QuickCounsel

Green Advertising: The FTC Green Guides

Summary Substantiation Comparative Claims Environmental Benefit Recycled Content Degradable Reduction of Carbon Footprint Additional Resources Rate this QuickCounsel

Summary

The FTC issued its Green Guides (16 CFR Part 260) in 1992 and updated them in 1998 (Green Guides). The Green Guides are agency interpretation of the application of Section 5 of the FTC Act, which prohibits deceptive acts and practices in commerce, to environmental claims in a company's advertising and marketing. Although the Green Guides focus on product claims, the principles they outline are also applicable to evaluating other claims made in a company's marketing materials, or in its citizenship and social responsibility reports, about the environmental performance of the company's products, services or operations. In addition to FTC oversight, advertising claims can also be pursued by states attorneys general under equivalent state legislation and by competitors under Section 43(a) of the Lanham Act, 15 U.S.C. 1125(a) and state unfair competition or unfair business practices statues.

Under the Green Guides an environmental claim is any claim about any environmental attribute or aspect of a product (or component), packaging or service. It includes claims made in writing or through use of symbols or logos. Both claims made on the product or its packaging itself and claims made in advertising or marketing materials are covered. The following is a summary checklist for rules laid out in the Green Guides.

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Substantiation

Environmental claims, like other advertising claims must be factually correct and substantiated by competent and reliable evidence. This evidence must be available at the time the claim is made. Claims must also be qualified as necessary to prevent the claim from being false, misleading, or deceptive.

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Comparative Claims

Comparative claims should make clear whether comparison is being made to previous versions of the product or to competitive products. Examples are claims of reductions in the weight, volume or toxicity of a product or its packaging. Claims that a product is "environmentally preferable," are another example of a comparative claim. Substantiation for a claim of "environmentally preferable" can sometimes be based on a lifecycle analysis of the product, or on a third party performance rating that is disclosed in the claim. Otherwise, the claim should be qualified to refer to the specific attributes that can be substantiated as making the product environmentally preferable.

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Environmental Benefit

Unqualified claims of general environmental benefit, such as "environmentally friendly", "good for the environment" "environmentally safe" or "green," should be avoided unless all material claims implied by use of the term in context can be substantiated. Otherwise, these terms, if used, should be qualified to specify a particular attribute or aspect for which the claim can be substantiated, and the claim as made must not be deceptive in context.

Claims of environmental benefit that are accurate as stated and substantiated can still be misleading or deceptive if they are overstated in context. Examples:

• "50% more recycled content than before" when increase was from 2% to 3%.
  
  
• "Environmentally friendly because it was not chlorine bleached, a process that has been shown to created harmful substances", when bleaching process used released significant quantities of other harmful substances.
  
  
• Trash bag labeled "recyclable", when trash bags ordinarily will not be separated out at landfill or incinerator for recycling but disposed.

Recyclable

Claims that a product is recyclable (including use of a recycling symbol) should:

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Recycled content

Claims of "recycled materials" or other claims of recycled content should be qualified to indicate the percentage of recycled content, by weight, if less than 100%. If pre-consumer recycled content is used, substantiation is needed that these materials would otherwise have entered the solid waste stream.

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Degradable

Claims of biodegradable, degradable or photodegradable should be qualified to indicate the rate and extent of degradation in the environment in which the product or packaging is typically disposed, unless it can be substantiated that the product or package to which the claim refers will completely break down and decompose into elements found in nature within a short period of time after customary disposal.

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Reduction of Carbon Footprint and Use of Voluntary Offsets

The FTC has yet to issue guidance in these two important areas. However, it is clear that claims that a company has reduced its carbon footprint must be supported by competent and reliable evidence. Claims based on voluntary source reduction efforts by the company also should be qualified as necessary to indicate to which portion[s] of the company's operations the claim refers and the base year or base period used in the comparison. Any portion of the reduction that is attributable to normal business operations (e.g. sale of a business unit) should be disclosed or removed from the calculation. Claims that the reductions have been "certified" by a third party organization should be qualified as necessary to avoid overstatement about the activities of the certification organization.

Reduction claims based on purchase of voluntary offsets raise additional issues, including whether the projects underlying the offsets are surplus (i.e. would have happened in any event), verifiable, enforceable and permanent. Disagreement also continues to exist as to whether renewable energy certificates (REC's) ought to be considered as offsets, since, among other factors, it is typically difficult to quantify the underlying reductions.

For further information, contact Bonni Kaufman at Bonni.Kaufman@hklaw.com or Pat Goughan at Pat.Goughan@hklaw.com

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ADDITIONAL RESOURCES

ACC Resources

Federal Trade Commission

Better Business Bureau

National Advertising Division
Self regulating dispute resolution for advertising claims. Website has searchable database of case reports. (Subscription required).

Other Resources

Sponsor Resources

• ACC Webcast Environmental Marketing Claims: The FTC's "Green Guides" and Emerging Issues Relating to Carbon
• Green-House Counsel Environmental Tips

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