2009: A year of change for green marketers

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Back in May of last year we posted about how the FTC was discussing and planning on rolling out new green marketing guidelines.   The following Adage article examines how the Obama administration and other altered circumstances are impacting the discussion.

  • FTC was previously expected to release new guidelines in late 2009 or early 2010, but this might be delayed because of the Obama administrations halt on regulations.
  • FTC has legal authority to regulate false or misleading claims without new guidelines and might do so with support of a green-friendly administration.
  • Consumers will generally put more pressure on advertisers to be honest by being even choosier about their green products due to a decreased ability to spend.


Posted April 1, 2009
By Charles Franklin and Kenneth Markowitz, AdvertisingAge

Three easy steps can keep you out of hot regulatory water

In the wake of an historic presidential election,
shakeups in Congress and an unfolding economic recession, advertisers
will need to adapt to changing consumer expectations as well as a
tougher regulatory oversight of "green" marketing claims. Fortunately
for most companies, adapting to these new market realities means
following a few basic principles. For those that cannot, or will not,
adapt, 2009 could get ugly—and expensive.

Selling the environmental attributes of products has been a niche
marketing strategy for decades in the U.S., but in recent years green
marketing has gone mainstream. Fueled by growing media attention to
global climate change and other environmental issues, the demand for
"environmentally friendly" products and services has soared.

The growth in green marketing has prompted concern that some corporate
advertisers are "greenwashing," or touting products or services using
overbroad or unsubstantiated environmental claims. In 2007, citing
concern over potential greenwashing in the voluntary carbon offset
market, Congressman Ed Markey asked the Federal Trade Commission to
investigate the new green claims. Subsequently, the FTC began a series
of public consultations as well as consumer research to assess whether
and how the commission should revise its Guides for the Use of
Environmental Marketing Claims, often referred to as the Green Guides.

The FTC had been expected to release updated Green Guides in late 2009
or early 2010, but the timing now appears uncertain in light of the new
administration's decision to halt, pending reviews, many types of
regulatory proceedings initiated by the prior administration. .

Even in the absence of new guidance, advertisers have several
incentives to act now and review their green marketing strategies. The
FTC already has the legal authority to regulate false and deceptive
advertising, with or without updated Green Guides. Under a new
Democratic administration, the commission may ratchet up its
enforcement of the current guidelines.

With larger Democratic majorities in both the House and Senate, and
leadership in both houses voicing concern over greenwashing, however,
executives could also face increased congressional oversight of green
marketing practices.

Regulators are not the only ones likely to scrutinize corporate
environmental claims more closely in the future. While climate change
is no less compelling today than a year ago, more consumers may need to
balance their green ideals with financial realities enforced by the
current economic downturn. Those consumers still responsive to green
marketing will likely expect more than flashy green catchphrases.
Consumer and environmental groups alike are quick to inform consumers
about companies they feel lack support for environmental claims.

Here, then, are three tips to help marketers avoid run-ins with regulators, consumers and watchdog groups.

  • Put your marketing money where your facts are
    A threshold question for any green marketing strategy should be: Is
    your client able to back up claims when challenged? While the FTC does
    not set definitive standards for the use of specific environmental (or
    other) claims, its policy states that "any party making an express or
    implied claim that presents an objective assertion about the
    environmental attribute of a product, package or service must, at the
    time the claim is made, possess and rely upon a reasonable basis
    substantiating the claim," as reflected in "competent and reliable
    evidence." In some cases, competent and reliable evidence may require
    independent studies confirming the scientific basis of the claim.
  • Keep it real: Qualify your claims
    Another principle of defensible green advertising is that claims should
    not be overly broad in a manner that may mislead or confuse a consumer.
    In the language of the FTC's Green Guides, "[a]n environmental
    marketing claim should . . . [make] clear whether the environmental
    attribute or benefit being asserted refers to the product, the
    product's packaging, a service or to a portion or component of the
    product, package or service." Similarly, "[a]n environmental marketing
    claim should not [overstate] the environmental attribute or benefit,
    expressly or by implication." Comparative statements (whether between
    old and new products or between competing brands) should make "the
    basis for the comparison sufficiently clear to avoid consumer
    deception." In short, narrowly tailor your claims to avoid misleading
    consumers or regulators.

    Hint: The FTC considers most open-ended general claims (for
    example, "new environmentally friendly formula") as overly vague and
    ambiguous without some clarification about the product's environmental
    benefit.

  • Seek sound advice
    Shakespeare was famous for
    his distrust of lawyers, but if he had been a copywriter, even he would
    have recognized the value of consulting legal counsel before making
    high-profile green marketing claims. A quick call to the legal
    department is a wise step before starting that multimillion-dollar,
    multimedia green marketing campaign. With the FTC and lawmakers
    signaling that they will draw a harder line on misleading advertising
    in the future, and stiff penalties for false and misleading
    advertising, that call to your lawyer may save more than just the face
    of your corporate campaign.

Green marketing remains a promising tool for companies that can
identify concrete, factually supported environmental benefits
associated with their products or services. As consumers' interest in
green products rises, so will their expectations; and they will become
more discerning about the products they purchase with decreasing or
limited resources. Regulators and private watchdog groups are also
likely to be more aggressive in monitoring questionable marketing
practices.

Advertisers and marketers looking to connect with environmentally
conscious consumers will need to take extra care to develop sound
creative strategies that tune in buyers without turning off
authorities.

Kenneth J. Markowitz and Charles L. Franklin are attorneys in the
global climate change practice of law firm Akin Gump Strauss Hauer
& Feld.

FTC adapts to a changing "green" marketplace

The FTC's Green Guides provide general guidance on the need to
qualify and substantiate environmental claims, as well as examples of
how the FTC will interpret specific terms. Claims discussed in the
current guides include:

  • General environmental claims such as "environmentally friendly," "earth smart" and "earth safe."
  • Comparative claims such as "environmentally preferable" and "contains less (fill in the blank)."
  • Product safety claims such as "essentially nontoxic," "ozone safe," "ozone friendly" and "environmentally safe."
  • Lifecycle claims such as "degradable," "biodegradable," "compostable," "reusable," "recycled" and "recyclable."

Recently, the FTC initiated an effort to update its Green Guides in
response to the growth of new marketing claims appearing in commerce,
including:

  • New general environmental claims such as "eco-friendly" and "green."
  • Substance-free claims such as "chemical-free," "PVC-free" and "formaldehyde-free."
  • Sustainability claims such as "sustainable" and "sustainability."
  • Climate-related claims such as "carbon-neutral," "carbon-negative" and "climate-friendly."
  • Renewable energy-related claims such as "manufactured with
    renewable energy," Renewable Energy Credit, Renewable Energy
    Certificate and RECs
  • Green building claims and claims regarding environmentally friendly materials.
  • Green textile claims referring to "natural" or "organic" fibers.

Information on the FTC Green Guides and pending update proceedings is available on the FTC's
Web site
.

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