February 11, 2010
By Justin J. Prochnow, Contributing Editor
As consumer demand for environmentally conscious products increases, so do claims touting the positive environmental impact of products, also known as green claims. Companies wishing to capitalize on the demand for eco-products must understand the law regarding such claims, as well as the ramifications, both legal and otherwise, of making illegal or false claims.
The Federal Trade Commission (FTC), tasked with regulating advertising, is currently reviewing its Guides for the Use of Environmental Marketing Claims (the Green Guides) to ensure they adequately address the explosion of environmental claims, and help minimize greenwashing, the misleading of consumers regarding the green or environmental practices of a company or the environmental benefits of a product or service.
When the FTC reviews any piece of advertising, whether it concerns environmental claims or not, the agency looks at it from the consumers perspective and asks a simple question: What message does the advertising actually convey to consumers? Each piece of advertising must be truthful and not misleading, and all objective claims must be supported by adequate substantiation, often characterized as competent and reliable scientific evidence. In the environmental arena, the FTC attempts to ensure that advertisements meet these criteria by three different means: promulgating rules and guides, such as the Green Guides, to regulate such advertising; bringing enforcement actions that challenge unfair and deceptive advertisements; and publishing materials, such as brochures and fact sheets, to help consumers make informed purchasing decisions.
Central to the FTCs environmental marketing program are the Green Guides, established in 1992 to regulate the proper use of green claims (Title 16 of the Code of Federal Regulations, Part 260) The guides address the proper use of green claims such as recycled or recyclable, and degradable or biodegradable, as well as provide the basic elements needed to substantiate such claims. The Green Guides also contain examples that demonstrate how to properly make such claims to avoid deceptive advertising. While the FTC planned to revisit the Green Guides in 2008, the rapid increase of green claims caused the FTC to embark on its review a year earlier than planned. Starting in November 2007, the FTC sought public comment and, in 2008, held a series of public workshops on various green marketing issues. While it anticipated making revisions and issuing revised Green Guides in 2009, the FTC, based on issues raised through public comment and the workshops, determined that it needed to conduct further studies on consumer understanding of certain green marketing claims. Thus, it is anticipated that a revised form of the Green Guides will be issued some time in 2010.
In addition to regulatory concerns that must be carefully evaluated before making green advertising claims, companies must also be cognizant of monitoring done by environmental watchdog groups. For example, TerraChoice, a Canadian environmental marketing agency, garnered a great deal of attention in November 2007 when it published The Six Sins of Greenwashing, which was later updated toThe Seven Sins of Greenwashing in April 2009. Based on a review of over 2,000 products, the latter report identifies the seven most egregious sins committed by companies guilty of greenwashing, such as the Sin of Vagueness (making a claim that is so broad that the meaning is likely to be misunderstood or is impossible to verify). While the report does not identify greenwashing companies by name, other watchdog groups routinely identify perceived violators on their websites or blogs. Such negative publicity can cause major damage to a companys public reputation and impact future sales of products.
With calls to conserve our resources, protect our environment and Save Our Earth reaching an all-time high, there is no question that green claims will continue to populate the marketplace with ever-increasing regularity. Many companies wishing to capitalize on this demand for eco-products will be seeking to make green claims, offering environmentally preferable alternatives to other products. In doing so, companies should recognize that such claims will be closely scrutinized by the FTC, and environmental watchdog groups will be on the lookout for greenwashing violators. Companies must thoroughly understand the law regarding such claims, as well as the ramifications, both legal and otherwise, from making illegal or false claims.
Justin J. Prochnow is Of Counsel in the Denver office of the international law firm of Greenberg Traurig LLP. His practice concentrates on legal issues affecting the dietary-supplement and natural-products industries. He can be reached at 303/572-6562 or [email protected].
Want to learn more about the specific regulations and statutes addressing "environmental" or "green" claims? Join Justin J. Prochnow, Esq., for the session Going Green and Telling the Consumer: The Use of Environmental Claims in Advertising, Marketing and Labeling of Food and Beverage, Supplement and Cosmetic Products at 9 a.m. on April 27, 2010, at SupplySide East. Find more details at SupplySideShow.com.
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