Everyone knows it’s not easy being green. Federal regulators, however, are starting to wonder whether it should be so easy to say you’re being green.
The Federal Trade Commission, for one, recently announced plans to revise its guidelines for how companies present their “environmental marketing.” Those guidelines were last updated 10 years ago.
The FTC’s decision to review its “Green Guides” comes one year earlier than expected, thanks to a “virtual explosion of green marketing” in the past 12 months, according to FTC Chairwoman Deborah Platt Majoras. Her agency is now holding a series of workshops to consider green marketing issues and what rules may be necessary.
LaMotte
While the Green Guides are only administrative interpretations of the law and are not independently enforceable, the FTC can still take action under the Federal Trade Commission Act, which prohibits unfair or deceptive advertising. In that sense, the Green Guides are somewhat of a safe harbor provision for companies and marketers, says Russ LaMotte, an environmental lawyer with the firm Beveridge & Diamond. “If you follow the Green Guides, you’re not going to be enforced against by the FTC.”
The larger issue, however, is the tidal wave of big consumer brand companies touting environmental claims that are not currently covered by the Green Guides since they were last revised in 1998.
Among the more popular initiatives are carbon offset programs, where corporations or individuals can purchase credits to fund projects that “offset” their emissions of carbon, believed to be a prime cause of global warming. Last year, for example, Volkswagen offered free offsets to every consumer who bought a car during a certain period. The offsets, which covered a year of driving for a typical consumer, go toward planting trees in a “VW forest” located in the lower Mississippi Valley.
“Inadequate tracking and verification systems could lead even those sellers acting in good faith to inadvertently sell the same product more than once.”
— Deborah Platt Majoras,
Chairwoman,
Federal Trade Commission
Airlines, traveling agencies, and credit card companies are also jumping on the sustainable bandwagon. Continental now allows travelers to track the carbon imprint of their routes, while Delta and Expedia.com allow consumers to purchase carbon offsets to counter their flight emissions. General Electric and Bank of America, too, offer consumers the option to convert credit card reward points into offsets.
Consumers, however, make up only a small percentage of carbon credit buyers. Nearly 90 percent of those who purchase carbon credits are companies, and the majority is located in the United States, says Kate Hamilton, carbon project manager at research firm Ecosystem Marketplace, who also spoke at one of the FTC workshops. Hamilton estimates that the value of the voluntary carbon-offset market in 2006 was $91 million, and it is projected to quadruple over the next five years.
Unanswered Questions
A carbon-offset market of nearly $500 million would be serious business. And it raises a serious question for the FTC and other regulators: Is all that money really going where companies say it is?
Tuerff
Right now, that’s unclear. As Kevin Tuerff, president and principal of EnviroMedia Social Marketing, noted in a comment letter to the FTC: “My biggest concern is that there is no assurance to consumers that their funds are truly being used to offset carbon emissions. In fact, any individual, company, or non-profit can claim to sell carbon offsets, and the consumer must trust that their funds are truly being used for that purpose.”
Furthermore, as addressed at the FTC workshop, even if every green marketing claim is legitimate, and every penny goes toward carbon-offset programs, does that really solve anything? How many trees does it take, for example, to neutralize carbon dioxide waste?
And those aren’t the only concerns. Majoras gave the example of offsets or their close cousins, renewable energy certificates, which could involve multiple transactions with various entities. “Inadequate tracking and verification systems could lead even those sellers acting in good faith to inadvertently sell the same product more than once,” she said.
Urbach
On the flip side, says Ron Urbach of the marketing communications law firm Davis & Gilbert, other companies may not even bother to be well-informed and just “go through with it anyway, because it’s going to resonate with consumers.'”
Or, as Majoras said with simple understatement: “With this much uncertainty there’s a heightened potential for deception.”
Getting Into Trouble
No regulator has yet accused anybody of wrongdoing. But Urbach predicts a number of enforcement actions will be brought this year—either by the FTC or the states—over green marketing claims. “And the states are going to be very aggressive, because … that’s how they operate,” he says. Indeed, 10 states—including California and Delaware, always influential on matters of corporate law—have already voiced their concerns in a comment letter to the FTC regarding best practices when communicating about carbon offsets.
OUT FOR COMMENT
The following excerpt from Part B of the Federal Trade Commission’s “Guides for the Use of Environmental Marketing Claims” outlines specific issues for comment.
(1) Should the Guides be revised to include guidance regarding renewable
energy or carbon offset claims? If so, why, and what guidance should be
provided? If not, why not?
