FTC Issues Revisions to Its Guides for Use of Environmental Marketing Claims

by Wilson Sonsini Goodrich & Rosati

On October 1, 2012, the Federal Trade Commission (FTC) provided important new guidance concerning environmental marketing claims, issuing revisions to its Guides for the Use of Environmental Marketing Claims (the "Green Guides"). The Green Guides, which apply to marketing directed at both consumers and businesses, were last updated in 1998 and had become outdated. The FTC's summary of the revised Green Guides is available at http://www.ftc.gov/opa/2012/10/greenguides.shtm, and the revisions themselves are available at http://www.ftc.gov/os/2012/10/greenguides.pdf.

The revised Green Guides are intended to help marketers avoid unfair or deceptive environmental marketing claims. The revisions address broad, unqualified "green" claims and more-recently adopted environmental terms, such as "carbon offsets," "free-of," "non-toxic," "renewable energy," and "renewable materials." The revisions also provide updated recommendations for the use of other environmental claims, including "compostable," "degradable," "ozone-safe," "recyclable," and "recycled content." The FTC explicitly declined to address "organic," "sustainable," and "natural" claims in the revised Green Guides.

While the Green Guides do not serve as law, they offer meaningful insight into the FTC's view and provide a basis for FTC enforcement. In 2012, the FTC brought at least five actions against companies alleged to have violated the Green Guides by making deceptive or unsubstantiated environmental claims. The FTC likely will step up enforcement of environmental claims under the revised Green Guides.

Broad, Non-specific "Green" Claims

The revised Green Guides make clear that marketers generally should avoid broad, unqualified green claims such as "environmentally friendly" or "eco-friendly." The FTC believes that such claims are likely to suggest that a product has specific and far-reaching environmental benefits when in fact few products, if any, have all the attributes consumers perceive from such claims.

Certificates and Seals of Endorsements

The revised Green Guides introduce a new section concerning the use of certifications and seals of approval. The revisions acknowledge that the use of a certification or seal may be considered an endorsement, which should adhere to the FTC's Endorsements Guides. For example, if in the course of obtaining certification, the marketer compensated the certifier more than is necessary for the certification process, the marketer should disclose that fact. In addition, the revisions recommend that marketers refrain from using certifications or seals that communicate a general environmental benefit because it is highly unlikely that such a claim can be substantiated. However, marketers can use clear and prominent qualifying language to convey that the general environmental benefit indicated by the certification or seal pertains to a specific quality. For instance, where an "EarthSmart" seal—known for certifying a product's chemical emissions—is placed on product packaging, the use of the seal would be considered deceptive unless the marketer displays appropriate qualifying language, such as "EarthSmart certifies that this product meets EarthSmart standards for reduced chemical emissions during product usage."

"Free-Of" Claims

Under the revised Green Guides, it is deceptive to misrepresent that a product, package, or service is "free of," or does not contain, a substance. A "free-of" claim likewise would be deceptive if one harmful substance is removed for the sake of the claim but replaced with a different, similarly harmful substance. However, the revisions state that a "free-of" claim would not be problematic if the product at issue uses a level of the substance that is no more than that which would be found in background levels, if the substance's presence does not cause the harm associated with the substance, and if the substance is not intentionally added to the product.

Renewable Energy Claims

The revised Green Guides discourage a marketer from claiming that its product (or service) was manufactured (or rendered) without fossil fuels or electricity derived from fossil fuels. The revisions recommend that marketers typically qualify such claims, potentially by specifying the source of renewable energy (e.g., wind or solar energy). The revisions provide some guidance with regard to claims involving renewable energy certificates, which are certificates representing the renewable attributes associated with the production of renewable energy. For example, the revised Green Guides state that it would be deceptive for a marketer to represent that it uses renewable energy if the marketer generates renewable energy but actually sells the certificates for all of that energy.

Carbon Offset Claims

Carbon offsets are credits or certificates attributed to quantified greenhouse gas emission reductions resulting from various types of projects, such as methane capture at landfills. Carbon offsets are purchased by entities seeking to reduce their "carbon footprints" by offsetting the greenhouse gas emissions associated with their activities. The revised Green Guides instruct sellers of carbon offsets to use "competent and reliable scientific and accounting methods" for measuring claimed emission reductions. The revisions encourage marketers to disclose when emission reductions will not occur for two years or longer into the future, and advise marketers not to imply that offsets already have reduced emissions or will do so in the near future if such reductions will occur at a significantly later date. The revisions also discourage the use of carbon offset claims when the underlying emission reduction or activity causing the reduction is required by law.

Practical Tips for Marketers Making Environmental Claims

  • Update "green" marketing practices in light of the revised Green Guides. Become familiar with the revised Green Guides and implement the recommendations as soon as possible. The revisions are effective immediately, without any grace-period delay.
  • Use environmental claims that are specific. The revised Green Guides require marketers to use claims that are specific and unambiguous with regard to the nature and scope of the environmental benefit. These recommendations apply not just to the situations specified in the revised Green Guides, but to all claims, including those using the terms "sustainable" and "natural."
  • Maintain records to substantiate all claims. Normal advertising laws apply to environmental claims, including the requirement for businesses to be able to substantiate all claims before the claims are made. As a result, prior to publishing any environmental claim, conduct reasonable diligence to confirm its validity and then maintain all appropriate records.
  • Develop and follow internal marketing guidelines to ensure compliance with the Green Guides. Establishing and adhering to an effective review protocol for all environmental marketing claims will limit the potential for problems. Should regulators question your company's green marketing practices, evidence of a documented and followed protocol also may go a long way in demonstrating your company's genuine efforts to engage in responsible green marketing.
  • Follow applicable advertising requirements in addition to the Green Guides. Marketing activities that include environmental claims may be subject to requirements mandated by other federal agencies (for example, the USDA's National Organic Program).
  • Leverage FTC resources concerning the revised Green Guides. The FTC has released a number of education resources designed to help marketers understand the revised Green Guides. These resources include the following: 1) Environmental Claims - Summary of Green Guides, a four-page summary of the changes in the Green Guides; 2) The Green Guides, a video explaining highlights of the changes; and 3) A new page on the FTC Business Center that includes links to key legal documents.

Further Guidance

For further guidance on the Green Guides or environmental or "green" marketing, please contact Aaron Hendelman, John Slafsky, Lydia Parnes, or Matt Kuykendall at Wilson Sonsini Goodrich & Rosati.

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.

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