Greenwashing involves attempts by companies to convince consumers that their products or services are environmentally friendly. As companies increasingly want to be seen as green, the practice has become more common -- and dangerous. In light of recent Federal Trade Commission actions, your business needs to understand the Commission's guidelines for environmental marketing claims.
Recent FTC Actions Against Greenwashing Claims
In June 2009, the Federal Trade Commission (FTC) brought administrative actions against Kmart Corp., Tender Corp., and Dyna-E Intl. for making deceptive and unsubstantiated claims that their paper products are biodegradable. Kmart Corp. said that its American Fare brand disposable plates are biodegradable, Tender Corp. stated its Fresh Bath moist wipes are biodegradable, and Dyna-E International claimed its Lightload brand compressed dry towels are biodegradable.
The case against Dyna-E Intl. will be litigated, while Kmart Corp. and Tender Corp. have settled. The FTC has vowed to vigorously pursue cases of greenwashing that involve unfair or deceptive advertising.
The FTC's "Green Guides"
To avoid problems with the FTC, you need to understand of the FTC's "Green Guides" found at 15 U.S.C. §§15-48, part 260 (Guides for the Use of Environmental Marketing Claims).
Here are some highlights:
1. Scope of Coverage (§260.2)
The Green Guides cover all environmental marketing claims. Claims include words, images, symbols, logos, brand names, labeling, and other promotional materials.
2. Avoid Making Overreaching and Irrelevant Statements (§260.7)
Claims should not overstate an environmental benefit or characteristic of a product. Although it is tempting to exaggerate your product, doing so create risks that your statements will be seen as deceptive. As explained in further detail below, make sure that you can back up your claims, whether they concern energy efficiency or recyclable content.
Furthermore, claims should be relevant to the product at hand. For example, it is irrelevant to nakedly call a utensil "degradable" if the utensil will be incinerated, end up in a landfill, or if the company does not possess sufficient evidence that the utensil will degrade in a reasonably short rime in a landfill.
3. Beware of Making Vague or Unclear Claims (§260.7(a))
Avoid claims that are general or vague in terms of their environmental benefits. Products claiming to be "essentially non-toxic," "environmentally safe" and similar phrases suggest an environmental benefit that can confuse consumers. Such phrases invite FTC scrutiny.
4. Substantiate Your Claims (§260.5)
Pay special attention to the substantiation requirement. Evidence must support an environmental marketing claim. The following is often required to substantiate an environmental marketing claim:
"… competent and reliable scientific evidence, defined as tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area, conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results."
As a result of the FTC actions mentioned above, both Kmart Corp. and Tender Corp. are barred from describing their products as "degradable" and are required to supply competent evidence to substantiate their environmental claims.
Takeaway
More and more companies are jumping on the green bandwagon and using greenwashing as a central part of their business strategy. While the Green Guides do notmandate that companies follow any particular certification or scientific standards, doing so can reduce the risk of running afoul of the guidelines. You must invest time and money to back up your claims. Being green is not cost free.
By understanding the relationship between the Green Guides and your environmental claims, you can develop a Legally Informed Strategy based on greenwashing that minimizes the risk of an FTC action.
Douglas Y. Park
Twitter: @DougYPark
NOTE: Although some use greenwashing to describe to describe the overzealous use of environmental marketing, I use it more generally to describe the practice of making claims that a product or service is environmentally friendly.
