At Last!! US & ISO Green Guide Updates Done.
And that’s not all.
Go ahead. Ask us what’s new and exciting.
The big news, of course, is that on October 1, 2012, the Federal Trade Commission (“FTC”) finally released its final revised Guides for the Use of Environmental Marketing Claims (“US Guide”). The revisions went into effect on October 11, 2012.
That wasn’t all though. The granddaddy of international green guidelines, ISO 140211, was also updated on December 15, which may affect the countries that look to those guidelines for their rules. Canada is one of them, as the Competition Bureau’s guide, Environmental Claims: A Guide for Industry and Advertisers (“Canada’s Guide”) is based on ISO 14021. Further steps would need to occur before our guidelines reflected the ISO 14021 amendments. The 2010 Green Claims Guidance of the UK Department for Environment, Food and Rural Affairs (“UK Guide”) also draws on ISO 14021. It already contemplated and referenced the ISO 10421 amendments.
Brazil has extensively revised its green provisions as well. They went into effect in August 2011. New Zealand’s self-regulator issued a revised Code for Environmental Claims, coming into force January 2013.
The final guideline news we’ll mention is Australia’s new Carbon Price Claims: Guide for Business. This was introduced on November 15, 2011 (and updated in May 2012) in light of the carbon-pricing regime that went into effect in Australia on July 1, 2012. What’s a carbon-pricing regime? It requires some large businesses to buy carbon credits to offset their emissions. That means their costs will go up and some consumer prices will also go up as the costs are passed down the chain. Having a vivid imagination, Australia’s false advertising regulator thought some companies might want to raise their prices and (falsely) blame the full hikes on the carbon price. Or perhaps scare consumers into thinking that electricity prices were going to go sky high so they should waste no time in buying low-carbon energy alternatives like solar panels. The Guide was brought in to head them off at the pass.
The Skinny: What's New?
So Who Now Has the Strictest Standards in the Land (World)?
Where the US Guide is Less Extensive
US Coming on Board with Other Guidelines
Green Advertising Practices Have Changed
Brazil's New Green Guidelines
Canada's Position on Life Cycle
The Skinny: What's New?
1. US Guide – Most notably:
Six sections have been added: Carbon Offsets, Certifications and Seals of Approval, Free-of, Non-toxic, Made with Renewable Energy, and Made with Renewable Materials.
Six sections have been substantively modified: General Environmental Benefit, Compostable, Degradable, Ozone, Recyclable, and Recycled Content. (Certain non-substantive changes were made as well for purposes of simplification and easier reference.)
2. ISO 14021 – Most notably:
Definitions have been added for “biomass”, “greenhouse gases”, “life cycle GHG emissions”, “offsetting”, “sustainable development” and “traceability”.
Direction has been given on the terms “renewable”, “renewable energy”, “sustainable”, “product carbon footprint”, and “carbon neutral”, such as: how to use these claims, required qualifications, and/or evaluation methodology to substantiate them.
The new provisions in Brazil’s self-regulatory code include green guideline basics seen everywhere – truth and accuracy, verifiability, the need to consider the whole life cycle, etc., but also address corporate social responsibility and sustainability advertising. See the side bar box, which addresses Brazil’s guidelines in more detail.
4. New Zealand
So Who Now Has the Strictest Standards in the Land (World)?
It depends which issues you’re looking at, but the US is the frontrunner on strictness on a number of important issues. To put matters into perspective, we highlight below some comparisons between the new US Guide, Canada’s Guide, ISO 14021 and certain other guidelines, so you can get a slightly larger sense of how issues may be handled in various places.
(Obvious note: we have only focused on certain aspects of the claims referenced below, so please check with local counsel and see the relevant guidelines themselves.)
Where The US Guide Is Stricter or More Exacting in Specifics
So far as we’ve seen, the US Guide is the only green guide providing the following:
a. Degradable: To be called “degradable” (without qualification), products entering the solid waste stream (e.g., in contrast with liquids) must completely decompose into elements found in nature within a specified time period (one year) after customary disposal. If beyond a year, the US Guide says you should specify the rate and extent of degradation, among other things.
