Go Green: How the FTC Helps Fight Climate Change

Noah Cothern, Contributing Member 2023-2024

Intellectual Property and Computer Law Journal

I. Introduction

Climate change is a significant issue that threatens the well-being of billions of people globally.[1] The economic costs of climate change over 2022 in the U.S. alone totaled more than $165 billion.[2] The majority of Americans believe that the government should do more to address climate change.[3] Many companies have become responsive to the environmental concerns of the public and have launched green marketing campaigns as a result.[4] Green marketing is an advertisement strategy where a company incorporates environmentally friendly practices into their operations as an incentive to attract environmentally conscious customers.[5] For a large portion of U.S. consumers, whether products are environmentally friendly is a highly material consideration.[6] Green marketing, however, is not without its risks. Companies may mislead consumers, either intentionally or inadvertently, by making unsubstantiated green claims. In response to this, the FTC in 1992 established the “Green Guides” to help prevent companies engaged in green marketing from deceiving consumers.[7]

This article examines how the Green Guides regulate green marketing. Part II of this article gives background on the operative provisions of the Green Guides. Part III applies the Green Guides and provides guidance on how green marketers can avoid liability.

II. Background

The Green Guides are not binding agency regulations. Rather, they are supplemental instructions directed at green marketers to help avoid violating the general prohibition on deceptive advertisement found in Section 5 of the FTC Act.[8] The Green Guides can be broadly divided into three main sections: (1) general principles applicable to all claims; (2) specific guidelines for niche claims; and (3) matters of substantiation and public interpretation.

General Principles

A green marketer should draw a distinction between the environmental benefits of its product, packaging, and services.[9] For example, if a product uses recycled material only for its packaging, it would be deceptive to advertise the product as “using recycled material” without further qualification.[10] When a qualification or disclosure is required, it should be clear, prominent, and understandable.[11] This means being placed close to the claim, using plain language, and in large typeface.[12] Green claims should not be overstated.[13]  For example, it would be deceptive as an overstatement to advertise a product as containing twice the recycled material from before if that means only an increase from 1% to 2%.[14] Finally, green claims making a comparison to other products should be clear and substantiated.[15]

Specific Guidelines

The Green Guides provide more specific guidelines on 13 different genres of green marketing. These are: carbon offsets, certifications and seals of approval, compostable claims, degradable claims, “free-of” claims, non-toxic claims, ozone-safe and ozone-friendly claims, recyclable claims, recycled content claims, refillable claims, renewable energy claims, renewable material claims, and source reduction claims.[16] As markets have continued to evolve and new niches have emerged, the FTC has, from time to time, updated the Green Guides with new specific guidelines.[17] Indeed, the FTC is currently proposing an amendment which addresses claims relating to “sustainability” and “organic” both of which have increased in usage over the past decade.[18]

Substantiation and Public Interpretation

The public is presumed to interpret green claims under a reasonable person standard.[19] Green marketers must therefore identify all express or implied claims that their advertisements reasonably convey.[20] Once identified, all claims must be supported by a reasonable basis. In the context of green claims, “a reasonable basis often requires competent and reliable scientific evidence. Such evidence consists of tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.”[21]

III. Discussion

With the three core components of the Green Guides laid out, this section will examine several important factors green marketers must consider. These include matters of claim identification, substantiation quality, and niche claim guidelines.

Claim Identification

Green marketers must first take extra precautions to affirmatively identify all claims made in their advertisements. While this is intuitive for express claims such as “this product contains X percent recycled content,” implied claims can prove problematic. The FTC requires any reasonable interpretation of an implied claim to be substantiated.[22] Green marketers who overlook reasonable interpretations of their claims risk liability.

For example, a green marketer may seek to label their product as “eco-friendly” because the product is made primarily from recycled materials. The marketer would then provide substantiation adequate to prove the recycled content claim. To the marketer, describing their product as “eco-friendly” is a reasonable interpretation. Despite this, the marketer has violated the Green Guides. Although the marketer’s interpretation is reasonable, it is an equally reasonable interpretation to believe an “eco-friendly” product follows environmentally friendly practices in all areas such as packaging and distribution methods. Because the marketer provided substantiation only pertaining to recycled content, their advertising is deceptive.

