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Green Marketing Work Continues to Evolve

Dennis Cuevas, Consumer Protection Counsel

Dennis Cuevas, Project Director and Chief Counsel, Consumer Protection

Americans have become increasingly concerned about environmental issues. As the public becomes more educated and informed about these issues, they soon realize that they may contribute unintentionally and unknowingly to greenhouse gas, acid rain, pollution, and massive accumulation of waste. Environmentally-conscious people strive to do their part to protect and restore our planet’s resources, and consumers have become willing to change their buying habits in ways that will reduce harm to the environment. Consumers seek out products they believe are better for the environment and avoid products they believe are harmful to the environment. On average, consumers are willing to pay 6 percent more for products that cause less pollution, according to the 2005 Green Gauge Report. A recent survey by Global Market Insite found that Americans are quick to identify polluting companies as "socially irresponsible" and make their purchasing decisions accordingly.

In the late 80s and early 90s, companies began a marketing strategy known as “green marketing” -- claiming that their products are environmentally friendly. Green marketing incorporates a broad range of activities, including product modification, changes to the production process, and packaging changes, among others.

Green marketing can be particularly troublesome and problematic for businesses and consumers. In November 1989, several state Attorneys General formed an ad hoc task force to review environmental advertising claims. Working with the Federal Trade Commission (FTC) and the Environmental Protection Agency, the task force held a March 1990 forum. During the meeting, the task force was able to identify issues where there was virtual unanimous agreement. These issues included increased consumer demand for products that are less harmful to the environment, intense competitive pressure by companies to make environmental claims, growing consumer confusion surrounding environmental marketing claims, corporate environmental responsibility, the need for standards, guidelines or definitions to guide businesses in making environmental claims, fostered competition, and a standard setting process. While there was agreement on many issues, there were issues that were hotly contested, such as degradability claims regarding plastics, recyclability claims, and whether it is appropriate to promote a product as “recyclable” when there is no readily available method of recycling the material in the area in which the product is sold. Moreover, there was disagreement in the appropriate meaning of “recycled” as it relates to recycled content claims.

After careful study, the task force offered several recommendations for federal action and for businesses. With respect to federal action, the task force recommended the adoption of a national regulatory scheme establishing definitions for environmental marketing claims to be used in the labeling, packaging, and promotion of products on the basis of environmental attributes. It recommended testing procedures and standards for determining whether a product meets a particular definition. The task force stressed the need for government regulation and opined that a government regulatory response is preferable to industry self-regulation. The task force also felt that a single, carefully structured seal of approval program may have “the potential to be a powerful mechanism for increasing consumer awareness.” With respect to businesses, the task force provided the following guidance: 1) environmental claims made by businesses should be as specific as possible, not general, vague, incomplete or overly broad; 2) claims should reflect current disposal option; 3) claims should be substantive; and 4) claims should be supported.

In 1992, the FTC issued its Green Guides help marketers ensure that the claims they are making are true and substantiated. While the Guides are administrative interpretations of the law and not independently enforceable, the Commission can take action under the FTC Act if a business makes claims that are inconsistent with the Guides. It provides examples of some of the marketing that may be in violation of the FTC Act.

There are four general principles of the Green Guides. The first principle is that qualifications and disclosures necessary to avoid misleading consumers must be clear, prominent, and understandable. For example, a company should not advertise itself as “Green” while not stating how it is “Green.” Using the phrase without specific qualifying language explaining what steps the company is taking to reduce its environmental impact is deceptive if it leads consumers to believe that the company is doing more than it can substantiate.

The second principle is that claims must be presented in such a way as to make it clear whether they relate to a product, the packaging, and/or the company’s practices. For example, a cereal box that is advertised as “recyclable” is not clear whether the claim applies to the paper cereal box or the plastic bag holding the cereal.

The third principle is that a claim must not overstate an environmental attribute or benefit, either expressly or by implication. The example in the Green Guides is a package of paper coffee filters with the label “These filters were made with a chlorine-free bleaching process.” The filters were bleached with a process that releases into the environment a reduced, but still significant, amount of the same harmful byproducts associated with chlorine bleaching. The claim is likely to overstate the product’s benefits because it is likely to be interpreted by consumers to mean that manufacturing the product does not cause any of the environmental risks posed by chlorine bleaching.

The fourth principle is that environmental claims that include a comparative statement should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception. And, of course, the advertiser should be able to substantiate the comparison. The example used in the Green Guides is an ad claiming that a shampoo bottle contains “20% more recycled content.” Depending on contextual factors, it could be a comparison either to the advertiser’s immediately preceding product or to a competitor’s product. The advertiser should clarify the claim to make the basis for comparison clear, for example, by saying “20% more recycled content than our previous package.”

The Green Guides were updated in 1996 and 1998. Due to an increase in environmental marketing claims in the marketplace, the FTC is undertaking another revision to its Guides again. The proposed changes include new guidance on marketers’ use of product certifications and seals of approval, “renewable energy” claims, “renewable materials” claims, and “carbon offset” claims. The revised Guides caution marketers not to make blanket, general claims that a product is “environmentally friendly” or “eco-friendly.” The proposed Guides also caution marketers not to use unqualified certifications or seals of approval – those that do not specify the basis for the certification. Lastly, the proposed Guides advise marketers how consumers are likely to understand certain environmental claims, including that a product is degradable, compostable, or “free of” a particular substance.

The public comment period for the proposed Guides was closed at press time. Visit http://www.ftc.gov/bcp/edu/microsites/energy/about_guides.shtml to view the filed public comments filed and for more information about the FTC Green Guides.

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