Manufacturers of products that claim to be environmentally friendly will face tighter rules on how they are advertised to consumers under changes proposed Wednesday by the Federal Trade Commission
The commission’s revised “Green Guides,” last updated in 1998, warn marketers against using labels that make broad claims that cannot be substantiated, like “eco-friendly.” Marketers must qualify their claims on the product packaging and limit them to a specific benefit, such as how much of the product is recycled.
“This is really about trying to cut through the confusion that consumers have when they are buying a product and that businesses have when they are selling a product,” said Jon Leibowitz, chairman of the commission.
One of the most notable updates to the guides concerns the use of environmental seals and certifications seen on many packages. According to the Ecolabel Index, there are currently 349 seals and certifications for marketing green products worldwide, with 88 used in North America alone. While the commission does not require the use of a specific label, it considers them endorsements that should be substantiated.
“No longer are you going to be able to make broad unqualified green claims,” said Christopher A. Cole, a partner at the law firm Manatt, Phelps & Phillips who practices advertising law.
The revisions come at a time when green marketing is on the rise. According to a new study by the TerraChoice Group, now part of the Underwriters Laboratories, the number of advertisements with green messages in mainstream magazines has risen since 1987, and peaked in 2008 at 10.4 percent. In 2009, the number of ads dropped to 9 percent.
But while the number of advertisements may have dipped, there has been a “proliferation” of eco-labeling, according to Scott McDougall, the president of TerraChoice, who says there are both good and bad players in the eco-labeling game.
“Consumer demand for better green claims has grown, and this can also be blamed for the use of eco-labeling that may not offer the type of third-party verification that comes with legitimate eco-labeling,” Mr. McDougall said in an e-mail.
Mr. Leibowitz, referring to consumers, said: “In the last five years or so there’s been an explosion of green claims and environmental claims. It’s clear that they don’t always know what they are getting.”
In a news conference to announce the revisions, Mr. Leibowitz said the commission was expecting a lot of voluntary compliance from businesses and that the guidelines could be put in place as soon as the first half of next year.
In response to a question about how the commission plans to enforce the guidelines, Mr. Leibowitz said that he expected most businesses to comply, and added “for those companies that don’t, that fall on the wrong side of the final ‘Green Guides,’ we’re going to go after them.”
The commission has dedicated a new section in the guides specifically to handling issues surrounding certifications and seals of approval. Companies will be obliged to tell customers if the seals they use are certified by their own companies as opposed to being certified by a third party. Companies that are members of a trade organization that certifies their product must disclose that relationship to the consumer.
The new rules call on seals and certifications that connote general environmental claims to be more specific. A company would have to use a label like “Green Smart, Recyclable Certified” instead of just “Green Smart,” for example. And companies that use third-party certifications will also have to make sure they substantiate the claims they make.
“I think everybody that’s doing these claims now is going to have to take a fresh look at them,” Mr. Cole said. “I think that some claims will drop based on the fact that you’d have to do so much explanation to adequately qualify it in the F.T.C.’s eyes.”
A handful of lawsuits have been filed in recent years against companies accused of using misleading environmental labels. In 2008 and 2009, class-action lawsuits were filed against SC Johnson for using “Greenlist” labels on its Windex and Shout cleaning products. The lawsuits said that the label was misleading because it gave the impression that the product had been certified by a third party when the certification was the company’s own. The cases are pending.
“We are very proud of our accomplishments under the Greenlist system and we believe that we will prevail in these cases,” Christopher Beard, director of public affairs for SC Johnson, said in an e-mail, while acknowledging that “this has been an area that is difficult to navigate.”
Companies have also taken it upon themselves to contest each other’s green claims.
David G. Mallen, the associate director of the national advertising division of the Council of Better Business Bureau, said in the last two years the organization had seen an increase in the number of claims companies were bringing against each other for false or misleading environmental product claims. Some of the cases involve Clorox, Heartland Sweeteners, Apple and Seventh Generation.
In 2009, the Federal Trade Commission brought its first enforcement actions in 10 years against companies making environmental claims. In one case, the commission charged Kmart, Tender Corporation and Dyna-E International with making false claims that their paper products were biodegradable. In another case the commission charged clothing retailers with deceptively labeling products as being made from bamboo when they were made of rayon.
Much of the problem involves an abundance of seals and labels that assure environmental worthiness, experts say.
“About once a week, I have a client that will bring up a new certification I’ve never even heard of and I’m in this industry,” said Kevin Wilhelm, chief executive officer of Sustainable Business Consulting, a Washington-based company that helps businesses plan green marketing strategies. “It’s kind of a Wild West, anybody can claim themselves to be green.”
Mr. Wilhelm said the plethora of labels made it difficult for businesses and consumers to know which labels they should pay attention to. “There’s no way for the average consumer or even for a C.E.O. to know which ones to go for or what they should get,” he said.
The revised guides introduced on Wednesday also give marketers parameters for a number of other claims. Products that are labeled as degradable must decompose within a year. Products or packages that claim to be compostable must break down in the same time as the materials they were made with.
Marketers who make claims about renewable materials must explain how the materials are sourced and whether the item is made entirely by renewable materials or not. Products claiming to be nontoxic or “free of” something will have their own set of rules; for example, an item cannot claim to be “free of” a substance that it has never been associated with. Manufacturers will not be able to make “renewable energy” claims if the power used to manufacture any part of the product was derived from fossil fuels. Marketers will also have to be more specific in their promotion of carbon offsets and must disclose if the emission reductions funded by the purchase will not occur for two or more years, according to the new guides.
The Federal Trade Commission held a series of workshops in 2008 to discuss issues central to the guides’ revision, like green packaging, and also conducted surveys online with 3,700 consumers. The commission will accept public comment on the guides until Dec. 10, after which it will publish a final version.