Because all claims must be substantiated, green marketers must consider any reasonable interpretation of their advertisements. However, it is highly unlikely that a green marketer can substantiate all reasonable interpretations of general environmental benefit claims. Unsurprisingly, the Green Guides explicitly caution against making such claims.[23] Instead, the Guides recommend qualifying such claims by tailoring them to the specific environmentally friendly practice used.[24] For example, the marketer described above could describe their product as “eco-friendly: made with recycled materials” to avoid deception.[25]

Substantiation Quality

Substantiation must have competent and reliable scientific evidence.[26] Despite this, green marketers may underestimate how strictly the FTC can apply this standard. In 2013, the FTC brought an enforcement action against ECM Biofilms, Inc. which produced chemical additives for plastics which allegedly made those plastics biodegradable.[27] ECM produced 19 laboratory tests which allegedly substantiated their claim.[28] For example, one of these substantiation tests demonstrated that ECM plastics degraded 49.28% over a period of 900 days.[29] Finding that the biodegradability claims were unqualified, the FTC nevertheless concluded that the tests provided by ECM were “not competent and reliable scientific evidence supporting unqualified claims.”[30] Instead, ECM was held to a higher standard of substantiation which required that “any scientific technical protocol (or combination of protocols) substantiating such claims must assure complete decomposition and simulate the physical conditions found in landfills, where most trash is disposed.”[31] (emphasis added).

ECM’s blunder reveals how the FTC views substantiation quality. ECM failed to adequately qualify their biodegradability claim which triggered the higher standard of substantiation. However, unlike the marketer theorized above who makes a general environmental benefit claim and completely overlooks substantiation, ECM provided substantiation directly supporting their biodegradability claims. Regardless, the quality of that substantiation was insufficient to support the unqualified claim.

Specific Claim Research

Green marketers should closely follow up with the specific guidelines when making specific claims. The general principles of § 260.3 apply to all claims, however, they are just that:  general. The specific guidelines which range from § 260.5 to § 260.17 are more technical and nuanced. Marketers who fail to review these specific guidelines risk liability.  

Several examples demonstrate this problem. Benjamin Moore & Co., Inc. was the subject of an enforcement action in 2017 for, inter alia, marketing their paints with a “Green Promise” seal.[32] This violated the “Certifications and Seals of Approval” section of the Guides because the seal was implied to come from a third party.[33] Moonlight Slumber, LLC was the subject of another 2017 enforcement action for marketing baby mattresses as organic and free of volatile organic compounds.[34] This violated the “Free-of claims” section of Guides because Moonlight Slumber, LLC did not possess testing which proved the absence of volatile organic compounds.[35] Both Kohl’s Inc. and Walmart, Inc. were the subjects of a 2022 enforcement action for marketing textile products as being “bamboo derived” and free of toxic chemicals.[36] This violated the “Free-of claims” and “Non-toxic Claims” sections of the guides.[37]

Ultimately, the more technical nature of the 13 specific guidelines demands closer attention from marketers. Marketers who attempt to intuit whether their green advertisements are deceptive are unlikely to succeed.

IV. Conclusion

The costs of violating the Green Guides can be exceedingly harsh.[38] It is therefore in the best interests of any green marketer to pay close attention to them. As the world continues to struggle with the issue of climate change, the FTC is doing its part to keep the markets free of deception. This allows environmentally focused consumers to direct their money towards causes they support. This in turn incentivizes businesses to take better care of the environment.

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[1] Climate Change Impacts, National Oceanic and Atmospheric Administration, https://www.noaa.gov/education/resource-collections/climate/climate-change-impacts (last updated Aug. 13, 2021).

[2] Candace Vahlsing, The Importance of Measuring the Fiscal and Economic Costs of Climate Change, The White House, (Mar. 14, 2023) https://www.whitehouse.gov/omb/briefing-room/2023/03/14/the-importance-of-measuring-the-fiscal-and-economic-costs-of-climate-change/.

