Comments on the Green Guides Shed Light on Demand for Clarity
After announcing early this year that is would seek public comments in furtherance of potential updates and changes to its Guides for the Use of Environmental Marketing Claims, known as the “Green Guides,” the Federal Trade Commission is on the receiving end of more than 800 submissions from stakeholders, including a wide range of entities – from AMP Robotics, Plastics Industry Association, and Plant Based Foods Association to L’Oreal, National Retail Federation, and Ellen MacArthur Foundation, among others. After extending the initial deadline to April 24, FTC called for “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,” as well as “information on consumer perception evidence of environmental claims, including those not in the guides currently.”
First issued by the FTC in 1992 and last updated by 2012, the Green Guides are “designed to help marketers avoid making environmental claims that mislead consumers,” according to the consumer protection regulator. Looking specifically at submissions that retail-related entities lodged with the FTC, a number of key themes standout, we delve into a handful of them below …
Importance of the Green Guides – As a primary point, most of the parties that submitted comments seem to agree that the Green Guides are necessary and important. According to the Ellen MacArthur Foundation, for example, “The Green Guides are of unmatched importance in the U.S. when it comes to defining and articulating key terms related to the circular economy.” The Footwear Distributors & Retailers of America (“FDRA”) echoed this, stating, “The Guides play an important role in directing companies on what should be communicated to consumers in any environmental claim, [which] is more important now than ever, because when consumers make purchasing decisions, these consumers increasingly expect brands to provide environmental impact information.”
Against this background and in light of rising attention among consumers to the ESG elements of companies and their products, commenters agree that the FTC Green Guides are in need of revisions in light of current shortcomings, including “vagueness” that the FDRA says has facilitated rampant greenwashing by companies.
Confused Consumers, Companies – Revisions are also necessary in light of rising consumer demand for greener products and services, with Truth in Advertising (“TINA”) stating that, “at present, a majority of U.S. consumers prefer environmentally-friendly products, and nearly two-thirds of them are willing to pay more for such products.” Yet, the watchdog notes that “it is incredibly difficult for consumers to verify the accuracy of eco- friendly marketing claims, [and] it has been reported that approximately three-quarters of consumers do not know how to accurately identify sustainable products.” In the jewelry space, in particular, American Gem Trade Association says that there has been “a proliferation of new, ill-defined terms that are creating confusion among consumers.”
As consumers continue to be “understandably confused by current marketing practices” in the “green” vein, Mycoworks contends that this presented companies with an opportunity to “capitalize on the demand for environmental-friendly products and services [by] taking advantage of the informational asymmetry that exists between companies and consumers to engage in greenwashing.” As of now, the biotech company (which is best known for its Mycelium mushroom textiles) states that “greenwashing is, in fact, a lucrative proposition for many companies,” which the FTC can remedy by removing the “information deficit and surfeit of misinformation by which companies take advantage of millions of eco-conscious consumers.”
Greenwashing & Greenhushing – In addition to greenwashing, more than one commenter pointed to the rise in “greenhushing,” which the FDRA describes as situations where “companies fear promoting qualified efforts and products because of intense scrutiny around environmental claims.” The National Retail Federation (“NRF”) spoke to this, stating that “overly prescriptive guidance or regulation and growing litigation alleging false sustainability advertising may discourage companies from sharing important sustainability information, a concern within the broader sustainability community known as ‘green muting’ or ‘green hushing.’” And thus, it urges the regulator to adopt “flexible, balanced guidance [that] could provide clarity and help companies convey information of environmental attributes to consumers.”
Clarity Through Definitions – The most common push from the entities that responded to the FTC is a call for the adoption of uniform definitions for an array of “green” terms, with the Ellen McArthur Foundation stating that the FTC should “look to established and widely adopted definitions” – such as those for “reuse, reusable packaging, recycling, recyclable packaging, composting, compostable packaging, post-consumer recycled content, renewable material, and renewable content” – in updating the related definitions in the Green Guides.