Having said that, Canada’s Guide, ISO 14021 and others such as Finland’s, focus on an aspect of degradability that the US Guide doesn’t. These guides state that if a product/package/component releases substances in concentrations that are harmful to the environment when it degrades, it shouldn’t be marketed as “degradable” without an appropriate qualification. With respect to liquids, Canada’s Guide provides the example that a biodegradable claim for cleaners with phosphates that can promote algae growth (which can wipe out ecosystems in waters) can be deceptive. (Note that the UK’s Department for Environment, Food and Rural Affairs put out specific Guidance on “Biodegradable” and other environmental claims in the Cleaning Products Sector.)
b. Recyclable: To be called “recyclable” (without qualification) under the US Guide, recycling facilities have to be available to a “substantial majority” or “60%” of the population where the product is sold. That’s more than the “reasonable proportion” required under IS O 14021, which has been interpreted as at least “50%” in Canada’s Guide. New
Zealand uses “most”, which is apparently also the position in Australia.
c. Compostable: To be called “compostable” (without qualification) under the US Guide, commercial composting facilities must be available to “60%” of the population, where the item is sold, versus “50%”, “most” or a “reasonable proportion” elsewhere.
d. Renewable energy: Under the US Guide, these claims must disclose the type of renewable energy - e.g., solar, etc., as well as the percentage if it is less than all or virtually all. Other jurisdictions just require the percentage where it is less than 100%, not the type of energy.
On the other hand, the US Guide may be a little more liberal, specifically allowing a “made with renewable energy” claim when you’ve actually used fossil fuel energy, but purchased a renewable energy certificate to match the amount of fossil fuel used. We haven’t seen that elsewhere as yet.
e. Renewable materials: With “renewable material” claims, the US Guide recommends disclosing what the material is AND explaining how it is renewable - in addition to disclosing the percentage of renewable material. (Other guidelines just require the percentage.)
This is interesting. The FTC found through consumer perception studies that consumers may understand “made with renewable materials”to mean that the product is made with recycled content, recyclable and/or biodegradable. It therefore set out sample disclosures that could head off that misunderstanding – i.e., “Our flooring is made from 100 percent bamboo, which grows at the same rate, or faster, than we use it.” Or even more elaborately, “Our packaging is made from 50% plant based renewable materials. Because we turn fast-growing plants into bioplastics, only half of our product is made from petroleum-based materials.”
f. Certificates and seals of approval: As consumers have come to trust companies’ own claims less and less, certifications by trusted, independent parties have become increasingly important. However, these can also be confusing for consumers. Which seals and certificates are meaningful and trustworthy, which are less so, and what attributes do the trumpeted certifications cover?
The US Guide has the most detailed requirements of any guidelines we’ve seen on this issue, aiming to obliterate the ambiguity and deceptiveness that has had consumers throwing up their hands in confusion. Was the seal awarded by an independent, authoritative party (most trusted), a trade association (often less trusted) or the company itself (query how many of these we will even see going forward)? This is an issue that has spawned litigation as well – e.g., the class actions launched against SC Johnson in connection with its Greenlist™ logo, which was developed by the company itself.
Does the company have a material connection with the entity whose seal or certificate displayed, such that its credibility or weight might be affected? Which certifications are based on solid, consensus-based and exacting requirements as opposed to being not-so-rigorous endorsements by trade associations or others? Which environmental aspects of the product were actually evaluated and what was the specific basis for a certification? Here it also gets interesting. Anticipating the obvious question of, ‘how do you explain the basis of complex, multi-attribute certifications on a little label’, the FTC allows you to refer consumers to a website for the details. Don’t get excited, though. Even though you can reference a website, you would still have to accompany the seal with a statement like, “Virtually all products impact the environment. For details on which attributes we evaluated, go to [a website that discusses this product.]”
The FTC has tackled all of these potential devices for ambiguity and deception - and more, it provides numerous recommendations and examples. It also spells out that, use of the name, logo or seal of approval of a third-party certifier or organization may be an endorsement, which should meet the criteria for endorsements provided in the FTC’s Endorsement Guide. The name of the new game, then, is to disclose, disclose, disclose.
On this front, ISO 14021 and Canada have been left a little pale, with only a few general principles laid out, mainly under the part dealing with “symbols”.
Where the US Guide is Less Extensive
a. Carbon Claims: While the US Guide focuses on carbon offsets, other guidelines cover not only that but also “carbon neutral” and similar claims – namely, New Zealand, Australia, Norway, the UK and ISO 14021.
