The New FTC Green Guides The New FTC Green Guides -- Renewable - - PowerPoint PPT Presentation

The New FTC “Green Guides” The New FTC “Green Guides”

• - Renewable Materials
• - Renewable Energy & Carbon Offsets
• - Certifications & Seals of Approval

Joseph (“Jay”) Eckhardt April 21, 2011

Oregon State Bar University of Oregon School of Law Sustainable Future Section Green Business Initiative Antitrust and Trade Regulation Section

FTC Consumer Protection FTC Consumer Protection

Regulatory Authority

• Federal Trade Commission Act,
• Sec. 5 (15 U.S.C. § 45)
• Prohibits “unfair or deceptive

acts or practices”

• Broad application, including

consumer protection matters Enforcement Areas

• Fraud and scams
• Consumer warranties
• Credit and loans
• Privacy, identity theft
• Telemarketing
• Auto sales, leasing and maintenance
• Health (supplements, diet programs)

Green Marketing Rules Green Marketing Rules

• Consumer demand for products that

minimize environmental impact

• “Explosion” of marketing focused on

green attributes of products

• Marketplace need for guidance on the

definition of misleading and fraudulent environmental marketing claims

• Emergence of “Greenwashing”

Drivers of FTC Regulation in Environmental Marketing

FTC Green Guides FTC Green Guides

“Guides for the Use of Environmental Marketing Claims”

• Prior versions: 1992, 1996, 1998
• Focus on claims concerning

“environmental attributes”

• Not enforceable regulations –

but define “deceptive practices” actionable under the FTC Act

• Outline of general principles
• Guidance on certain types of claims
• Illustrative examples

Specific FTC Guidance Specific FTC Guidance

Claims Addressed in the Prior Guides

• Compostable
• Recyclable
• Recycled Content
• Refillable
• Ozone Safe
• Source Reduction
• “Free of” and nontoxic
• Degradable (photo and

biodegradable claims)

Backing Green Claims Backing Green Claims

• Competent and reliable scientific evidence

“tests, analyses, research, studies conducted and evaluated in an objective manner using procedures generally accepted to yield accurate and reliable results.”

• Current industry or regulatory standards
• Laboratory testing, in-house or independent
• Current testing results
• Repeatable test results

Revision of the Guides Revision of the Guides

• Three public workshop programs in 2008
• Perception survey of 3,777 consumers
• Survey of 1,000 web pages making

environmental marketing claims

• New enforcement actions filed in 2009,

first since 2000

• Release of Draft Guides and request

for public comment, October 2010

• Public comment period through December 2010
• 340 public comments posted on FTC website

Official release of Green Guides slated for 2011(?)

The New Guides The New Guides

New Types of Claims Addressed by the Guides

• Renewable Materials
• Renewable Energy
• Carbon Offsets
• Seals and Certifications

Claims Not Directly Addressed by the Guides

• Organic
• “Natural”
• “Sustainable”
• No ban on general benefit claims

Renewable Materials Renewable Materials

Proposed Guidance – Source identification, renewability “It is deceptive to misrepresent . . . that a product or package is made with renewable materials.” “Unless marketers have substantiation for all their express and reasonably implied claims, they should clearly and prominently qualify their renewable materials claims by specifying the material used, how the material is sourced, and why the material is renewable.”

Renewable Materials Renewable Materials

Proposed Guidance – need for clarification, quantification “Marketers . . . may intend to communicate that a product is made from a material that can be replenished at the same rate,

• r faster, than consumption. Consumers . . . likely believe the

product has other specific environmental benefits. . . .” “[U]nless the entire product or package, excluding minor, incidental components, is made from renewable materials, marketers need to . . . specify the amount of renewable materials in a product or package.” USDA “BioPreferred” program – defines bio-based materials

Renewable Energy Claims Renewable Energy Claims

Proposed Guidance – Simple Deception, Fossil Fuels “It is deceptive to misrepresent . . . that a product or package is made with renewable energy or that a service uses renewable energy.” “Marketers should not make unqualified renewable energy claims . . . if power derived from fossil fuels is used to manufacture any part of the advertised item or is used to power any part of the advertised service.”