[3] Alec Tyson and Brian Kennedy, Two-Thirds of Americans Think Government Should Do More on Climate, Pew Research Center, (June 23, 2020) https://www.pewresearch.org/science/2020/06/23/two-thirds-of-americans-think-government-should-do-more-on-climate/.

[4] Green Guides, Federal Trade Commission, https://www.ftc.gov/news-events/topics/truth-advertising/green-guides (last visited Feb. 10, 2024).

[5] What Is Green Marketing? Definition and Examples, Shopify, (Oct. 28, 2022) https://www.shopify.com/blog/what-is-green-marketing.

[6] Lesley Fair, FTC Environmental Marketing Guides: Is it time for a change of green-ery?, Federal Trade Commission, (Dec. 28, 2022) https://www.ftc.gov/business-guidance/blog/2022/12/ftc-environmental-marketing-guides-it-time-change-green-ery.

[7] Green Guides, supra, note 4.

[8] FTC Issues Revised “Green Guides”, Federal Trade Commission, (Oct. 1, 2012) https://www.ftc.gov/news-events/news/press-releases/2012/10/ftc-issues-revised-green-guides.

[9] 16 C.F.R. § 260.3(b).

[10] Id.

[11] 16 C.F.R. § 260.3(a).

[12] Id.

[13] 16 C.F.R. § 260.3(c).

[14] Id.

[15] 16 C.F.R. § 260.3(d).

[16] 16 C.F.R. § 260.5-17.

[17] FTC Issues Revised “Green Guides”, supra, note 8.

[18] Lesli C. Esposito and Marisa E. Poncia, Going ‘Green’—What Does That Mean? FTC Proposes Revisions To Green Guides, McDermott Will & Emery, (June 1, 2023) https://www.mwe.com/insights/ftc-proposes-revisions-to-green-guides/.

[19] 16 C.F.R. § 260.2.

[20] Id.

[21] Id.

[22] 16 C.F.R. § 260.2.

[23] 16 C.F.R. § 260.4(b).

[24] Id.

[25] 16 C.F.R. § 260.4(d).

[26] 16 C.F.R. § 260.2.

[27] FTC Cracks Down on Misleading and Unsubstantiated Environmental Marketing Claims, Federal Trade Commission, (Oct. 29, 2013) https://www.ftc.gov/news-events/news/press-releases/2013/10/ftc-cracks-down-misleading-unsubstantiated-environmental-marketing-claims (last visited Feb. 1 2024).

[28] ECM BioFilms, Inc. v. Fed. Trade Comm’n, 851 F.3d 599, 606 (6th Cir. 2017).

[29] Id.

[30] Id. at 608.

[31] Id.

[32] Paint Companies Settle FTC Charges That They Misled Consumers; Claimed Products Are Emission- and VOC-free and Safe for Babies and other Sensitive Populations, Federal Trade Commission, (July 11, 2017) https://www.ftc.gov/news-events/news/press-releases/2017/07/paint-companies-settle-ftc-charges-they-misled-consumers-claimed-products-are-emission-voc-free-safe.

[33] See 16 C.F.R. § 260.6.

[34] Illinois Firm Barred from Making Misleading Baby Mattress Claims, Federal Trade Commission, (Sep. 28, 2017) https://www.ftc.gov/news-events/news/press-releases/2017/09/illinois-firm-barred-making-misleading-baby-mattress-claims.

[35] Id.; See also 16 C.F.R. § 260.9.

[36] FTC Uses Penalty Offense Authority to Seek Largest-Ever Civil Penalty for Bogus Bamboo Marketing from Kohl’s and Walmart, Federal Trade Commission, (April 8, 2022) https://www.ftc.gov/news-events/news/press-releases/2022/04/ftc-uses-penalty-offense-authority-seek-largest-ever-civil-penalty-bogus-bamboo-marketing-kohls. 

[37] See 16 C.F.R. § 260.9; 16 C.F.R. §260.10.

[38] See Tim Levin, VW Has Shelled out More than $9.5 Billion to Car Buyers it Deceived in its Dieselgate Scandal, Business Insider, (July 27, 2020, 6:21 P.M.) https://www.businessinsider.com/volkswagen-audi-paid-car-buyers-95-billion-dieselgate-settlements-vw-2020-7.