On October 6, 2010, the US Federal Trade Commission (FTC) released proposed revisions to its guides for avoiding misleading environmental marketing claims. Last updated in 1998, the “Green Guides” are administrative interpretations that create safe harbors for marketing claims, but they are not enforceable regulations.

The proposed revisions are the result of an FTC review that included public comments, three public workshops, and the Commission’s consumer perception research. With that information, the FTC is proposing to: (i) strengthen its warnings about use of general environmental benefit claims; (ii) include a new section covering certifications and seals of approvals; (iii) clarify existing guidance about claims that a product is degradable, compostable, “free-of” a particular substance, recyclable, ozone friendly, or non-toxic; and (iv) add new guidance for claims not addressed by the existing guides, including claims on “renewable materials,” “renewable energy,” and carbon offsets.

Highlights of the changes include:

  • General Benefit Claims. The FTC continues to discourage marketers from making such unqualified, general environmental benefit claims as “green” or “earth friendly” (because they may be impossible to substantiate). On the other hand, the FTC is proposing to allow such claims if they are limited to a specific benefit. Thus, the claim “Greener than our previous packaging,” may pass muster if qualified by “We’ve reduced the weight of our packaging by 15%.”
  • Certifications and Seals. The proposal emphasizes that certifications and seals are endorsements covered by the Commission’s Endorsement Guides. Accordingly, marketers are to disclose “a material connection” between the endorser and the marketer. Beyond that, a seal could constitute a general environmental benefit claim that would need appropriate qualification.
  • Degradation/Compostability. Under the existing Green Guides, degradation claims need to be qualified in such a way as to avoid being deceptive about a product’s ability to degrade in the location where it is customarily disposed, and the rate and extent of degradation. The proposal would add that a product must completely decompose within one year if an unqualified degradation claim is made. Similarly, an unqualified claim of compostability would indicate a material would break down safely to useable compost in approximately the same time as other substances with which it is composted “e.g., natural plant matter.”
  • Recyclable Claims. For “recyclable” claims, the proposal highlights the criteria for disclosures about the availability of recycling programs.
  • “Free-Of” Claims. Expanding the current guidance, the proposal would specify that a “free-of” claim may be considered deceptive if a substance has never been associated with a product category. Free-of even may be appropriate when a de minimis amount of a substance is present; however, any free-of claim could convey a general benefit or superiority claim requiring qualification.
  • Renewable Materials and Energy. To avoid deception in claims that a product is made with “renewable materials,” a marketer should include qualifications about the specific material involved, how it was sourced, and why it is renewable. Renewable energy claims likely would need to specify the source of the energy; qualification also would be called for when less than all (or virtually all) of the processes involved were powered with renewable energy. Further, a claim that an entity which generates electricity was using renewable energy would be deceptive if the entity was selling renewable energy certificates for all the power it generated (thereby allowing the buyer to claim it was using renewable energy).
  • Carbon Offsets. Marketers making claims about carbon offsets should have in hand competent and reliable scientific evidence for their claims, including appropriate accounting methods for quantifying emission reductions and showing they are being sold only once, and should disclose if the reductions will not take place for two or more years. Offset claims about activity already required by law would be considered deceptive.

In putting together the proposal, the FTC chose not to:

  • Provide specific guidance about claims for sustainable, natural, or organic products, or use of life cycle analyses;
  • Allow use of websites to qualify otherwise misleading claims;
  • Align the Green Guides with international standards such as ISO 14021; or
  • Refer to particular industry standards on compostability or degradation such as ASTM D6400 or D6868.

The FTC is seeking public comment on all aspects of its proposal, which will appear in the Federal Register. The deadline for submittal is December 10, 2010.

In releasing the proposal, FTC Chairman Jon Leibowitz noted that “[i]n recent years, businesses have increasingly used ‘green’ marketing to capture consumers’ attention and move Americans toward a more environmentally friendly future. But what companies think green claims mean and what consumers really understand are sometimes two different things.” In trying to align proliferating environmental claims with consumer expectations, the final guides will undoubtedly play a critical role in green marketing.

For more information about the Green Guides or any other matter raised in this Legal Update, please contact Roger W. Patrick at +1 202 263 3343 or Mitchell D. Raup at +1 202 263 3257.

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