How the FTC Will Tame the ‘Wild West’ of Green Marketing
In this GreenBiz.com post Perry Goldschein helps readers understand the upcoming "Green Guidelines" that will be issued by the FTC in an effort to curb or halt greenwashing altogether. It is the first time in 12 years that any regulations have been changed. Perry then mentions the top five things that green marketers should know in the coming months in order to fair well in the face of these new changes.
Published September 01, 2010
The FTC's imminent release of its first new "Green Guidelines" in 12 years has gotten lots of recent attention, along with how marketers will be impacted. Some good, but I believe incomplete or even inaccurate pieces have been written about it, as well as related events and trends. I summarize the current environment (no pun intended) and then cover the top five things you need to know about green marketing in the coming months and years to gain more benefit with less risk.
The Resurgence in Efforts Against Greenwashing
Up until recently, green marketing has been somewhat of a "wild west" as a result of increasing consumer interest, a lack of "truth in advertising" claims enforcement, a dearth of definitions or standards around green marketing claims, and an accompanying explosion of "eco-labels" (over 300 and counting).
That's changing rapidly, as the FTC cracks down on "greenwashing" and soon issues new environmental guidelines; and as consumers, NGOs and other stakeholders help create greater corporate transparency.
Following the end of a long, eight-year hiatus in 2008, the FTC has filed several greenwashing complaints and sent several dozen warnings to others, including some of the nation's largest retailers — but also some not-so-big companies. In fact, the FTC now considers prosecuting misleading green marketing claims as one of its seven priority areas for its consumer protection division.
Moreover, consumers have had some recent successes pursuing greenwashing-type claims under state laws, such as California's Unfair Competition Law. These include a $100,000 settlement against Honda for misrepresenting the gas mileage of its Civic Hybrid model; an allegation that Windex put a "Green list" logo on its label to deceive consumers into believing the product was certified as environmentally-friendly by a third party; and two food and beverage manufacturers claiming of "all natural" when their products include processed corn syrup.
The Revised FTC Green Guides
According to an Ad Age article last week, an advertising-law specialist said the FTC's new Guides "could render most of the more than 300 environmental seals of approval now in currency on packaging and products largely useless and possibly in violation of FTC standards."
Leonard Gordon, an FTC regional director I saw present not long ago, put it another way. He indicated that certification by any one or more of the hundreds of third-party certifiers and eco labels does not insulate advertisers, and they will be held accountable for any claims in connection with such certification. What that means to me is that many certifiers are going to be working very hard to make sure their certifications remain in compliance with the new guides, and some, maybe many, certified companies will need to make changes or drop the labels they use.
The guides are expected to tighten standards for packaging claims such as "recyclable" or "biodegradable" (a term that was at the heart of some of the recent enforcement actions); regulate how marketers use such terms as "carbon neutral"; and how quickly and close to the source of carbon output "carbon offsets" must be executed, among other things. They could also influence efforts by retailers such as Walmart to institute a sustainability-rating system for products.
A spokesman for the FTC said the commission is on track to meet its schedule of issuing updated guidelines by the end of summer. "I would expect that they're going to require more concrete showing of environmental benefits, and insubstantial environmental harm associated with anything that wants to claim green, friendly or eco-conscious terms," he said. To the extent it's been undefined, the bar has been pretty low." The new guides will be published in the Federal Register and subject to public comment before they become final.
What's a Green Marketer to Do?
Is there a need to panic? Give up the brilliant sustainability communications plans you're developing for 2011? Write off that large annual fee you paid your third-party eco-label(s) to use their logo?
No, no and no.
First, the guides issued will be only drafts that are then subject to public comment. Do comment on them, providing your wisdom in the process so that needs can be met without overburdening green marketers.
An argument can be made more broadly, for example, that continuing to educate the public on these matters should be balanced with credible, supportable language and claims. If the FTC's new guides were overly burdensome, it could stifle the dialogue that business and consumers are now having around sustainability, something that's not in the public interest. There's sure to be plenty of opportunity to add wisdom around how terms specific to your industry or business should used as well.
Second, don't assume that you, or even your lawyers, know what "greenwashing" means. That is still evolving, along with the upcoming, revised Green Guides. Keep in mind, as Mr. Gordon says, that the FTC's simple premise is that marketers should 1) tell the truth and 2) be able to substantiate their claims. Many greenwashers, he says, have not followed these simple guidelines.
So, review the guides again, once they are made final, and be as specific as possible when making claims regarding a product's environmental impact. Then, make sure you can substantiate your claims with credible, reliable evidence around the environmental impact of your product. Your lawyer will then be your friend.
This will help keep you in compliance with state laws, too — California law, for example, requires any company that advertises its products using broad claims such as "ecologically sound," "environmentally safe," "eco-friendly" or any similar term to provide written documentation supporting such claims to any member of the public upon request.
Third, if you work with a respectable third-party certifier now, that certifier should be starting to communicate with you about how any changes will affect the certification or your use of it. However, you should be proactive in this relationship, as you are ultimately responsible for any claims, third-party certified or not.
Start also looking at "safe" alternatives for having your brand or products recognized as more sustainable options, if you haven't already. The federal government itself is actually responsible for many of the most popular environmentally-oriented certifications, including EPA's Energy Star and other Partnership Programs that cover such topics as design, waste and water; and these are often low or no cost. Other popular certifications have significant credibility and make no specific environmental claims beyond the certifier's name (just specifications), such as "LEED"-certified buildings.
Fourth, act and lead, don't just follow other green marketers. Identify a sustainability problem that is relevant and material to your organization and/or its industry, and that is not adequately being addressed — then, take ownership of finding a solution.
One example of that is Starbuck's search for a replacement of its disposable cups via a crowd-sourced campaign to develop ideas for the solution — its "Beta Cup" campaign. Another is Timberland's placement of an "ingredient label" on its shoe boxes identifying its products' environmental impacts to educate and allow customers to make more informed decisions.
These brands are leading on sustainability in a way that garners far more differentiation, credibility, buzz and good will than words or eco-labels ever could — and they're doing it without making any claims at all! Read our recent leadership post for more on this.
Perry Goldschein is a founding partner in SDialogue, LLC, an award-winning sustainability communications firm formerly known as SRB Marketing, that's helped such clients as Ben & Jerry's, National Geographic, and Yale University.