On October 6th, the Federal Trade Commission (FTC) published the final revisions to the 1988 "Green Guides" which provide guidance to companies when making environmental claims regarding their products. The FTC is seeking public comments on the proposed changes until December 10, 2010, after which it will decide which changes to make final.
The FTC can take legal action against unfair or deceptive marketing practices under Section 5 of the FTC Act. The 1988 "Green Guides" provide standards for asserting environmental benefits or advantages of products. However, the 1988 guides were outdated. Since their release in 1988, the number of companies asserting environmental benefits relative to their products has grown exponentially as well as the type of claims being asserted.
The proposed revisions to the "green guides" (copy here) provide much more detail than the 1988 version. For the first time issues such as- renewable energy claims, carbon offsets, and use of renewable materials are addressed in the proposed revisions.
Past court decisions highlight the importance of the guides. Judges have been willing to abide by the guidance set forth in the guides in determining whether a claim constitutes an unfair or deceptive marketing practice.
Here are some of the key proposed revisions:
- Stay away from general environmental benefit claims. These general claims such as "green" or "eco-friendly" are almost impossible to substantiate. The requirement to justify any green claims is a central requirement of the guides.
- Third Party Certifications- Seals or endorsement of environmental benefits will receive heightened scrutiny. Any material connection to the certifier must be disclosed. Also, a 3rd party certification doesn't eliminate the requirement to substantiate all claims.
- Renewable Energy- If a company wants to say they utilize renewable energy in the manufacturing of their product, they better be prepared to provide more detail. For example, if the company does not have its own wind or solar generation sources and is only purchasing RECs, it must disclose this as part of its claim. If you generate your own renewable energy, but sell the RECs you cannot claim you use renewable energy.
- Climate Change- The concept of "additionality" has entered into marketing claims regarding carbon offsets. A company cannot claim it is offsetting its carbon emissions if those reductions were required by law.
- Recycling- Proposed revisions will create various tiers for claiming your product is recyclable. If the product is only partially recyclable due to lack of access to recycling, then any recycling claim must carry with it certain qualifications.
This is just a brief highlight of the many topics covered in the revised guidelines. Once the revisions are finalized, the guides will likely cause wholesale revisions to marketing campaigns for products. While companies will still have a strong incentive to market the green attributes of their products, those campaigns will have lawyers reviewing the labeling, support for claims and mandatory qualifications required under the guides.