In order to provide clarity, L’Oreal says that the FTC “should precisely define the term ‘recyclable’ with the goal of resolving existing confusion regarding when a marketer can make an unqualified ‘recyclable’ claim. For example, confusion exists whether marketers must confirm that materials collected in recycling programs are ultimately recycled into something else.” The FDRA encourages the FTC to update the Guides “with deeper guidance on specific terms – like post-consumer or post-industrial recycled – to help companies clearly see marketing boundaries.”
TINA also “recommends the initiation of a proposed rulemaking proceeding concerning unqualified recyclable claims,” as “companies, not consumers, should bear the burden of navigating and understanding the complicated recycling landscape in the U.S. and ensure their claims are not misleading or deceptive.”
“Defining ‘sustainability’ presents significant challenges because of the breadth and vagueness of the term,” the FDRA further states, noting that “today, some brands use ‘sustainable’ to mean an array of things.” On this front, the Gem Trade Association – which urges the FTC to define “commonly used terms (ethical, responsible, conflict-free, etc.) for the benefit of the consumer, and for the integrity of the supply chain” – suggests that the FTC should use “the generally accepted definition of ‘sustainable’ as developed by the Brundtland Commission in 1987: ‘meeting the needs of the present without compromising the ability of future generations to meet their own needs.’”
Collective Fashion Justice points to an array of “sustainability buzzwords” – such as “regenerative” – that have become “increasingly popular in product marketing, including in the food and fashion industries” but that lack a “clear consensus” as to what they mean. Meanwhile, Mycoworks states that “research suggests the terms ‘plant-based’ and ‘bio-based’ are the most widely-used misleading terms, and we invite the FTC to set rules on the use of these terms to restrict their use in a misleading or deceptive manner.”
Carbon Claims – Another commonly mentioned issue comes in the form of carbon-related marketing claims, with Collective Fashion justice stating that “while the Guides already include language relating to ‘carbon offsets,’ other terms such as ‘carbon neutral’, ‘carbon positive’ and ‘carbon negative’ have become increasingly used to promote products.” These terms should also be “defined and advised to be restricted in their use,” the fashion-focused non-profit asserts, stating that “carbon offsets should also not be able to be used to label a product as ‘carbon negative’ or similar without clear specification.”
Collective Fashion Justice notes that despite many offsets being “found to be ‘useless,’” fashion brands have “often promoted the sustainability of carbon offsets.” It points to the fact that “brands, including Gucci, [have been] linked to bogus offsets.” As for brands in the jewelry space, the Gem Trade Association argues that there is an increasing use of the term “carbon-free” in the jewelry industry, and while “some companies may in practice be using carbon offsets, and may be carbon ‘neutral,’” the “carbon-free” claims are misleading to consumers. As such, the term “carbon free” should not be permitted in the jewelry industry at all, it argues, and instead, “term ‘carbon neutral’ should be allowed with substantiation as this more accurately reflects the carbon offsets being used by some companies.”
Third-Party Certifications – Speaking of carbon, a number of parties mentioned the importance of/continued need for third-party certifications. The NRF, for example, states that the FTC “should, when reasonable, permit retailers to rely on recognized outside, independent expertise to validate and substantiate the accuracy of claims, including the use of single-attribute claims such as ‘carbon-neutral’ and broader third-party certifications that address multiple attributes” given that retailers “often lack the expertise and/or ability to determine the accuracy and validity of specific claims.”
Also on the issue of certifications, the FDRA asserts that the FTC “should ensure it has adequate guidance in place that allows for certification of environmental claims, given its value to consumers.” It cites a recent survey in which it found that “57 percent of consumers said the use of certified logos or symbols would give them more trust in environmental claims, rather than companies listing all environmental claims with a specific product.,” with 63 percent of millennials saying that they most valued environmental certifications that appear on products.
