United States: The Challenges Of Green Labeling

Last Updated: March 4 2015
Article by Phillip E. Hoover

Why manufacturers need to tread a fine line when communicating the environmentally friendly attributes of their products to consumers.

Today, more than ever, is a great time to be a "green" manufacturer. As the effects of climate change become more evident and a more frequently discussed topic in the media, consumers are modifying their buying behavior in favor of products they perceive to be environmentally friendly. Consumers are motivated by multiple factors to purchase green products. Although they recognize that green products may be better for the environment, there is also a perception that such products are better or healthier for their families and their communities. In response to this trend, more manufacturers are trying to capitalize on green markets. For many companies, however, effectively communicating the environmentally friendly attributes of their products without misleading consumers is a challenge.

In recognition of the difficulty faced in accurately presenting products to consumers, and in the interest of preventing consumer confusion the Federal Trade Commission (FTC) has issued "Green Guides" to help businesses and consumers understand and best utilize green marketing. The guidelines were issued pursuant to the authority of Section 5 of the FTC Act (the "Act"), which prohibits deceptive marketing. They can be found at 16 C.F.R. Part 260, et seq., are divided into 14 categories of common environmental claims, and contain numerous illustrative examples in each category.
The guidelines help marketers avoid making environmental claims that are unfair or deceptive as defined by Section 5 of the Act. The FTC can take action under the Act if a marketer makes an environmental claim inconsistent with the guidelines. As stated in the preamble to the guidelines, the "guides apply to claims about the environmental attributes of a product, package, or service in connection with the marketing, offering for sale, or sale of such item or service to individuals. These guides also apply to business-to-business transactions. The guides apply to environmental claims in labeling, advertising, promotional materials, and all other forms of marketing in any medium, whether asserted  directly or by implication, through words, symbols, logos, depictions, product  brand names, or any other means."

16 C.F.R. Part 260.1(c). As can be seen from this language, coverage is extremely broad, and basically applies to any product or service placed into commerce.

To date, there have been 39 enforcement actions brought by the FTC under the Green Guides. The enforcement actions tend to be brought in clusters against certain industries. In January of 2013,  the FTC focused on unsubstantiated biodegradability claims for various companies' plastic products. As part of this effort, the FTC went after companies  that were "bam- boozling" consumers with false claims about articles of clothing supposedly made of bamboo fibers when, in fact, they were made of rayon. The FTC also issued a slew of complaints against paint manufacturers claiming that their products were free of volatile organic compounds, or VOCs.

Most recently, the FTC has returned its focus to claims of biodegradability, as illustrated by the following 2014 enforcement action brought against the manufacturer of gDiapers. The results of the action provide good insight into how the FTC applies the guidelines. The FTC alleged, among  other things, that the various environmental benefits claimed by the manufacturer simply did not add up when closely analyzed. gDiapers claimed in its advertising that its diapers were "certified 100% biodegradable, garbage-free when trashed or flushed, and plastic-free."

The FTC found that these claims were unsubstantiated. Specifically, the FTC noted  that gDiapers thrown  into the trash typically ended  up in landfills where conditions are not ideal for composting and decomposition. Diapers that were flushed tended to go to wastewater treatment plants where much of the material of the gDiaper would be removed and sent to a landfill. Finally, the FTC challenged  gDiapers' claim that gRefills and gWipes are 100 percent compostable. gDiapers failed to disclose to consumers that any product soiled with human waste isn't safe to compost, and the primary component of soiled diapers is, of course, human waste. Under these conditions, the diapers could not be "100% certified biodegradable."

With more consumers eager to buy products that are easier on the environment or better  for them personally, manufacturers who can substantiate their claims would be remiss in failing to make valid claims. However, before such claims can be made, great care must be taken to consider all aspects of the claim as applied to the manufacturer's product. If you are not sure how the guidance  would be applied by the FTC to your product, you should contact a consultant who specializes in advising clients on FTC matters, or seek the advice of a qualified attorney.

1. General EnvironmentalBenefit Claims

  • Marketers should not make broad, unqualified general environmental benefit claims like "green" or "eco-friendly." Broad claims are difficult, if not impossible, to substantiate.
  • Marketers should qualify general claims with specific environmental benefits. Qualifications for any claim should be clear, prominent and specific.
  • When a marketer qualifies a general claim with a specific benefit, con- sumers understand the benefit to be significant. As a result, marketers shouldn't highlight small or unim- portant benefits.
  • 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.

2. Carbon Offsets

  • 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.
  • Marketers should disclose whether the offset purchase pays for emission reductions that won't occur for at least two years.
  • Marketers should not advertise a carbon offset if the law already requires the activity that is the basis of the offset.

3. Certifications and Seals of Approval

  • Certifications and seals may be endorsements. According to the FTC's Endorsement Guides:
  • Marketers should disclose any material connections to the certifying organization. A material connection is one that could affect the credibility of the endorsement.
  • Marketers shouldn't use environmental certifications or seals that don't clearly convey the basis for the certification, because the seals or certifications are likely to convey general environmental benefits.
  • To prevent deception, marketers using seals or certifications that don't convey the basis for the certi- fication should identify, clearly and prominently, specific environmental benefits.
  • Marketers can qualify certifications based on attributes that are too numerous to disclose 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.
  • A marketer with a third-party certification still must substantiate all express and implied claims.

4. Degradable

  • Marketers may make an unqualified degradable claim only if they can prove that the "entire product or package will completely breakdown and return to nature within a reasonably short period of time after customary disposal." The "reasonably short period of time" for complete decomposition of solid waste products? One year.
  • Items destined for landfills, incinerators or recycling facilities will not degrade within a year, so unqualified biodegradable claims for them shouldn't be made.

5. Compostable

  • 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 compose 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.

6. Free of

  • Marketers can make a free-of claim fora 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 sub- stance; and
  • The substance wasn't added to the product intentionally.
  • It would be deceptive to claim that a product is "free of" a substance if it is free of one substance but includes another that poses a similar environmental risk.
  • If a product doesn't contain a substance, it may be deceptive to claim the product is "free of" that substance if it never has been associated with that product category.

7. Ozone-Safe and Ozone- Friendly

  • It is deceptive to misrepresent that a product is ozone-friendly or safe for the ozone layer or atmosphere.

8. Nontoxic

  • Marketers who claim that their product is nontoxic need competent and reliable scientific evidence that the product is safe for both people and the environment.

9. Recyclable

  • 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.

10. Recycled Content

  • 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 composition.

11. Refillable

  • 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 empty package.

12. Made with Renewable Energy

  • 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 misun- derstanding is to specify the source of re-newable energy clearly and prominently (e.g., "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 renewableenergy – for example, by using solar panels – but sell RECs for all the renew- able energy they generate shouldn't claim they "use" renewable energy. Claiming to use renewable energywould be deceptive in this circumstance.

13. 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 identify the material used clearly and prominently, 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.

14. Source Reduction

  •  Marketers should qualify a claim that a product or package is lower in weight, volume or toxicity clearly and prominently 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."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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