Revised FTC Guidance for Making Environmental Benefit Claims

Antitrust Update

The Federal Trade Commission (“FTC”) has issued its revised Guides for the Use of Environmental Marketing Claims—known as its “Green Guides”—which contain guidance for how product marketers should use environmental claims in their advertising and packaging. The FTC intends these revisions to encourage marketers to clearly support claims of their products’ environmental benefits.

Although the guidance is nonbinding, FTC officials have indicated that the standards in the revised Green Guides will inform what the agency considers deceptive advertising for enforcement actions under Section 5 of the FTC Act.

The revisions to the Green Guides are the first since 1998, and come two years after the FTC published a 2010 draft revision for public comment. The finalized 2012 Green Guides, released on October 1, 2012, include both updates to existing guidance and newly added sections.

In announcing the revised Green Guides, the FTC has strongly emphasized the section cautioning against broad, unqualified representations that “a product, package, or service offers a general environmental benefit.” The Guide offers as examples of potentially deceptive claims such unqualified descriptions as “greener” or “eco-friendly.” The FTC warns that these broad claims suggest to the consumer a level of benefits that cannot be substantiated.

Other updates to existing sections include recommendations that marketers qualify claims of a product or package as “degradable” if it does not completely break down within one year, as well as clarifications on guidance related to compostable, ozone, recyclable, recycled content and source reduction claims.

The revised Green Guides also include several new sections that provide more elaborate guidance on a variety of topics:

Certifications and Seals of Approval. Certifications or seals of approval indicating environmental quality or benefits may functionally be “endorsements,” as defined in other FTC advertising guidelines. As such, marketers are advised to disclose any material connection the marketer has to the endorsing body that could affect the credibility of the claim.

Carbon Offsets. Marketers are advised not to imply that the emissions reduction associated with a carbon offset has already occurred (or will occur in the immediate future) if those reductions will not actually occur for two years or longer. The FTC also classifies as deceptive any claims of emission reduction where the reduction is required by law, rather than voluntarily undertaken.

“Free-Of” Claims. Claims that a product, package or service is “free of” any particular substance are considered deceptive if not qualified. Even if the product is free of that particular substance, the FTC may consider the claim deceptive if the product uses a different, but comparably harmful substance.

Non-Toxic Claims. As with “Free-Of” claims, the FTC suggests that a product or package claiming to be non-toxic qualify the claims with reliable evidence to avoid deception.

Renewable Energy Claims. The FTC advises against unqualified claims that a product or package is made with renewable energy if any part of its manufacture uses fossil fuels. Renewable energy claims should be qualified to accurately show both the extent and source of renewable energy used in the product or package.

Renewable Materials Claims. As with the “Renewable Energy” claims, the FTC discourages unqualified claims that a product or package is made from renewable materials if any part of it is made from nonrenewable materials. The FTC further suggests identifying the type of renewable materials used.

In announcing the revised Green Guides, the FTC specifically noted that the Guides do not address how marketers should use the terms “sustainable,” “natural” or “organic.” Other agency regulations and guidance, however, provide some guidance on the use of these terms.

The FTC has announced that the new Green Guides will be effective immediately for use in clarifying what may or may not be permissible under Section 5’s prohibition against deceptive advertising. Our lawyers are available to assist clients with their implementation and compliance efforts in light of the new guidelines. For those wishing to review the full set of materials issued by the FTC, they may be found on the FTC’s web site at http://www.ftc.gov/opa/2012/10/greenguides.shtm.

If you have any questions regarding this update, please contact the Sidley lawyer with whom you usually work.

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This Sidley update has been prepared by Sidley Austin LLP for informational purposes only and does not constitute legal advice. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. Readers should not act upon this without seeking advice from professional advisers.

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