Renewable Energy Claims Renewable Energy Claims

Proposed Guidance – Energy Source “Unless marketers have substantiation for all their express and reasonably implied claims, they should clearly and prominently qualify their renewable energy claims by specifying the source

• f the renewable energy (e.g., wind or solar energy).”
• “Renewable” is inherently vague – better to disclose actual

source of energy

• Companies can confidently identify Solar, Wind, Wave, and

Biomass as renewable

• Careful with claims about new or unconventional sources of

renewable energy

Renewable Energy Claims Renewable Energy Claims

Proposed Guidance – Manufacturing Process “It is deceptive to make an unqualified ‘made with renewable energy’ claim unless all or virtually all of the significant manufacturing processes involved . . . . are powered by renewable energy, or conventional energy offset by renewable energy certificates.”

• “All or virtually all” standard allows for minor, incidental use of

non-renewable energy, anything exceeding 1% is probably risky

• Direct purchase or direct generation of renewable energy is not

required – renewable energy certificates (“RECs”) are acceptable

Renewable Energy Claims Renewable Energy Claims

Proposed Guidance – Renewable Energy Credits “If a marketer generates renewable electricity but sells renewable energy certificates for all of that electricity, it would be deceptive for the marketer to represent . . . that it uses renewable energy.”

• If you sell the credit, you can’t claim the credit
• Carefully account for any renewable energy certificates

purchased or sold

Carbon Offset Claims Carbon Offset Claims

Proposed Guidance – Reliable Science and Accounting “[S]ellers should employ competent and reliable scientific and accounting methods to properly quantify claimed emission reductions and to ensure that they do not sell the same reduction more than one time.”

• Avoid double-counting of carbon offset certificates
• Document scientific evidence supporting any carbon offset

program (Do you capture measurable carbon emissions? How long will it take for trees to grow?)

Carbon Offset Claims Carbon Offset Claims

Proposed Guidance – Simple Deception, Required Reductions “It is deceptive to misrepresent, directly or by implication, that a carbon offset represents emission reductions that have already

• ccurred or will occur in the immediate future.”

“It is deceptive to claim . . . that a carbon offset represents an emissions reduction if the reduction, or the activity that caused the reduction, was required by law.”

• Don’t take credit for reductions in carbon emissions that were

required by law

Carbon Offset Claims Carbon Offset Claims

Proposed Guidance – Timing “[M]arketers should clearly and prominently disclose if the carbon offset represents emission reductions that will not

• ccur for two years or longer.”
• Make clear and prominent disclosures of when reductions

will actually occur

• Long term reduction measures, such as planting trees or

building new facilities must be fully and prominently disclosed

Seals & Certifications Seals & Certifications

• The new Green Guides identify several forms of misleading and

deceptive use of seals and certifications

• Unqualified seals or certification

are likely to be deceptive

• A self-awarded seal implying

third-party certification is deceptive

• Potentially deceptive to display a

third party seal based solely on membership in an organization

• Seals or certifications awarded by

trade associations may be deceptive Use of seals or certifications is also governed by the FTC Endorsement Guides (16 C.F.R. Part 255)

Seals & Certifications Seals & Certifications

Proceed with Caution

• Any “self-certification” is risky without clear and prominent

disclosure

• Scrutinize certifications from “interested” organizations such as

trade associations

• Evaluate potential certification programs from the perspective of

consumers and regulators

• Before seeking certification from a valid organization, consider

whether the certification is too weak, or too rigorous

• Is a certification necessary? Consider alternative forms of

disclosure and substantiation

Don’t Forget the Big Picture Don’t Forget the Big Picture

Enforcement Goes Beyond FTC

• Other Regulators
• USDA, FDA, EPA
• California
• Maine, Minnesota, Rhode Island
• Consumers
• “Greenlist” case, Koh v. SC Johnson
• Competitors
• Lanham Act Claims
• National Advertising Division
• Self-appointed Regulators
• Greenwashing Index
• ForestEthics v. Sustainable Forestry Initiative

Best Practices Best Practices

Remember the Fundamental Issues

• Claims must be substantiated by reliable scientific evidence
• Substantiate claims with clear and prominent language

(on the label and online)

• Collect and store relevant evidence, be prepared to defend

claims with complete evidence and documents

• Keep abreast of developing science and policy –

present valid claims can become deceptive tomorrow

• Never forget the array of enforcement tools available to

all stakeholders (including you!)

Thank You!

For further reference: GREEN GUIDES RESOURCE PAGE

www.stoel.com/greenguides