Federal Trade Commission Updates Its Green Guides

Date: October 27, 2010

The Federal Trade Commission (FTC), after much deliberation, recently released proposed revisions to its Green Guides. Formally known as the Guides for the Use of Environmental Marketing Claims, the Green Guides were first introduced in 1992 and were last revised in 1998. Sustainable practices and green marketing techniques have changed significantly over the past twelve years, and the FTC had quite a bit of work to do in bringing the guides up to date.

The revisions update and expand upon the main categories of green claims including general environmental benefit claims, certifications and seals of approval, degradable claims, compostable claims, recyclable claims, recycled content claims, ozone-safe and ozone-friendly claims, free-of and non-toxic claims, source reduction claims, and refillable claims. Many of the changes provide clarification and specificity. Some issues previously addressed only implicitly in examples are now covered directly in the regulations. While the FTC has declined to include all of the areas that it initially considered, some new topics have been added. These include claims relating to renewable materials, renewable energy, and carbon offsets.

One of the prominent themes throughout the revisions is the requirement that marketers qualify their claims. Previously, unqualified statements that a product is "green" or "eco-friendly" were acceptable so long as the manufacturer could substantiate those claims if prompted. The FTC's new position is that such unqualified claims suggest general environmental benefits that likely cannot be substantiated, so they are deemed deceptive.

In addition to qualifying general marketing claims, claims of recyclability must consider the availability of recycling programs for the particular product. Unqualified claims can only be made where a substantial majority of consumers and communities have access to a facility that recycles the product. Where only a significant percentage of communities maintain the corresponding facilities, a warning must be given that the item may not be recyclable in the consumer's particular area. Where less than a significant percentage of consumers would have access to an appropriate recycling program, the label must say that the item is only recyclable in a few areas. Local companies that market in a limited geographic region are more likely to be able to make unqualified claims as they are able to ascertain the availability of recycling programs in their market.

Other claims that may now require qualifications include those regarding renewable materials, renewable energy, and certifications or seals of approval. Renewable material claims must be specific about what the material is, how it is sourced, and how it is renewable and the entire product must be made from renewable materials. A renewable energy claim cannot be made if fossil fuels were used at all in the production process. Labels reflecting certifications or seals of approval must comply with the FTC's Endorsement Guides and also specify the quality of the product that the certification or seal relates to.

Notably, several definitions have been updated or clarified. Biodegradable products must be able to fully degrade within one year, as opposed to the prior vague requirement that the item "return to nature within a reasonably short period of time." A claim that a product is non-toxic is intended to convey that it is safe for both humans and the environment generally. Non-toxic claims must be appropriately qualified to avoid deception. Such claims may not be made at all if the product simply substitutes a different substance that carries the same risks or if the substance is not already associated with the product category.

The new regulations on carbon offset claims are intentionally limited as a reflection of the FTC's lack of technical expertise in this area. The research and consumer perception studies used to develop the revisions suggested that timing is important to consumers and, therefore, marketers using carbon offset claims must disclose if the corresponding emissions reductions will not occur within two years. In addition, a carbon offset claim would be deceptive if the underlying carbon offset is required by law and not an added green benefit.

As a result of both unprecedented consumer concern for environmental matters and a protracted recession, manufacturers of all kinds have put a new emphasis on green marketing in recent years. The FTC, in turn, has stepped up its enforcement of the existing Green Guides to combat "green-washing" and is likely to continue in that trend as the revised Green Guides take effect and considerably impact the way that green claims are made.