Going Green? Make Sure You Know the Rules13 May, 2014 By: Marc Roth
According to Environmental Leader, a leading daily trade publication that reports on energy, environmental and sustainability news, almost three out of four consumers consider the environment when they shop. This number, reported in 2013, is up from 66 percent in 2008. While the extent to which consumers make actual purchasing decisions based on this information may vary, it is very clear that protecting the environment is a significant and growing consumer concern. Recognizing this trend, marketers and manufacturers across all industry categories have raced to “go green” when advertising their products as well as operating their businesses. But those who “talk the talk” had better be able to “walk the walk” in supporting these claims, lest they find themselves on the wrong side of a regulatory investigation.
On May 2, the Federal Trade Commission (FTC) approved a final order settling charges against American Plastic Manufacturing Inc. for making misleading and unsubstantiated biodegradability claims for certain of its plastic products. The FTC first announced its investigation of and settlement with the company in October 2013, when it accused it of misrepresenting and failing to possess support for claims that its products will completely decompose into natural elements within one year of disposal. At that time, the FTC announced that the company had agreed to settle the agency’s charges and enter into a settlement order that prohibited it from making any biodegradability claims unless the claims were true and it possessed and relied upon scientific evidence to support such claims.
Interestingly, in conducting its investigation, the FTC found the company’s reliance on laboratory tests conducting in accordance with standards promulgated by the American Society for Testing and Materials (ASTM) unpersuasive. Specifically, the FTC alleged in its complaint that such tests “do not assure complete decomposition of [respondent’s products] in a reasonably short period of time or in respondent’s stated timeframes.” Further, and probably more importantly, the FTC noted that such controlled tests “do not replicate, i.e., simulate, the physical conditions of either landfills, where most trash is disposed, or other disposal facilities stated in the respondent’s representations.”
American Plastic was not the only company to come under the FTC’s microscope in this area. In its October 2013 press release announcing this case, the agency also identified five other companies that the agency claimed had either misrepresented or lacked adequate support for their environmental clams. All of these cases came on the heels of the FTC’s 2012 revision to its Green Guides (which were originally issued in 1992 and updated in 1996 and 1998), which are intended to provide companies with specific guidance on making green claims. In revising the guides, the FTC sought to modify and clarify sections of the prior guidance, as well as provide new guidance on environmental claims that either were not common or did not exist when the rules were last reviewed.
Among these modifications, the revised guides warn marketers not to make broad, unqualified claims that a product is “environmentally friendly” or “eco-friendly” – or "green" – because consumer perception studies conducted by the FTC in its rule review process revealed that such claims are likely to suggest that the product has specific and far-reaching environmental benefits. “Very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate,” the FTC noted in the revised guides.
With regard to degradability claims, the revised guides caution marketers not to make an unqualified degradable claim for a solid waste product unless they can prove that the entire product or package will completely break down and return to nature within one year after customary disposal. Items destined for landfills, incinerators or recycling facilities, the guides note, will not degrade within a year, so unqualified degradable claims for these items are likely misleading. Last, the revised guides address compostable, ozone, recyclable, recycled content, and source reduction claims, as well as other green marketing features like certifications and seals of approval.
Companies that intend to engage in “green” marketing generally, and “bio-degradable” claims in particular, are well advised to read and become intimately familiar with the FTC’s Green Guides and enforcement cases in this area. And, as the recent American Plastic matter makes clear, relying solely on laboratory controlled tests for unqualified degradable claims will not likely pass regulatory muster, as such protocols do not accurately simulate the actual and real life waste degradation process. In such cases, a qualified claim may be more appropriate, provided it is truthful, not misleading, and supported by adequate and appropriate testing.
Marc Roth is a partner in the Advertising, Marketing and Media division of Manatt Phelps & Phillips LLP, in New York. He can be reached at firstname.lastname@example.org.