On October 1, 2012, the Federal Trade Commission released its long-awaited revised Environmental Claims Guides, known as the “Green Guides.” The Commission staff adopted many of the approaches it had proposed a year ago, but it also has introduced some brand new concepts, which in this final version could raise serious questions about the Commission’s procedural integrity. Furthermore, the Green Guides suffer from ambivalence toward governmental, international, and scientific standards, which surfaces as a palpable tension between that which is scientifically factual and that which is subject to the misconceptions of the public because of the technical nature of the subject matter.
General Environmental Benefit Claims
The Commission restated its position that marketers should not make broad, unqualified general environmental benefit claims like “green” or “eco-friendly.” Based on consumer research the Commission conducted several years ago, consumers do not have a clear understanding of what such phrases mean absent specific context. Because of this, broad claims are difficult, if not impossible, to substantiate. This is based on the basic principle that advertisers are responsible for all reasonable interpretations of a claim.
If marketers do qualify their general green claims, they have to do so with specific environmental benefits. That is, they must make disclosures that specify what the green claim means.
When a marketer qualifies a general claim with a specific benefit, consumers understand the benefit to be significant. As a result, marketers shouldn’t highlight small or unimportant benefits.
Life Cycle Analysis
Yes, you heard right. Life cycle analysis. Contrary to the position taken by the FTC in 2010 when it introduced the proposed modifications to the Green Guides, the Commission has essentially adopted a Canadian-style life cycle analysis. It is disguised as a “trade-off” analysis. The Guides state that if a qualified general claim conveys that a product has an overall environmental benefit because of a specific attribute, marketers should analyze the trade-offs resulting from the attribute to prove the claim. So, if an advertiser claims that its plastic bottle is “green” because it uses less plastic, the FTC would want the advertiser to do an analysis that asks whether the new materials used to lessen the plastic content came from further away and thus had an overall negative impact on the environment. And if there were more attributes that made the bottle “green,” who knows how many other “trade-offs” would have to be considered. Thus, this is almost indistinguishable from a life cycle analysis to the extent that the FTC is saying an advertiser cannot make an attribute claim without taking into account economic and production factors as far up stream as transportation of raw materials.
The Final Guides generally reflect the original proposals from 2010. Marketers should have competent and reliable scientific evidence to support carbon offset claims. They should use appropriate accounting methods to ensure they measure emission reductions properly and don’t sell them more than once. Further, they should disclose whether the offset purchase pays for emission reductions that won’t occur for at least two years. Finally, they should not advertise a carbon offset if the law already requires the activity that is the basis of the offset.
Certifications and Seals of Approval
This is an area where the FTC has been focusing a lot of attention. Obsessed with the testimonial and endorsement guidelines, the Commission has infused the concept of organizational endorsements and material connections into the Green Guides to such a great degree as to be virtually impossible to apply in practice, except in the most obvious situations.
According to the FTC staff, seals or certifications can convey general environmental benefits. Therefore, marketers should not use environmental certifications or seals that do not clearly convey the basis for the certification. In addition, even if the seal does not explain the basis for the certification, it is up to the marketer to identify, clearly and prominently, specific environmental benefits in the advertising.
Going well beyond the proposed Green Guides from 2010, the FTC has once again infused its quasi-life cycle analysis/trade-off concept into the certification discussion. In the same way the FTC wants marketers to be doing a “trade-off” analysis even with specific attribute claims, the staff has recommended that marketers qualify certifications that cover many attributes by saying, “Virtually all products impact the environment. For details on which attributes we evaluated, go to [a website that discusses this product].” The marketer should make sure that the website provides the referenced information, and that the information is truthful and accurate. (By the way, do not be misled into thinking that this is a license to place qualifying language on a website; the FTC wants all qualifying language to appear at point of sale.)
Marketers who claim a product is compostable need competent and reliable scientific evidence that all materials in the product or package will break down into — or become part of — usable compost, safely and in about the same time as the materials with which it is composted. Marketers should qualify compostable claims if the product can’t be composted at home safely or in a timely way. Marketers also should qualify a claim that a product can be composted in a municipal or institutional facility if the facilities aren’t available to a substantial majority of consumers. Can’t we rely on governmentally determined definitions or those established by reputable scientific entities such as ASTM? Nope. The FTC does not believe they would constitute a reasonable basis because the science doesn’t comport with what some people think compostable should mean.
