Clamping down on greenwashing

More and more consumers are opting for the environmentally friendly, all-natural, non-toxic, dolphin-safe, recyclable alternative. They do not want to waste money on ordinary “eco-junk” that has been tarted up with deceptive or unsubstantiated “green” marketing claims. To help consumers separate the green from the mundane, federal agencies in Canada and the United States have established rules to discourage corporate “greenwashing,” as the practice is known. 

On Oct. 6, the U.S. Federal Trade Commission proposed revisions to its “Guides for the use of environmental marketing claims” (known as the Green Guides). The proposed revisions support the Federal Trade Commission Act’s prohibition against “unfair methods of competition” and “unfair or deceptive acts or practices.” The Green Guides do not have the force and effect of law. Nonetheless, they set the standard for FTC enforcement, and courts may rely on them in determining the standard of care in tort claims. They also send a strong message to corporations and their hired guns in the advertising sector.
The proposed revisions include:
• prohibiting the use of general environmental marketing claims such as “green” or “eco-friendly”;
• requiring companies to be able to substantiate environmental claims when using seals of approval or certifications;
• requiring qualification of claims about the use of renewable energy to manufacture products if power is derived from non-renewable energy sources;
• requiring that carbon offset claims are not double counted; and
• qualifying source reduction claims by identifying the amount of the source reduction and the basis for any comparison made.

The draft Green Guides will hopefully ensure environmental marketing claims are trustworthy and understandable for consumers. U.S. marketing experts say revisions to the long out-of-date Green Guides could end the use of up to 300 environmental “seals of approval” that appear routinely on various products and packages.

North of the border, the Canadian Standards Association and Competition Bureau updated “Environmental claims: A guide for industry and advertisers” in June 2008, superseding the original from 2000. This latest CSA special publication also replaces “Principles and guidelines for environmental labelling and advertising,” published by Industry and Science Canada in 1993. This should aid compliance with provisions of the Competition Act and the Consumer Packaging and Labelling Act administered and enforced by the Competition Bureau.

Meanwhile, the FTC has also shown it will take enforcement action. In United States v. Meyer Enterprises LLC, the FTC targeted marketers of home insulation for overrating the insulation properties of their products. The commission alleged the insulation’s R-value, a measure of thermal resistance, was only one-quarter of what the defendant claimed in its advertising. The court order settling the FTC’s charges required Meyer Enterprises to pay a $155,000 civil penalty, revise the challenged claims, and substantiate any future energy-related efficacy claims.
In another 2009 case, the FTC charged Kmart Corp., Tender Corp., and Dyna-E International Inc. with making deceptive and unsubstantiated biodegradability claims involving disposable plates, moist wipes, and dry towels. Kmart and Tender agreed to orders barring them from making such claims, and requiring record keeping and reporting to the FTC that will aid in monitoring future compliance. The FTC has also succeeded in recent enforcement action against four companies falsely marketing rayon fabrics and textiles as made of environmentally friendly bamboo, and against the marketers of “miracle” devices advertised to dramatically increase gas mileage in ordinary cars.
Consumer’s interest in conserving energy and protecting the environment is no passing fad. This is a good thing. Competition based on green marketing initiatives should drive business to greater innovation, benefit consumers, and make our world a healthier and safer place. However, consumers must be able to confidently rely on green claims and companies must be accountable for their advertising. Once the FTC adopts the proposed revisions, there will be greater certainty about what is acceptable and what is not. And this certainty will apply equally to both U.S. products entering the Canadian marketplace and Canadian companies that market to the U.S. The new rules should also be a wake-up call for Canadian corporate counsel. The last thing a Canadian exporter wants is the unwanted public attention, embarrassment, and stigma of an FTC enforcement action. It’s just not good advertising.

Marc McAree is a partner at Willms & Shier Environmental Lawyers LLP.

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