Federal Trade Commission’s “Green Guides” Aim To Protect Consumers Against Misleading and Deceptive Environmental Marketing Claims
The US Federal Trade Commission is expected to extend the reach of its “Guides for the Use of Environmental Marketing Claims” when it updates the regulation codified at 16 CFR Part 260. Although FTC’s “Green Guides,” as they are commonly called, are provided only as guidance, organizations that make environmental marketing claims ignore them at their peril. The Federal Trade Commission Act grants the Commission the authority to file complaints against firms that engage in misleading or deceptive business practices. Under the law, the FTC can seek injunctions, issue cease-and-desist orders, and impose civil penalties. In practice, the majority of cases is settled without the imposition of sanctions.
The Green Guides help businesses make environmental claims that are truthful and verifiable. In the parlance of the FTC, companies making environmental claims should have a “reasonable basis” for doing so. FTC oversight extends to claims that are made both by businesses to consumers as well as to other businesses.
The Green Guides caution companies against making overly general claims like “eco-friendly.” Claims about recyclability should specifically state whether the claim applies to the packaging or to the product, or both. Enforcement actions by the FTC have increased under the administration of President Barack Obama. In 2009 the Commission filed three complaints against companies it said misused claims of biodegradability and four claims related to the purported environmental friendliness of clothing made from bamboo fibers. In the two terms of the George W. Bush administration, no complaints were filed against firms for misleading or deceptive environmental claims.
Some observers of the FTC hope the Commission’s updated Green Guides will address new types of environmental claims. At public workshops conducted in 2008, participants asked the Commission to expand the document to cover topics such as greenhouse gas emission reduction offset credits and Renewable Energy Certificates. Other environmental claims that have become common since the last issuance of the Green Guides address products that their marketers consider “sustainable” or “carbon neutral.”
The Commission’s Green Guides track closely ISO 14021, an International Standard published in 1999 with the title “Environmental Labels and Declarations—Self-declared environmental claims (Type II environmental labelling)” and adopted in 2001 as an American National Standard. Subcommittee 3 of ISO Technical Committee 207 is currently amending ISO 14021 and has before it some of the same issues that arose in the FTC’s public workshops.
ISO’s draft amended standard would allow qualified claims of “sustainable” or “sustainability” to be made as long as they can be justified in accordance with the 18 tests enumerated in clause 5.7 of the ISO 14021 standard. The draft amended standard addresses claims made about greenhouse gases, such as those relating to the “carbon footprint” of a product and claims that a product is “carbon neutral.” A new definition of “offsetting” refers to a “methodology by which the removal of CO2 from the atmosphere or prevention of emissions to the atmosphere from one process can be procured by the operators of another separate and unrelated process to counterbalance their own CO2 emissions that occur from the production or use of that process or product.” Claims that products composed of biomass are “renewable” are also discussed, as are claims related to “renewable energy.”
Given the past influence of ISO 14021 on the Green Guides, it can be reasonably expected that the FTC will take the amended ISO 14021 into consideration when finalizing its Green Guides revisions.
There are practical reasons for basing FTC guidance on International Standards. Primary among them is the influence that ISO standards have in international trade. When regulations adopted in the United States parallel ISO standards, actions the FTC takes to protect consumers against misleading or deceptive product claims are easier to sustain when challenged in bodies such as the World Trade Organization. Moreover, Congress in the National Technology Transfer and Advancement Act of 1995 instructed federal agencies to give preference when possible to voluntary consensus-based standards.
Futurepast is an active member of the US Technical Advisory Group to ISO Technical Committee 207, and is participating in the development of US positions related to the amended ISO 14021 standard. Futurepast provides expertise to clients on the development of environmental claims that can be substantiated in accordance with FTC Green Guides.
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