FTC Green Guidelines May Leave Marketers Red-Faced

Experts Say Pending Guides Could Upend Efforts, Make Some 300 Environmental Seals of Approval Unsustainable

By Jack Neff   August 23, 2010 adage.com

BATAVIA, Ohio (AdAge.com) — Attention marketers: Within the next few weeks, you may be recasting your entire green-marketing strategy.

Right now on the desks of Federal Trade Commissioners is the new set of so-called Green Guides that are used by the FTC to guide enforcement of existing laws. They are the first environmental-marketing guidelines in 12 years and could radically reshape how far marketers can go in painting their products, packaging or even corporate images green.

Christopher Cole, an advertising-law specialist and partner with law firm Manatt Phelps & Phillips in Washington, said the 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. They could also influence efforts, seemingly stalled, by retailers such as Walmart to institute a sustainability-rating system for products.

The guides are expected to tighten standards for packaging claims such as “recyclable” or “biodegradable”; 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 may also attempt to define such legally and linguistically squishy terms as “sustainability” or tackle the central issue of many “greenwashing” controversies — trying to define how far companies can go in painting themselves as green in advertising when they or their products also have detrimental environmental impacts.

A spokesman for the FTC said the commission is on track to meet its schedule of issuing updated guidelines by the end of summer, and that they’re likely to cover areas that were the subject of FTC workshops over the past three years, including carbon offsets, packaging claims and environmental seals of approval.

“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.”

Almost certainly issuance of the guidelines will increase enforcement and litigation around green issues, Mr. Cole said.

Some of that will come from the FTC itself. During the first two years of the Obama administration, the FTC has already brought seven environmental advertising enforcement actions, compared to zero during the eight years of the Bush administration.

It’s unclear whether the new regulations will favor any one class of advertisers over another, Mr. Cole said. But an increase in litigation or arbitration of green claims could favor bigger marketers in a space where many key players remain relatively small independents, such as Seventh Generation and Method. The bigger players have bigger pockets and in-house counsel to handle litigation.

Spokespeople for both those companies said they’re following the development of the Green Guides closely but have no predictions on how they’ll look.

The Green Guides aren’t new laws; rather, they’re an update of how the FTC will interpret its mandate to enforce longstanding laws against unfair and deceptive advertising. Still, the spokesman said the FTC will treat them like other new regulations, publishing them in the Federal Register and instituting a comment period before they become final.

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