Green Marketing Standards — Overhaul On The Horizon
7 February 2023 The market demand for eco-friendly offerings has steadily increased over the past few years, driving companies across all industries to increase their marketing efforts to demonstrate the environmental benefits of their products, services and processes, often referred to as sustainability marketing. How. or Green Marketing.
The potential benefits associated with green marketing are significant. Companies that manage to establish themselves as environmentally conscious will benefit from greater brand loyalty, better financial performance, and greater brand value. However, with great rewards come great risks. Failure to properly implement green marketing strategies in accordance with regulatory and legal requirements can result in regulatory enforcement actions (both state and federal), personal litigation and class action, and reputational damage.
With so much at stake, the need for guidance on effective and appropriate environmental marketing is paramount. The Federal Trade Commission (FTC or Commission) Environmental Claims Handbook (referred to as the “Green Handbook” or “Handbook”) effectively serves as a roadmap or reference guide for companies wishing to work in this area.
Widely regarded as the ultimate reference for evaluating green marketing claims, the Green Guides set standards for green marketing and guidelines for how marketers can support such claims so as not to mislead consumers.
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While the Guidelines themselves are non-binding under federal law, the FTC and private parties often rely on the Guidelines when filing complaints or lawsuits regarding environmental claims. Several states, including California, Maine, and Rhode Island, have incorporated environmental guidelines into their laws in one way or another. Likewise, companies defending such claims often view compliance with the Green Guidelines as a defense. Even courts rely on and cite Green Guides when considering false or misleading advertising claims.
The Green Handbooks, first published in 1992 and last updated in 2012, is ready for updating. While the basics outlined in the green guidelines remain informative, they are silent on some of the more recent (and more mainstream) trends in green marketing, including the increased use of descriptors such as "natural", "organic" and "sustainable". . . . . . The lack of detailed guidelines makes companies unsure that they want to participate in responsible and sustainable marketing initiatives.
Last month, the FTC announced plans to revise the guidelines in 2023 and officially opened the public comment period by inviting stakeholders from all industries to provide comments and feedback on the guidelines' effectiveness.
At a high level, the Commission said it was closing loopholes for companies seeking evidence of green marketing claims while increasing consumer understanding of those claims. The FTC has stated that it intends to update its guidelines to reflect current market realities, including recent advances in environmental science and technology and the increasing demand for eco-friendly products from conscientious consumers.
The FTC is currently seeking public comment on 19 general issues and 12 specific categories of complaints.
It should be noted that the Commission has expressly expressed its interest in receiving comments by 21 February on the following issues:
• Carbon and climate change/renewable energy offset claims;
• Recycled and "Recycled Content" claims - including "pre-consumer" and "post-industrial" content claims;
• Claims such as "compostable", "biodegradable", "ozone friendly", "organic" and "sustainable";
• Statement on energy consumption and energy efficiency.
When the guidelines were last reviewed and updated in 2012, hundreds of stakeholders from all sectors submitted their comments. With the exponential growth of the sustainability movement being driven by consumers, businesses and investors, the possibility of the upcoming redesign will once again generate significant interest from stakeholders around the world.
What can companies do to prepare for it?
• If companies have views on any of the areas covered by the Green Guides, they should consider submitting feedback and comments to the Commission by the 21 February 2023 deadline. This can be done in person (through the company itself) or through professional and industry associations . Groups that can submit comments on behalf of their respective stakeholders.
• Going forward, companies must be aware of the potential regulatory changes that could result from implementing the Green Guidelines. Businesses should take a close look at the 19 frequently asked questions and 12 specific categories of complaints the FTC has asked for comment, as they are the best indicators of areas where the FTC is likely to apply the advice. This may require changes to current business practices and advertising strategies. The organization must anticipate the cost and time required to implement the proposed changes and plan accordingly.
• Businesses must continue to adhere to the key principles set out in the Green Guidelines. Either way, any company committed to green marketing must deliver advertising that is honest, clear and makes sense. Companies should pay special attention to the rationale for claims of environmental benefits—and any reasonable interpretations of those claims—prior to distribution. To this end, the company must take appropriate steps to verify that claims are reasonably supported, which requires competent and reliable evidence, usually testing, analysis or study. In addition, companies must be careful not to exaggerate environmental benefits. General claims that do not qualify have a higher inherent risk than special and limited claims. It should be noted that companies must consider the legitimacy of claims of environmental benefits in all contexts, not just traditional television and print media advertisements or public statements and press releases. Green marketing claims made in user-generated content or promoted by influencers on social media platforms like TikTok, Instagram, and Snapchat carry the same (if not more) risks than traditional marketing channels.
While the updated Green Guidelines are intended to provide additional explanation for green marketing, there has always been and always will be a basic level of inherent risk associated with claiming environmental benefits. Businesses should seek advice from experienced marketing and advertising consultants before making such claims in any context. With the upcoming changes in green marketing standards, adherence to the basic principles of advertising and careful input from consultants will enable you to responsibly and fruitfully promote valuable product and service properties. If approached carefully, environmental marketing can be informative and beneficial to businesses, consumers and other stakeholders.
Elizabeth Goldberg is a regular contributor to Reuters Legal News and Westlaw Today on ESG and governance issues.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and impartiality based on the principles of trust. Westlaw Today is owned by Thomson Reuters and operates independently from Reuters News.
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