Guidelines in the latter jurisdictions specify what you need to put in your ads by way of qualification – for example, identifying: i) which elements of the life cycle you have “offset”; ii) which “Scopes” ofemissions have been offset (Scopes 1, 2 and/or 3, under the Greenhouse Gas Protocol); iii) what offset scheme you’ve used; and/or iv) sources of further information about the offset scheme.
b. Public Access to Your Substantiation: The US Guide doesn’t recommend, as do ISO 14021 and jurisdictions like Canada and the UK , that companies either release to the public information that verifies a claim or at least provide access to the information on request.
Indeed, ISO 14021 and the UK add the strict kicker that if your claim relies on confidential information for its verification, you shouldn’t make the claim. Canada’s Guide doesn’t go quite that far. It says that if your claim is based on confidential information, you should be prepared to make the substantiation available to a regulator, if asked.
c. Encouraging Bad Environmental Practices: The US Guide doesn’t prohibit ads from showing scenes that would encourage pollution or harm to the environment, as some European guidelines and Brazil’s guidelines do.
d. Making Consumers Feel Guilty: The US Guide doesn’t prohibit, “techniques which manipulate consumers’ emotions or conscience,” as Norway’s guidelines do. Examples of unfair claims in Norway are, “Think of the polar bears: buy energy-efficient insulation.” and “Drink coffee with a better conscience.”
e. Guidelines for Specific Products: The US Guide doesn’t include special guidelines directed to certain product categories, as some other countries have done for vehicles, electricity, energy for house heating, decorative coatings, growing media, greeting cards and cleaning products, for example.
f. Sustainability Claims: The FTC declined to delve into claims of “sustainability.” Not so in some other guides. ISO 14021 was clear in its original form that no claim of achieving sustainability should be made. The amendments to ISO 14021 say that no “unqualified” claim of sustain-ability should be made (though without offering any details on the kinds of qualifications that would be appropriate).
Granted, “sustainability” is a bit of a thicket. A good illustration comes from a 2008 case in which Cotton USA was told by the UK selfregulatory Advertising Standards Authority (“ASA”) not to call its cotton “sustainable”. The advertiser argued that its cotton was natural, biodegradable and renewable and met the criteria of sustainability put forward by a number of major organizations (including the UN) – namely, economical viability, environmental protection and social responsibility.
The challenger was not having any of it and submitted that cotton was a pesticide and insecticide-intensive crop that could seriously deplete groundwater; and, furthermore, that cotton growers in West Africa were having a terrible time because of subsidies granted in the US cotton industry.
The advertiser came back saying that current pesticides were more targeted, less toxic and less persistent in the environment, that the vast majority of cotton was genetically modified, which reduced its need for intensive agriculture, that cotton was not water-intensive, and, furthermore, that there were a number of reasons the cotton growers in West Africa were having a terrible time apart from US subsidies. Of course, there was a division of scientific opinion on a lot of these issues and ASA wasn’t sure how clear it was that genetic modification of the cotton, which had allowed some of these benefits, wasn’t harmful – etc., etc. One can see why the FTC would say – OK, this is a quagmire; we’re not going there (at least yet).
US Coming on Board with Other Guidelines
Trade-Offs - Net Environmental Benefit
The US has now come on board with most other guidelines in requiring you to consider whether an improvement you’ve made on one environmental front (e.g., reducing the amount of petroleum-based plastic you use) has worsened other environmental impacts your product has. Let’s not paraphrase this important wording, which is: “If a qualified general claim conveys that a product is more environmentally beneficial overall because of the particular touted benefit(s), marketers should analyze trade-offs resulting from the benefit(s) to determine if they can substantiate this claim.” (US Guide, §260.4(c); emphasis is ours.)
Canada’s Guide provides, among other related principles, that, “It is not permissible to shift the environmental burden from one stage of a product's life to another and then make a claim concerning the improved stage without considering whether there is, in fact, a net overall environmental benefit." (Emphasis is ours.) It also incorporates the ISO 14021 provision saying that claims must not only be true for the finished product, but must also consider all relevant aspects of the life cycle, “to identify the potential for one impact to be increased in the process of decreasing another.”
