FTC Seeks Public Input on Update to Green Guides for Environmental Claims
The Federal Trade Commission announced last Wednesday that it is seeking public comment on updates and changes to the Green Guides for the Use of Environmental Claims. In an era when charges of greenwashing and green hushing are proliferating across social media while at the same time governments are mandating ESG including environmental disclosures by businesses, an update to the Green Guides is a welcome effort toward providing safety bumpers for companies.
At their root, the FTC’s Green Guides help businesses avoid making environmental marketing claims that expose them to the risk of being viewed as unfair or deceptive under Section 5 of the FTC Act.
Compliance with the Green Guides (i.e., literally using them as a checklist) may be the single best act a business can undertake to avoid claims of greenwashing when making environmental disclosures and other statements.
The Green Guides were first issued in 1992 and were revised in 1996, 1998, and 2012. They provide guidance on environmental marketing claims, including how consumers are likely to interpret particular claims and how businesses can substantiate their claims to avoid deceiving consumers. The FTC is updating the Guides at least in part based on increasing societal interest in environmentally friendly business, from purchasing green household products to investing in ESG funds.
“We look forward to this review process and will make any updates necessary to ensure the Green Guides provide current, accurate information about consumer perception of environmental benefit claims. This will both help marketers make truthful claims and consumers find the products they seek,” said Bureau of Consumer Protection Director Samuel Levine.
Somewhat frustrating to many who realize just how out of date the 2012 Green Guides are, exacerbated by the fact that the FTC did not meet its previously announced schedule of updating the Guides during 2022, the FTC did not propose any specific amendments or planned alterations to the Guides for public comment. Instead, the FTC requested generalized comments within a nineteen question framework. The FTC is requesting general comments on the continuing need for the Guides, their economic impact, their effect on the accuracy of various environmental claims, and their interaction with other environmental marketing regulations (e.g., the proposed SEC mandatory GHG emissions disclosures, the Maryland required direct emission disclosures, etc.). The FTC also seeks information on consumer perception evidence of environmental claims, including those not in the Guides currently.
Specific issues on which the FTC expects to receive large numbers of public comments include:
Carbon Offsets and Climate Change: The current Guides provide guidance on carbon offset and renewable energy claims (e.g., a business that generates onsite renewable energy through solar panels on its roof but finances the panels by selling the RECs cannot claim it “uses” renewable energy). The FTC invites comments on whether the revised Guides should provide additional information on related claims and issues.
The Term “Recyclable:” Among other things, the FTC seeks comments on whether it should change the current threshold that guides marketers on when they can make unqualified recyclable claims, as well as whether the Guides should address in more detail claims for products that are collected (picked up curbside) by recycling programs but not ultimately recycled.
The Term “Recycled Content:” Comments are requested on whether unqualified claims about recycled content – particularly claims related to “pre-consumer” and “post industrial” content – are widely understood by consumers, as well as whether alternative methods of substantiating recycled content claims may be appropriate; and
The Need for Additional Guidance: The FTC also seeks comment on the need for additional guidance regarding claims such as “compostable,” “degradable,” ozone-friendly,” “organic,” and “sustainable,” as well as those regarding energy use and energy efficiency. Some have suggested that list appears stale if not already outdated and that the FTC should expand that list to include “net zero,” “carbon neutral,” and other ESG related terms that will be in wide use in 2023.
Of interest, a list of recent cases brought relating to topics covered by the Guides can be found on the FTC’s website.
For those that do business outside of the U.S. there are more than 450 environmental labels worldwide that say something about environmental performance, and among the most widely followed is the EU Green Deal which provides, “companies making ‘green claims’ should substantiate these against a standard methodology to assess their impact on the environment”
The Commission voted 4-0 to approve the publication of a Federal Register notice at an open Commission meeting on December 14, 2022, announcing the opening of the public comment period. The notice will be published in the Federal Register in mid January 2023, after which the FTC will accept comments for 60 days. Information about how to submit comments can be found in the link above to the Federal Register notice.
We regularly provide advice and counsel to businesses on mitigating risk in environmental disclosures and statements and we can assist in drafting comments on proposed revisions to the Green Guides.