Advertising Law -- Oct 02, 2012: SPECIAL FOCUS - FTC Releases Highly Anticipated Revised Guides on Environmental Marketing Claims

by Manatt, Phelps & Phillips, LLP
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[authors: Christopher A. Cole and Lauren B. Aronson]

The Federal Trade Commission ("FTC") issued yesterday the final version of its revised Guides for the Use of Environmental Marketing Claims ("Green Guides" or "Guides").  While the final Guides continue to emphasize that advertisers need reliable scientific support to back up environmental claims, there were a few significant changes made to prior versions of the document.  Advertisers making environmental marketing claims should carefully review the final Guides to determine whether their advertising should be modified in light of these changes.

The significant modifications to existing sections of the Green Guides are listed below:

  • General Environmental Benefit Claims:  The Guides state that unqualified general environmental benefit claims such as "Eco-friendly" or "Green" are likely deceptive and should not be made.  Instead, marketers should use clear and prominent qualifying language to limit environmental benefit claims to a specific benefit(s).  In a change to the draft Guides, the FTC added a new provision regarding analysis of environmental "trade-offs."  This means that the advertiser should evaluate whether the touted benefit(s) in fact impacts the overall environmental benefit of the product.  Even when making qualified general benefit claims, "marketers should analyze trade-offs resulting from the benefit(s) to determine" if they can substantiate that the product is in fact more environmentally beneficial due to the touted benefit(s).  Thus, even where a claim is properly qualified, the Guides advise that marketers should look to the entire context to avoid conveying a false implied general environmental claim.  Marketers should also avoid overstating the significance of any stated benefit(s).
  • Compostable Claims:  Marketers can make compostable claims only where the item will break down "in approximately the same time as the materials with which it is composted."  Where the item cannot be composted safely or in a timely manner in a home compost pile or device or if the item cannot be composted in a landfill, qualifications should be added.  If the composting benefit applies only when sent to municipal or institutional composting facilities, the marketer must clearly and prominently qualify compostable claims "if such facilities are not available to a substantial majority of consumers or communities where the item is sold."
  • Degradable Claims:  Marketers cannot make degradable claims for items that do not completely decompose within one year after customary disposal. Unqualified degradable claims cannot be made for items that are customarily disposed of in landfills, incinerators or recycling facilities.  Voicing particular concerns about some claims made for biodegradable plastic additives, the FTC retains its earlier position that ASTM standards are not sufficient substantiation for such claims.
  • Recyclable Claims:  Recycling facilities must be available to at least 60% of consumers or communities for a marketer to satisfy the "substantial majority" requirement.  The lower the level of access to the appropriate recycling facility, the stronger the advertiser should emphasize limited availability.  The FTC removed the more complicated "three tier" system for making such claims, which it had included in the draft Guides.  The new rule promises somewhat greater flexibility, but perhaps more uncertainty.

In addition to modifying existing sections of the Green Guides, the FTC adopted several entirely new sections, all of which had been proposed in the draft version first published two years ago.

  • Certifications and Seals of Approval:  As it stated in the draft Guides, the FTC's final Guides require that advertisers using third-party certifications and seals essentially comply with the Endorsement Guides (16 C.F.R. Part 255).  Additionally, when touting seals and certifications, the marketer must substantiate all claims that are reasonably communicated.  If the seal or certification does not communicate the basis for the certification or seal, a misleading general environmental benefit claim could be conveyed.  Such broad claims can be qualified with language that clearly conveys that the seal or certification refers only to specific benefits.  The FTC clarified the rules regarding when advertisers must disclose a material connection with the certifying organization, which had been criticized in written comments to the draft Guides.  The Guides also  clarify where and how to make qualifying disclosures regarding so-called "multi-attribute seals."
  • Carbon Offsets:  No major changes were made to this section from the draft Guides.  Marketers must have competent and reliable scientific and accounting evidence to support carbon offset claims.  The Guides caution that advertisers must ensure that they are not selling the same reduction more than once.  Additionally, if the carbon offset reduction will not occur for two years or longer, the time lag should be clearly and prominently disclosed.  The FTC also retained its position regarding "regulatory additionality."  Claims that a carbon offset represents an emission reduction are deceptive if the resulting reduction was due to an activity or reduction that was required by law.
  • Free-of Claims:  Even if an item is "free of" a potentially harmful substance, "free-of" claims may be deceptive if the item presents the same or similar environmental risk without the substance or if the substance is not associated with a product category.  Free-of claims may be nondeceptive, however, if a product contains a "trace amount" of a substance provided that the presence of the substance does not cause the material harm typically associated with the substance and the substance has not been intentionally added to the product.  The new language referring to "trace amount" was substituted for the previous "de minimis" terminology at the EPA's request. 
  • Non-Toxic:  Marketers making "non-toxic" claims must have competent and reliable scientific evidence that the product, package, or service is non-toxic for both humans and the environment. If not, clear and conspicuous qualifications should be added.  The FTC also made clear that such claims must be founded on the strictest possible standards.
  • Made with Renewable Energy:  There were no major changes to these rules from the draft version of the Guides.  Renewable energy claims can be made only if "all, or virtually all, of the significant manufacturing processes involved in making the product or package are powered with renewable energy or non-renewable energy matched by renewable energy certificates."  If necessary, advertisers must "clearly and prominently specify the percentage of renewable energy that powered the significant manufacturing processes involved in making the product or package."  Renewable energy claims cannot be made by manufacturers that generate renewable energy but sell certificates for all of that electricity.  To minimize risk of deception, the source of the renewable energy source should be specified.
  • Made with Renewable Materials/Recycled Content:  No major changes were made to these portions of the Guides from the draft version.  Made with renewable materials claims should be qualified unless the product or package (other than minor, incidental components) is entirely made with renewable materials. As a general matter, renewable materials claims should be clearly and prominently qualified because they can be easily misinterpreted.  The Guides recommend that marketers identify the material used and explain why the material is renewable.  The Guides now clarify that manufacturers can base these claims on annual weighted averages.

Items Not Addressed:  As in the draft, the FTC declined to address claims of "sustainability" and the definition of the term "natural."  It also continues to defer to USDA regarding terms such as "organic" and "bio-based," and will not issue any guidance for those terms.

The FTC made clear that making revisions to the Guides was a massive project and that it does not intend to undertake another rewrite for the next ten years.  However, if new evidence arises regarding a specific section that is included, or was omitted, the FTC signaled it would be willing to undertake a more limited review and update.  In the meantime, marketers should review and understand the new requirements for environmental marketing.

For further information, review the full text of the final Green Guides, Federal Register notice, Statement of Purpose, and FTC Bureau of Consumer Protection explanatory video of the final Green Guides by clicking on the links below.

Revised Guides: http://www.ftc.gov/os/2012/10/greenguides.pdf
Federal Register  notice: http://www.ftc.gov/os/fedreg/2012/10/greenguidesfrn.pdf
Green Guides Statement of Basis and Purpose: http://www.ftc.gov/os/fedreg/2012/10/greenguidesstatement.pdf
FTC video explaining differences: http://business.ftc.gov/multimedia/videos/green-guides

For recent press coverage on the topic, see the following articles:

"F.T.C. Issues Guidelines for 'Eco-Friendly' Labels," The New York Times
"FTC Issues Final Version of Green Guides," AdvertisingAge
"FTC Finalizes Green Guides, Puts Greenwashers on Notice," Forbes
"FTC Clamps Down on Greenwashing With Revised Green Marketing Guides," brandchannel

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Manatt, Phelps & Phillips, LLP | Attorney Advertising

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