Trade-offs…shifts of environmental burden…increasing one impact while decreasing another – what they are asking is whether the change you’re touting really yields a net environmental benefit or whether your product is now LESS environmentally friendly.
And by the way, your general claim may still be sunk if misleading in the larger picture
In most places, even if the specific change you’ve made hasn’t resulted in any particular environmental downsides itself, you could still get into trouble saying, “Eco-friendly: 30% less plastic”. When? Say the materials you use – and have always used – are sourced from incredibly polluting plants and shipped from overseas when everyone else sources them locally, you pillage local water supplies that are scarce, and commit all sorts of other environmental sins. In that scenario, do you think that giving a specific attribute (30% less plastic) to explain your general “ecofriendly” claim will save your general claim from being misleading?
Green Advertising Practices Have Changed
The changes discussed above are part of the rush of activity we’ve seen around the world over the last five to seven years. At least 17 countries and two international organizations have introduced or updated their green advertising provisions (sometimes product or issue specific) since 20052. These have certainly influenced the way green claims are being made in the marketplace these days, although not so much that we can’t still find a LOT of cases to tell you about in our next article “Green Cases Around the World”.
ISO 14021 Amendments Crawl Out of a Lengthy Revision Process
The centerpiece of international green guidelines for advertisers recently underwent its first amendments in over a decade, finally being nailed down on December 15, 2011. These, of course, are the guidelines of the International Organization for Standardization [ISO], called ISO 14021:1999, Environmental Labels and Declarations – Self-declared environmental claims (“ISO 14021“).
ISO 14021 has spread its seeds all over the world. Canada’s own Environmental Claims: A Guide for Industry and Advertisers (“Canada’s Guide”) was squarely based on and incorporated ISO 14021. The International Chamber of Commerce’s (“ICC”) International Code of Environmental Advertising incorporates it and the UK’s 2010 guidelines from the Department for Environment, Food and Rural Affairs (“UK Guide”) refers to it as well, among others.
Why Should You Care About ISO 14021?
Even if your jurisdiction’s regulator or self-regulator doesn’t refer to ISO 14021, it is a great source of best practices in using and substantiating green claims.
The Guts of the Amendments: Focus on “Renewable” and “Carbon” Claims
Similarly to the US Guide, what the amendments to ISO 14021 did was bring in brand new provisions to address some more modern claims and concepts. Thus, ISO 14021 now includes (in addition to two new symbols, which aren’t particularly exciting ) direction on how to use and qualify the terms “renewable”, “renewable energy”, “sustainable”, “product carbon footprint”, and “carbon neutral” as well as direction on methodology to evaluate them. It also adds a number of new definitions – for “biomass”, “greenhouse gases”, “life cycle GHG emissions”, “offsetting”, “sustainable development” and “traceability.”
Let’s look at some highlights:
1. Renewable Materials
Think bamboo as a good example. ISO 14021 defines “renewable” in relation to materials as biomass from a living source that can be continually replenished. It also contains an important kicker: when virgin materials are the subject of the claim, they have to come from sources that are verified to show they are replenished at a rate equal to or greater than the rate of depletion.
If materials are less than 100% renewable, allowing for de minimus amounts of non-renewable materials, you have to disclose the percentage. As well, the percentage for products and packaging must be stated separately – they can’t be aggregated.
2. Renewable Energy
Renewable energy is defined as energy coming from sources that are non-exhaustible or capable of continuous replenishment. Examples given (non-exhaustively) are sunlight, wind-power, biomass and geothermal. NOTE, that the amendment goes out of its way to exclude energy sources associated with movements of water – unless the sources are managed in accordance with the principles of sustainable development. (Operations that interfere with aquatic life, for example, aren’t desirable.)
As in the US, unqualified claims for renewable energy can only be made when 100% of the energy supply is renewable (although the US Guide generously allows it as well if “virtually all” is renewable). Otherwise, the percentage has to be stated.
ISO 14021 also warns that you need to be especially careful with claims about products or processes that use energy from the grid and you want to claim that they contain a percentage of renewable energy.
The amendments to ISO 14021 re-emphasize that advertisers should NOT make an unqualified claim of “sustainable” or “sustainability”. So saying that you are selling “sustainable bags” or that your business is sustainable, and leaving it at that, is out.
