October 12, 2010

FTC Releases Proposed New Green Guides for Environmental Advertising Claims

On October 6, 2010, the Federal Trade Commission (“FTC”) released its long-awaited proposed revisions to the Guides for the Use of Environmental Marketing Claims or “Green Guides,” which were last updated in 1998.  The FTC has requested public comment on the proposed revisions, with the comment period to close on December 10, 2010.  The proposed revisions resulted from a series of public workshops that began in 2007. 

The FTC’s proposal updates guidelines for environmental claims already addressed by the current Green Guides, and also addresses new issues such as “renewable materials,” “renewable energy” and “carbon offset” claims.  As anticipated, the proposed revised guides warn against the use of broad environmental claims that are difficult to substantiate and which are not clearly understood by consumers.  The proposed revised guides also attempt to identify specific circumstances under which certain claims, such as “degradable” or “carbon offset”, can be made.  For example, under the proposed revisions an unqualified claim that a product is “degradable” should be made only if the advertiser can substantiate that the entire item will “completely break down and return to nature” within a reasonably short period of time after customary disposal; for solid items the guidelines set that period of time as one year.  In addition, the proposed revised guides emphasize that an advertiser’s disclosures and qualifications pertaining to its environmental marketing claims must be clear and prominent.

The proposed revisions caution advertisers not to make blanket, general claims about a product or service, such that it is “green,” “environmentally friendly” or “eco-friendly.”  The FTC believes that such claims imply that the product has “specific and far-reaching environmental benefits,” when, in fact, very few products “have all the attributes consumers seem to perceive from such claims.”  The revised guides therefore conclude that such claims are “nearly impossible to substantiate.”

The proposed revised guides also note that the use of third-party certifications and/or seals are governed by the FTC’s recently revised Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”), and then provide new examples of how those guides may apply to environmental claims.  For example, under the Endorsements Guides, advertisers must disclose “material connections” with the entity providing the certification or seal.  In addition, the proposed revised guides state that having a third-party certification of an environmental claim does not eliminate an advertiser’s obligation to possess substantiation for the claim.  The proposed revised guides also update current guidelines for “degradable,” “compostable,” “ozone-safe or ozone-friendly” and “recyclable” claims. 

Notably, the proposed revised guides do not specifically address the use of the term “sustainable,” apparently because the FTC believes it lacks a sufficient basis to provide meaningful guidance.  This omission is notable because “sustainability” claims have been a red flag for scrutiny from regulatory authorities overseas.  The proposed revised guides note, however, that
“[m]arketers … are responsible for substantiating consumers’ understanding of this claim in the context of their advertisements.”  Neither do the proposed revised guides specifically address the use of terms such as “natural” and “organic,” although such terms may be addressed in rules or guidance from other agencies.  Again, however, the proposed revised guides note that “[m]arketers that are using terms such as natural must ensure that they can substantiate whatever claims they are conveying to reasonable consumers.”

The FTC proposal also provides new guidelines for advertising claims not addressed in the current guides, such as claims of “renewable materials” and “renewable energy.”  For example, under the proposed revised guides, a product should not be described as having been made with “renewable energy” if any part of the product was derived from fossil fuels.  In addition, the guidelines state that it is deceptive for an advertiser to claim that a carbon offset represents an emissions reduction where, for example, the emission reduction was required by law.

The FTC has requested that the public comment specifically on a number of issues, including:

  • Consumer perceptions of general environmental claims
  • Consumer perceptions of “degradable” claims, for example, the length of time consumers believe it will take for a liquid substance to completely degrade
  • Specific requirements for “recyclable” claims
  • Guidance pertaining to “organic” claims, for both agricultural and non-agricultural products
  • Guidance pertaining to “renewable materials” and “renewable energy” claims
  • Consumer perceptions relating to “carbon offset” and “carbon neutral” claims

As with other FTC guidelines, such as the FTC Endorsement Guides, the revised Green Guides will not have the force of law.  Nonetheless, they will be extremely important because they represent the FTC’s view of how Section 5 of the FTC Act (15 U.S.C. § 45) should be interpreted when applied to environmental advertising claims.