Last week, we blogged about an environmental ESG NAD challenge brought by an advocacy group; this week features a blog about an animal welfare ESG NAD challenge also brought by an advocacy group.

The challenge was brought by the ASPCA against One Health Certification Foundation, which runs the One Health Certification program for poultry. The Foundation’s seal is below.

There were a lot of claims and problems at issue in the challenge, but the one we really want to focus on is the challenge to the seal itself, as NAD has begun to hear more and more such cases. The issue that NAD – and NARB – have wrestled with in several challenges is whether seals and certification programs imply to consumers that the certification program’s standards exceed those standards that are typical within the relevant industry. And if they do, what does it mean for a program’s standards to “exceed” industry standards?

Now we don’t ordinarily criticize NAD because we think they do a tremendous job, but as we are frequently reminded ourselves, no one’s perfect. And we think NAD needs to do a bit of cleanup in this area. In 2021, NAD heard a challenge to various claims made by Butterball regarding “humane” claims. Butterball defended the claim in part by saying the claim was tied to a certification it had received and displayed, from the American Humane program. NAD rejected criticism that some of Butterball’s certified practices might not fit what a consumer thinks is “humane,” for the following reason:

               “When an advertiser ties its claims to a clear and conspicuous third-party certification – a certification that is independent and based on scientific standards, enforced and audited by the certifier, with the origins of the seal clearly identified – consumers would reasonably understand the claim to mean that the advertiser’s practices are consistent with the certification, even if consumers do not necessarily know the specific standards that certification requires.”

In the One Health challenge, NAD rejected the argument that One Health was not an independent third party and agreed that its standards were scientific and audited. Case closed, right? Ah, but it wasn’t. NAD went on to find that:

“[I]t is reasonable for consumers to expect that a certification exceeds industry standards in a meaningful way. Consumers rely on certifications to differentiate products that have met a higher standard than prevailing industry practice in ways that cannot be readily verified by the consumer. Consumers are willing to pay above-average prices for a certified product because they understand the certified product to be above average as to the certified metric. Consumers therefore expect a certification to be meaningful – at a minimum, it should indicate that the certified product has met a standard beyond prevailing industry practice.”

So what happened to Butterball when NAD did not seem to care whether the program’s standards exceeded industry standards? And does it even make sense to impose such a meaning on a certification program? It seems to us there are lots of problems with where NAD appears to be headed. Consider a consumer in a grocery store looking at a bunch of chicken breasts, none of them certified. No doubt some of those chickens were raised by companies that pledged to comply with industry standards and actually complied with those standards; other chickens might have been raised by companies that pledged to comply with industry standards, but since those industry standards were voluntary, when push came to shove, they didn’t actually do it. Finally, some of those chickens may have been raised by companies with standards below typical industry standards. So how does a consumer who cares about how chickens were raised decide which one to select? A wide range of certification programs is well suited to the wide range of consumer attitudes. Suppose the consumer just wants to make sure the chickens weren’t mistreated; a certification program that promises that the producer actually complied with industry standards would work for that consumer. On the other hand, if the consumer wants to make sure the chickens were exceptionally well treated, then a certification program with higher standards might be appropriate. Our point is, why would a consumer automatically assume that the seal means better-than-average treatment? Isn’t the extra money the consumer is perhaps paying for the certified product mostly giving the consumer the reassurance that the chicken was actually treated in a manner consistent with the program’s standards? And what happens if a certification program with higher-than-average standards over time becomes very popular with consumers and a majority of producers sign on to the program? Is the program a victim of its own success because now its standards reflect typical industry standards? Does it have to raise its standards so some producers “flunk out”? None of this makes any sense to us.

Further, what are industry standards? In the Butterball challenge, NAD emphasized that the certification program audited producers. In One Health, the advertiser argued that its standards were higher than industry standards because it too audited for compliance, something that the industry-sponsored standard programs did not do. NAD, however, rejected that as evidence of a higher standard. Does that conclusion make any sense to chickens (or consumers)? If you were a chicken and had to make a choice, would you rather live on a farm that said it was complying with voluntary industry-sponsored standards or on a farm that was audited to make sure it was complying with those standards? And if you were a consumer who cared about that chicken, wouldn’t you be comfortable paying a bit more money when that chicken ultimately arrived at the store to know that it spent its life at a farm that was audited for compliance and had not just voluntarily pledged to be compliant? If only we could all live in a world where what mattered is what we say we will do and not what we actually do. But as we all know too well, the gap between those two things is often substantial. Isn’t the relevant metric here, for consumers who care about animals, how those animals are actually treated and not how the producer says it intends to treat them?

The One Health decision is being appealed to NARB. NARB has previously seemed to embrace the understanding of certification programs as reflected in the Butterball challenge. We hope they do so again.

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