4. Carbon-related Claims
a. “Carbon Footprint” (for a product)
Lots of companies like to make claims about how they are reducing greenhouse gas emissions. If you want to talk about your product’s “carbon footprint” (essentially how much carbon its existence is responsible for), ISO 14021 nails down a formal definition. The carbon footprint is the net amount of life cycle greenhouse gas emissions, including long term net removals of CO2. ISO 14021 also specifies how a carbon footprint should be evaluated, not surprisingly referencing the applicable ISO standards – i.e., ISO 14040 series, ISO 14064 and product category rules as specified in ISO 14025.
Carbon footprint, of course, is just one of the environmental impact categories that is considered in a life cycle assessment. Note that ISO 14021 focuses on the carbon footprint of products rather than companies.
b. “Carbon Neutral”
“Carbon neutral” claims were really on the rise, although it seems a bit less so recently. In any event, under ISO 14021, a carbon neutral product has a carbon footprint of – guess…! Yes, zero.
To call a product “carbon neutral”, you have to make sure that ALL greenhouse gas emissions from ALL stages of the life cycle have been reduced (or removed altogether if you’re doing that well) and/or accounted for through a system of offsets or credits or by other means.
“An unqualified claim of “carbon neutral” shall not be made.”
So sayeth Clause 22.214.171.124. Under this provision, carbon neutrality claims must always include a statement that the product carbon footprint is zero, thus explaining explicitly what carbon neutral means, and a clear statement about which elements of the product lifecycle have been offset. No being vague about that. And that’s not all. ISO 14021 wants ads to detail what has been offset, which offset scheme was used and how one can get further information to explain the offset program.
Looking for standards to assess your product’s carbon neutrality? Look at ISO 14040 series and ISO 14064.
Brazil’s New Green Guidelines
Brazil’s new green self-regulatory guidelines came into effect on August 1, 2011 as, Standards for Advertising Containing Appeals of Sustainability (“Guidelines”).
Not surprisingly, the Guidelines include some of the basics found in most green guidelines – e.g., claims must be verifiable, precise and accurate and the touted benefit has to be significant in terms of the total impact of the product/service on the environment throughout its life cycle.
Don't Encourage Disrespect for the Environment
The Guidelines also have some provisions we don’t see much in North America, although you do in Europe. Basically, ads shouldn’t directly or indirectly encourage bad environmental behaviour – for example, creating pollution (whether of air, water, forests, other natural resources, cities or noise), degrading flora, fauna or other natural resources, or wasting resources. An extreme example of the type of ad meant to be discouraged might be one showing an SUV racing through a forest and trampling plants, with the driver dumping garbage out the window into the creek as he drives.
The approach taken by the above provisions – i.e., wanting ads to influence behaviour as opposed to just not being deceptive – is akin to what is often done in guidelines relating to alcoholic beverage advertising in Canada (e.g., don’t show people consuming alcohol and doing tasks requiring skill) or advertising to kids (e.g., don’t show kids consuming enormous portions of food that’s bad for them).
Corpoate Sustainability Ads
Brazil’s Guidelines also have their eye on companies that advertise about their own responsible and “sustainable” conduct. If they talk about their efforts, they have to have already done what they are talking about or, if they’re talking about what they’re going to accomplish in the future, they have to disclose what they’re doing to realize that. (Clause 1, Concreteness).
What's the Overall Impact of the Business?
One provision that might be interesting in its application is Section 6, dealing with “relevance”. This requires the environmental benefit touted to be significant in terms of the overall impact that the business (or the brand, product or service, as the case may be) has on society and the environment throughout their process and cycle, from production and marketing to use and disposal. We will look forward to seeing how the new guidelines affect green advertising in Brazil, and how and whether other Latin American countries will follow suit.
Canada’s Position of Life Cycle
The FTC struggled with some legitimate issues when debating how and whether to incorporate life cycle provisions into the US Guide. Canada’s Guide, however, has for some time (like most guidelines around the world) made consideration of a product’s life cycle a central issue in environmental claims. What exactly does it require? And what guidance does it provide on determining the net environmental benefit it also expects?
What Does "Considering" the Life Cycle Entail?
Right upfront, Canada’s Guide states that, “A principle of environmental claims is consideration for the life cycle of the product.” (Clause 3.3) If you are having visions of elaborate accounting exercises being required, don’t panic. As Canada’s Guide says, “CAN/CSA-ISO 14021 does not require a full life cycle analysis to be carried out to verify an environmental claim, but it does require consideration of the life cycle of the product.”