Aspirational Claims – “For far too long, the FTC has remained largely silent with regard to sustainability and aspirational claims,” TINA states, noting that “as a result, brands have filled the void with claims that deceive consumers. In much the same way as the “lack of guidance or standards regarding the meaning of sustainability makes it challenging to hold wrongdoers accountable,” TINA contends that “the same is true of aspirational claims, which are also on the rise with numerous companies claiming to achieve ‘net zero’ emissions by a certain date, or deceptively conflating current practices with future goals.” The NRF also touches on aspirational claims, which have been at the center of more than one lawsuit, asserting that “there is value in providing further clarification, for terms and concepts such as aspirational claims (e.g., ‘striving to become carbon-neutral’ or ‘working to become powered by 100% renewable energy’).”
Green Tech – On a tech note, the NRF says that “the use of QR codes or other references to web-based information to provide additional sustainability information for products.” The adoption of new tech is necessary, the trade group states, as It is “impossible for retailers to provide all potentially relevant information on product packaging, in-store or on the initial online landing page for specific products, particularly with the increased number of disclosures often required for more technical claims.” While all material information necessary to prevent deception “must be clearly and conspicuously communicated at the point of sale, FTC should recognize the role of digital tools that allow retailers to refer consumers to online sources of additional information that some consumers consider relevant.”
Without this option, which is already being touted by groups like the Fashion Industry Taskforce, the NRF claims that “retailers often resort to using more paper by attaching additional hangtags to items to disclose all relevant information relating to the environmental claim, [which] runs counter to the goal of reducing material use.”
Industry-Specific Guidance – A few commenters suggested the adoption of guidance that is industry-specific, with Collective Fashion Justice citing “the need for the Guides to be more directly relevant and useful to the fashion industry, as this industry has both a significant impact on the environment and a high prevalence of green-washing.” At the same time, FDRA states that “a one-sized-fits all approach for clarifying ‘sustainable’ products will not work.” In particular, it maintains that the FTC “should update the Green Guides to distinguish between apparel and footwear clearly and explicitly, [as] we find more and more retailers and groups mixing and matching footwear and apparel claims under a large umbrella of ‘fashion,’ which is not only confusing to the consumer but in fact greenwashing.”
Consistent, Multi-Geographical Standards – A number of commenters urge the FTC to take a global view in its efforts to update the Guides. L’Oreal, for one, encourages the FTC to “consider laws, regulations, and standards that are consistent to the extent possible with existing national and international standards. Additionally, when considering guidance, we suggest the Commission take into consideration and harmonize definitions with [ISO 16128-1:2016]. Aligning with [ISO 16128-1:2016], will benefit consumers that multi- national companies serve by having a consistent, multi-geographical standard.” The Ellen MacArthur Foundation says that “now more than ever, we need domestic guidance to be in harmony with the broader [international] context in order to facilitate the global progress that we need to see.”
Legally-Binding Rules – Ultimately, TINA argues that “while the FTC’s Green Guides can be helpful to honest companies trying to ensure their marketing complies with the FTC Act, deceptive marketers will continue to flout the law and take advantage of consumers unless the FTC steps in with a heavier hand.” Collective Fashion Justice echoes this, claiming that “for the Green Guides to best protect consumers against greenwashing, they must be not only recommendations but enforceable standard,” and recommending “rulemaking under the FTC Act be produced to improve enforcement and compliance.”
“Many brands have continued to use green-washed marketing tactics until legal action was taken against them,” Collective Fashion Justice states, pointing to “H&M’s swift removal of green-washed claims following warning of economic sanction risks if potentially misleading language was not removed by the Norwegian Consumer Authority” as “one strong example of this.” And in a final note on this point, Mycoworks contends that “the extent of the greenwashing that currently exists across many industries suggests that the level of compliance with the Guides is low,” and in their current status, the guides simply “have limited deterrent effect.”