Complying With The Law While Marketing That You're "Going Green"
By Bao M. Vu, of Counsel, Stoel Rives LLP.
Consumers care about “green” initiatives, which are generally steps that businesses take to make their products and operations more environmentally friendly. And because consumers are willing to pay a premium to businesses that have such initiatives, having and marketing these initiatives is nearly a requirement for today’s premium brands.
With the financial incentives involved and the difficulty of confirming claims in such marketing, numerous federal and state laws and regulations now exist to help explain what claims are permissible and which are not. This article is not intended to be a treatise on those laws and regulations. Instead, we want to give you an overview of some of the applicable law and provide an example of how such laws apply to a claim that is popular at the moment: the reduction of carbon emissions.
At the federal level, the Federal Trade Commission’s Green Guides govern what claims can be made and how such claims can be made. The Green Guides have a few general principles and include specific regulations dealing with claims ranging from “Carbon Offsets” and “Renewable Energy Claims” to “Recycled Content Claims,” just to name a few.
The Green Guides’ general principles require that claims not be misleading, which mandates that claims be specific and substantiated. Claims must, in turn, typically be qualified and contain disclosures to satisfy these requirements.
For example, a plastic package containing a new shower curtain that is labeled as “recyclable” is misleading if any component of the packaging or the shower curtain (other than minor, incidental ones) can’t be recycled. To comply with the Green Guides, the packaging should say “recyclable packaging” or “recyclable product; packaging not recyclable,” or some other specific disclaimer, as appropriate.
In addition to the Green Guides, there is a patchwork of state laws. Those laws are mostly consistent with the Green Guides, but there are distinctions. For example, California has a specific law dealing with degradability claims in connection with plastic products that is far stricter than the Green Guides.
Violation of these laws and regulations can result in a government enforcement action with substantial penalties or costly claims by competitors or consumers seeking, among other things, disgorgement of all profits in connection with a product or a full refund for all consumers.
A “Carbon-Free” Example
Numerous companies have sought to market that they are “carbon neutral” or have “reduced their carbon footprint.” But under the Green Guides and other similar laws, marketers need to ensure their claims are specific and substantiated.
To be specific, such claims should explain the specific steps taken, the specific time periods those steps will result in reductions (or offset existing reductions), and the specific business operations those steps affect.
For example, a claim that “we are carbon free” is misleading, since a business cannot be “carbon free,” considering the carbon output involved with its vehicles, operations, electricity use, business travel, employees’ commuting, and supply chain.
Instead, a more accurate claim may be that “We have offset our carbon emissions associated with all company air travel by funding carbon recapture projects at local landfills in our state. Those projects will be operational within a year.”
To be substantiated, such claims should also use an accepted methodology to determine a business activity’s baseline carbon emissions, such as the Greenhouse Gas Protocol, which is one of several well-accepted methodologies for determining baseline emissions.
Further, to substantiate such claims, the steps taken to reduce or offset those baseline emissions should also be well-documented. For example, if a company is buying renewable energy credits (RECs) to offset its electricity use, it should ensure that those RECs are verified and that the company has a contractual right to exclusively claim those RECs (to avoid double-counting), among other considerations.
We hope this brief article helps to highlight complexities with popular “green” marketing claims. Because science is constantly evolving, along with consumer perceptions, it’s important to work with experienced counsel when making “green” claims.
About the Author: Bao M. Vu is an attorney with the law firm Stoel Rives LLP. He regularly advises clients on compliance with complex consumer protection and environmental statutes and regulations. More information about his practice can be found here. Bao routinely provides free consultations to RVCF members, and he can be reached at firstname.lastname@example.org or 415-500-6572.