to manufacture the product was derived from fossil fuels. Moreover, marketers should not claim that their products or processes use renewable energy if they generate renewable electricity but sell renewable energy credits for all of that electricity.
  • Claims that carbon offsets are used to counteract the effects of products. Under the new guides, carbon offset claims must reflect competent and reliable scientific evidence, must be based on effective accounting to ensure that emission reductions are not sold more than once, and, if the environmental benefits of the carbon offsets will not be realized within two years, must clearly state this fact. The FTC further warns that it is deceptive to advertise that carbon offsets are being used to reduce emissions if the company is already required by law to purchase or generate the offsets.

Going Forward

The FTC is seeking comments on the proposed Green Guides by December 10, 2010. The FTC has requested comments on a wide range of topics, including:

  • Whether consumers interpret qualified general environmental claims—meaning claims that emphasize one environmentally friendly attribute of a product—to mean that the product has a net environmental benefit.
  • How "made with renewable energy" claims should be qualified to avoid deception.
  • How consumers understand "carbon offset" and "carbon neutral" claims.

Whether these revised Green Guides are promulgated in their current form or with modifications, they will impact how businesses market themselves in the future. Companies should carefully examine the revised Green Guides to ensure that their environmental benefit claims do not subject them to liability for misleading marketing. For the complete text of the proposed Green Guides, click here.

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