(a) What evidence supports making your proposed revision(s)?
(b) What evidence is available concerning consumer understanding of
the terms “renewable energy” and “carbon offset”?
(c) What evidence constitutes a reasonable basis to support each such
claim?
(2) Should the Guides be revised to include guidance regarding “sustainable”
claims? If so, why, and what guidance should be provided? If not, why
not?
(a) What evidence supports making your proposed revision(s)?
(b) What evidence is available concerning consumer understanding of
the term “sustainable”?
(c) What evidence constitutes a reasonable basis to support a
“sustainable” claim?
(3) Should the Guides be revised to include guidance regarding “renewable”
claims? If so, why, and what guidance should be provided? If not, why
not?
(a) What evidence supports making your proposed revision(s)?
(b) What evidence is available concerning consumer understanding of
the term “renewable”?
(c) What evidence constitutes a reasonable basis to support a
“renewable” claim?
(4) The Guides provide that a recycled content claim may be made only for
materials that have been recovered or otherwise diverted from the solid
waste stream, either during the manufacturing process or after consumer
use. Do the current Guides provide sufficient guidance for recycled content
claims for textile products? If so, why? If not, why not, and what guidance
should be provided? What evidence supports making your proposed
revision(s)?
(5) The Guides suggest that recycled content be calculated on the annual
weighted average of a product. Should the Guides be revised to include
alternative method(s) of calculating recycled content,e.g., based on the
average recycled content within a product line, or an average amount of
recycled content used by a manufacturer across many or all of its product
lines? If so, why, and what is the appropriate method(s) of calculation? If
not, why not? What evidence supports making your proposed revision(s)?
(6) The Guides provide that an unqualified claim that a product or package is
degradable, biodegradable or photodegradable should besubstantiated by
competent and reliable scientific evidence that the entire product or
package will completely break down and return to nature within a
“reasonably short period of time after customary disposal.” Should the
Guides be revised to provide more specificity with respect to the time frame
for product decomposition? If so, why, and what should the time frame be?
If not, why not? What evidence supports making your proposed
revision(s)?
Source
Federal Trade Commission.
Lesley Fair of the FTC’s Division of Consumer and Business Education recommends another bit of advice for companies promoting their greenness: Don’t rely on footnotes in advertising to get you out of trouble. “[I]f a disclosure is necessary to prevent an ad from being deceptive, it must be clear and conspicuous,” she said at an FTC workshop. “Simply put, what the headline dideth, the footnote cannot taketh away.”
Fair added: “I have gone back 58 years in FTC jurisprudence, to my knowledge the commission has never lost a case when the company’s defense was, ‘But we disclosed it in a footnote or television superscript.’”
Another area that often gets companies into legal hot water is the tendency to use “generalized statements, or claims, or phrases,” Urbach says, “because they’re succinct, they’re easy to digest, they’re nice to put on packaging.” Such statements might include, “‘BP is a green company,’ or ‘Buy us. We’re good for the environment.’”
While those are catchy slogans, “that’s the part that drives the FTC and regulators crazy, because it’s rare to find a company that is globally good on any one issue,” he says.
If a company does decide to re-examine its green marketing claims, Fair suggests two important questions: “First, what claims express and implied does my ad convey to reasonable consumers? And, second, do I have competent and reliable evidence which, depending on the claim, may require scientific evidence to support each of these claims?”
Details are key, says Urbach. “Be cautious as to what you say, and be specific as much as possible.”
Into the Green Yonder
LaMotte says the question is not whether the FTC will update the Green Guides, but rather what issues the Commission will take up and how the guidelines will be updated.
Further, Urbach says, the FTC recognizes that green issues tie into economic issues like high oil prices, which aren’t going down any time soon. Such “leading-edge” issues make green marketing an appealing area ripe for innovation, he says.
Influential retailers such as Wal-Mart will also push green marketing into corporate consciousness, Urbach says, because as those retailers adopt green practices, their suppliers will follow behind (willingly or otherwise).
“So that is going to have a trickle down effect, where there is going to be a rash of new green products and green positioning because, not only do consumers want it, but a huge retailer is going to make it happen,” he says. “And so the products, services, and issues in marketing platforms that are going to exist a year from now, we don’t really know.”
What we do know, Urbach says: “The issue of green today is not going to die out. The issue is here. We’re not as well-advised or well-informed about it or well-sensitive to it like the rest of Europe is, for example, but we’re getting there.”
Comments on the Green Guides are due Feb. 11.
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