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Will the FTC’s Green Guides Stanch Greenwashing?

Carolyn McMaster | October 17, 2012

The FTC, at long last, has published the final version of its Green Guides, making it harder for companies to make sweeping, unsubstantiated environmental claims about their products or services. The agency made the announcement earlier this month and held a media briefing. The deed was reported widely, by GreenBiz.com, Environmental Leader, the New York Times and the Associated Press.

This is good news, and it’s generally believed that companies will be more careful about backing up green claims. The guides are supposed to “help marketers avoid making environmental claims that are unfair or deceptive,” and while they aren’t law, the commission can take action against violators under Section 5 of the FTC Act, which “prohibits deceptive acts or practices in or affecting commerce.”

The question for me is whether the guides will stanch greenwashing and change marketing claims in ways that result in less buyer confusion about what green claims mean and the benefits they confer.

We’ll see how things shake out in coming months; one indicator will be whether the FTC puts teeth into the Green Guides through increased vigilance and enforcement. (There have been a few cases of late.)

Generally, the revised guides say that claims of environmental benefits need to be relatively significant and must be backed up. The most important elements of the guides include:

  • Backup for claims needs to be specific, and provide context if needed for clarity.
  • Claims have to take the product’s full environmental impact into account.
  • Claims have to be applicable to reality. For instance, trash bags are normally destined for landfills, but landfill trash doesn’t decompose, so trash bags can’t be labeled “compostable.”
  • Claims can’t be overstated or imply a bigger benefit than exists. The example: “50 percent more recycled material,” without qualification, implies that a lot of recycled material is used. But if the original amount was only 2 percent of the product components, this is misleading.

The Green Guides also address areas long in need of attention. They define “compostable,” “degradable,” “recyclable” and other terms, and provide guidance for touting carbon offsets, certifications and ecolabels, renewable energy use, and other enviro claims.

However, the guides don’t specifically address the terms “organic,” “natural” and “sustainable,” though the FTC says those terms are generally covered by the guides, and “marketers are still responsible for substantiating consumers’ reasonable understanding of these claims.” The FTC says it lacks evidence of consumer perceptions of the terms, and it couldn’t find a basis for guidance. Also, it didn’t want to cover the same ground as the Department of Agriculture, which regulates organic food claims.

“Sustainable” and “natural” can mean many things to many people, and I understand why the commission chose not to address them. Still, they’re often used quite loosely, and I hope the agency will keep an eye on marketing claims around those terms.

The FTC first issued the guides in 1992, and hadn’t revised them since 1998. The revisions were two years in the making, a bit longer than is typical, said Jon Liebowitz during the media call, noting that there were 340 individual comments on the revisions. The commission consulted marketers, advertisers, companies, environmentalists and consumers, and performed consumer perception research.

“I think at the end of the day, most of the stakeholders involved … will be very happy with the final product,” said Leibowitz. Somehow, such broad consensus isn’t reassuring.

If you want to geek out on the policy background, including discussion of what was left out of the guides, see the 300-plus page Statement of Purpose. To get just the highlights, there’s this simple summary.

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