Marketers may make an unqualified degradable claim only if they can prove that the “entire product or package will completely break down and return to nature within a reasonably short period of time after customary disposal.” The staff has made clear that a “reasonably short period of time” for complete decomposition of solid waste products is one year. Based on science? Nope. Based on consumer understanding of what biodegradability means. Thus, because items destined for landfills, incinerators, or recycling facilities will not degrade within a year, unqualified biodegradable claims for them cannot be made.
In the context of “free-of” claims, the FTC has created a brand new construct for dealing the concept of “trace” levels of a substance. In the 2010 proposed Guides, the FTC recognized that “zero” might not have to mean “zero” in some instances, and it sought input on how it should approach the level of a substance that is de minimis. Rather than permitting marketers to focus their determination of what constitutes a “trace” level on governmental standards, such as the EPA or state regulatory bodies, the FTC has decided to come up with a three-part test that will almost certainly increase the costs for marketers seeking to make “free-of” claims. According to the new revised Guides, marketers can make a free-of claim for a product that contains some amount of a substance if:
- the product doesn’t have more than trace amounts or background levels of the substance;
- the amount of substance present doesn’t cause harm that consumers typically associate with the substance; and
- the substance wasn’t added to the product intentionally.
In particular, note how “trace” depends on what consumers “typically associate with the substance.” Thus, marketers must now not only substantiate that their product contains levels that scientifically would be considered “background,” but they must also figure out what consumers think about the substance and what harms they associate with it.
Marketers who claim that their product is non-toxic need competent and reliable scientific evidence that the product is safe for both people and the environment.
Ozone-Safe and Ozone-Friendly
It is deceptive to misrepresent that a product is ozone-friendly or safe for the ozone layer or atmosphere.
Marketers should qualify recyclable claims when recycling facilities are not available to at least 60 percent of the consumers or communities where a product is sold. The lower the level of access to appropriate facilities, the more a marketer should emphasize the limited availability of recycling for the product. Thus, the Guides create essentially a “sliding scale” approach, which on the surface seems reasonable, but is likely to be very difficult to administer in practice.
Marketers should make recycled content claims only for materials that have been recovered or diverted from the waste stream during the manufacturing process or after consumer use. Marketers should qualify claims for products or packages made partly from recycled material – for example, “Made from 30% recycled material.” Marketers whose products contain used, reconditioned, or re-manufactured components should qualify their recycled content claims clearly and prominently to avoid deception about the components.
Marketers shouldn’t make unqualified refillable claims unless they provide a way to refill the package. For example, they can provide a system to collect and refill the package, or sell a product consumers can use to refill the original package. If recycling facilities for a product are not available to at least 60 percent of consumers or communities, a marketer can state, “This product may not be recyclable in your area.” If recycling facilities for a product are available to only a few consumers, a marketer should use stronger qualifying language: “This product is recyclable only in the few communities that have appropriate recycling programs.” Again, the FTC is trying to create some sort of “sliding scale” approach with the intensity of language, even though it has no idea whether it would make any difference to consumers.
Made with Renewable Energy
The Guides concerning “renewable energy” are generally consistent with the proposals the FTC made in 2010. Marketers shouldn’t make unqualified renewable energy claims based on energy derived from fossil fuels unless they purchase renewable energy certificates (RECs) to match the energy use. Unqualified renewable energy claims may imply that a product is made with recycled content or renewable materials. One way to minimize the risk of misunderstanding is to specify the source of renewable energy clearly and prominently (say, “wind” or “solar energy”).
Marketers should not make an unqualified “made with renewable energy” claim unless all, or virtually all, the significant manufacturing processes involved in making the product or package are powered with renewable energy or non-renewable energy, matched by RECs. Marketers who generate renewable energy – say, by using solar panels – but sell RECs for all the renewable energy they generate shouldn’t claim they “use” renewable energy. Using the term “hosting” would be deceptive in this circumstance.
Made with Renewable Materials
Unqualified claims about renewable material may imply that a product is recyclable, made with recycled content, or biodegradable. One way to minimize that risk is to clearly and prominently identify the material used, and explain why it is renewable.
Marketers should qualify renewable materials claims unless an item is made entirely with renewable materials, except for minor and incidental components.
Marketers should clearly and prominently qualify a claim that a product or package is lower in weight, volume, or toxicity to avoid deception about the amount of reduction and the basis for comparison. For example, rather than saying the product generates “10 percent less waste,” the marketer could say the product generates “10 percent less waste than our previous product.”