What’s the difference between an “analysis” and “consideration?” Although the terms aren’t defined in Canada’s Guide, life cycle analysis generally refers to the type conducted under life cycle analysis/assessment protocols that involve specific measurements of impacts and detailed inventory analysis.
“Consideration” is obviously less than that – although unfortunately there isn’t a lot of detailed guidance on what it entails (except with certain claims like recovered energy and reduced energy, as discussed below). What Clause 5.9 says is that, “Environmental claims should be based on the best available information in each life cycle phase of the product to assess the net environmental benefit associated with a claim.”
Exception - When Analysis Should Be Done
One situation in which the Guide does refer to a life cycle “analysis” is where a sustainability claim is made. “A claim about a product’s sustainability requires life cycle analysis and cannot be based on a single attribute of the product such as how it was managed and extracted.” (Clause 4.6)
Net Environmental Impact
As indicated above, Canada’s Guide says that, “It is not permissible to shift the environmental burden from one stage of a product’s life to another and then make a claim concerning the improved stage without considering whether there is, in fact, a net overall environmental benefit.” It also incorporates the ISO 14021 provision saying that claims must not only be true for the finished product but must also consider all relevant aspects of the life cycle “to identify the potential for one impact to be increased in the process of decreasing another.”
The words “in the process of” decreasing another and reference to “shifting” the environmental burden from one stage of the life cycle to another suggest that you only need to identify a negative environmental factor that “results from” whatever you are doing to make the “improvement” (at least under this provision). An example given is using a gas for refrigeration that is non-ozone depleting, but makes the refrigerator less energy efficient (which apparently happens with some of them). If you make a claim about the non-ozone-depleting gas, the example says, you must either verify the net benefit OR clearly state the reduction in efficiency. (Canada’s Guide, Clause 5.9; emphasis is ours.)
Other principles may require you to have a broader look, however. What if – quite apart from the new gas, which hasn’t introduced a particular environmental downside – the metal used in your refrigerator is sourced from an operation in Nigeria that poisons all the local rivers and competitors are all using recycled material because it’s easy to do, and you are a terrible environmental performer in all other ways. Can you still say: “Environmentally friendly: non-ozone-depleting gas?” You may well still be vulnerable to attack under general misleading advertising principles of material non-disclosure, among others.
Even Stricter Elsewhere
Note how some countries get even more explicit here. Under Finland’s guidelines, for example, a general statement like “Environmentally friendly” can only be used if a product, “has considerably less environmental impact during its entire life cycle ‘from cradle to grave’ than other products in the same product group.” So, good luck with that.
More Guidance on Net Environmental Benefit
There are some claims where Canada’s Guide gets more specific on net environmental impact.
For example, with claims that your product is made with, or you are selling, “recovered energy” (energy that would have otherwise been wasted or dissipated, but instead is recovered and used - think cogeneration, for example), Canada’s Guide instructs you first on how to calculate the recovered energy (Clause 10.6) and then says that the amount of energy recovered has to be greater than the energy used to power the recovery process itself. It also requires adverse effects on the environment resulting from the production of the energy from waste to be “managed and controlled”. By way of example, Canada’s Guide says that “recovered energy” claims shouldn’t be made for energy produced from agricultural waste if the energy used to transport and process the waste exceeds the energy produced from the waste.
Clause 10.10 provides the same principles for reduced resource use claims, including how to calculate relevant quantities. The example given here is a new process enabling an appliance to be made from thinner and lighter sheets of steel. The downside is that production of the thinner sheets increases the energy required in the process. In this case, the recommended claim is, “This product has reduced its use of steel by X% for a net environmental benefit, although energy used in production was increased by Y%.”
ISO 14021:1999, Environmental Labels and Declarations - Self-declared environmental claims (Type II environmental labeling)
2012 - US; 2011 – Brazil and ISO 14021; 2010 – UK , Costa Rica and International Chamber of Commerce; 2007-2009– Canada, Greece, Ireland, Malaysia, Singapore, the Netherlands, Norway, Australia, New Zealand, Finland, France, Hungary; 2005 – Denmark and Iceland.