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Going Green the Smart (and Legal) Way

Unless you’ve been living under a rock in a remote part of the ever-dwindling rain forest, you know that a sure-fire way to get consumers to pay more for your products even in these difficult times is to make some “green” claims. And if you can time your ads to coincide with events such as Earth Day or convince the federal government to expedite the review for your green technology patent all the better. Bonus points for naming an actual shopping day “Green Monday” or changing the color of your logo to green.

But before jumping on the green bandwagon, it’s important to do your homework. Last summer, the Federal Trade Commission issued complaints against Kmart, Tender Corp. and Dyna-E International for making false and unsubstantiated claims of “biodegradability.”

On the heels of those complaints, the FTC went after a number of companies that claimed their products were green because they were made of bamboo when, in fact, they were made of rayon a man-made fiber that is technically created from the cellulose found in plants and trees, but only after it is chemically dissolved through a process that releases various pollutants. (After settling with the manufacturers, the FTC followed up with warning letters to 78 retailers, including Bloomingdale’s, Macy’s and Target). S.C. Johnson & Son faces a class action suit alleging that placing a proprietary “Greenlist” seal on its Windex window cleaning products misled consumers into believing that the products were independently certified by a third party (the Greenlist was actually an S.C. Johnson-conceived program). And following review by the National Advertising Division, the advertising industry’s self-regulatory forum, Clorox Co. decided to voluntarily discontinue claims that its Green Works Natural Cleaning Wipes were biodegradable, and MasterNet was advised to stop making claims that its plastic netting packaging products “saved countless trees from destruction.”

If your advertising survives the traditional sources of challenge consumers, competitors, the NAD and the FTC you may still face challenges from sources you hadn’t considered. The Department of Energy pulled its ENERGY STAR rating from certain LG Electronics refrigerators. The House of Representatives has passed the first-ever federal climate-change legislation (the American Clean Energy & Security Act), setting the stage for the broadest environmental regulation ever at the federal level.

New York Attorney General Andrew Cuomo has taken action against several major energy companies, including Dynegy Inc. and Xcel Energy, for failing to comply with various Securities and Exchange Commission regulations requiring disclosure of the material effects of various environmental provisions. And the SEC itself recently published an interpretive release to provide guidance to public companies regarding the commission’s existing disclosure requirements as they apply to climate change matters.

What’s a would-be green marketer to do? Some guidance is available in the FTC’s Guides for the Use of Environmental Marketing Claims (commonly known as the Green Guides), which provide some basic tenets with respect to environmental claims, including that claims be based on reliable scientific evidence and appropriately qualified.

The Green Guides recommend that seals of approval or certifications be accompanied by information explaining their basis and that it be made clear whether a claim such as “recyclable” applies to the product or its packaging. They also provide examples of dos and don’ts with respect to certain particularized claims of biodegradability and recyclability.

The Green Guides are currently undergoing review, since they were promulgated more than 10 years ago; updated versions are expected later this year and will likely address issues such as carbon offsets and renewable energy certifications, green packaging claims, and textiles and green building claims.

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