FTC Proposes Revisions to Green Guides
Yesterday the Federal Trade Commission proposed revisions to its Green Guides – “the guidance that it gives marketers to help them avoid making misleading environmental claims.” The Green Guides were first issued in 1992, but have not been changed since 1998. According to the FTC, one reason for the proposed revisions is to “provide new guidance on marketing claims that were not common when the Guides were last reviewed.” In particular, the proposal provides guidance on claims that relate to climate change, including carbon offset and renewable energy claims.
In its summary of proposed changes, the FTC makes the following proposal regarding carbon offset claims:
- Marketers should have competent and reliable scientific evidence to support their carbon offset claims, including using appropriate accounting methods to ensure they are properly quantifying emission reductions and are not selling those reductions more than once.
- Marketers should disclose if the offset purchase funds emission reductions that will not occur for two years or longer.
- Marketers should not advertise a carbon offset if the activity that forms the basis of the offset is already required by law.
The FTC also warns that “unqualified” renewable energy claims should not be made “if the power used to manufacture any part of the product was derived from fossil fuels.”
We previously reported that FTC’s revisions to the Green Guides could be relevant for “green” building claims. The proposed revisions were based, in part, on a workshop focused on Green Building and Textiles. An earlier workshop considered carbon offsets and renewable energy certificates. The FTC’s proposal contains specific discussion of both appropriate and potentially misleading claims regarding “green building” certifications and affiliations.
The FTC is accepting public comments to its proposed revisions through December 10, 2010. Additional posts on greenwashing claims and Green Guides can be found here.
FTC files "greenwashing" charges against three companies based on eco-friendly advertising claims
The Federal Trade Commission announced on June 9, 2009 that it charged Kmart, Tender Corp., and Dyna-E International with making false and unsubstantiated claims that their products were “biodegradable.” The charges were announced in testimony before the US House Subcommittee on Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce. (FTC prepared statement: “It’s Too Easy Being Green”) Kmart and Tender agreed to consent decrees to settle the charges against them and the case with Dyna-E will proceed in administrative litigation with the FTC.
The FTC action is based on its “Green Guides,” which govern environmentally- and climate-friendly claims in advertising. Among other things, the Green Guides require that any unqualified claims that a product is biodegradable be based on scientific evidence that it will completely decompose within a reasonably short period of time under customary methods of disposal. The FTC alleges that the products identified in its complaints against these companies are typically disposed in landfills, incinerators, or recycling facilities where it is impossible for waste to biodegrade within a reasonably short time. The charges were based on Kmart’s using the word “biodegradable” to describe its American Fare disposable plates, Tender Corp. using the word to describe its Fresh brand moist wipes, and Dyna-E calling “biodegradable” its Lightload brand compressed dry towels.
The FTC’s testimony before Congress was presented by James A. Korn, Associate Director of the Enforcement Division in the FTC’s Bureau of Consumer Protection. Korn testified that “[i]n the past few years, there has been a virtual tsunami of environmental marketing,” marketing touting the “green” attributes of products and services. He said that the FTC plays an important role in helping to ensure that these environmental advertisements are truthful, substantiated, and not confusing to consumers. The agency, Korn said, accomplishes its role in two ways, first by publishing guidelines regarding appropriate advertising, and second, by bringing enforcement actions such as the ones announced this week. The Green Guides help marketers avoid making claims that are “unfair or deceptive” in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a). The Guides explain how consumers understand commonly used environmental claims, such as “recyclable” and “biodegradable,” and describe the basic elements needed to substantiate those claims. The FTC plans to study consumers’ understanding of claims that were not common in 1992 when the Green Guides were originally written, including claims that products are “sustainable” and “carbon neutral.” (See also our previous post: “FTC Updating Green Guides.”)
Other recent enforcement actions by the FTC involving environmental marketing have involved two claims by marketers of “miracle” devices advertised to dramatically increase mileage in ordinary cars. (See e.g., FTC v. Dutchman Enterprises) In both cases, the FTC alleged that the claims for the devices violated basic scientific principles. Through litigation, the agency is seeking a permanent halt to the claims and reimbursement to consumers who purchased the devices.
FTC updating Green Guides, which govern environmental building claims
Original post available at www.constructionweblinks.com.
The Federal Trade Commission’s Green Guides, which govern environmental marketing claims, will be updated this year. The Green Guides are the FTC’s primary tool for preventing consumer deception in the ever-expanding arena of environmental claims. The manual was last updated in 1998. This year’s version will clarify the legal parameters for environmental promises made to consumers and business clients.
The Green Guides are intended to prevent “greenwashing” – claims of environmental superiority or benefit that are untruthful or misleading. Companies may engage in greenwashing in an effort to sell more products or to bolster their reputation with consumers.
The revised Green Guides will address questions such as:
- What does it mean to promise that a product or service is “green” or “sustainable”?
- What steps has a company taken to earn a third-party certification or seal stating that the company’s products or services do not cause harm to the environment?
The FTC is fast-tracking this year’s update to ensure that these and other questions are answered and appropriate guidelines are in place.
Third-party certification is a growing trend in construction. Fourteen percent of cities with 50,000 or more residents have green building programs. These programs require that buildings meet certain environmental standards. The US Green Building Council, a Washington, DC non-profit organization, publishes one set of green building standards relied on by municipalities.
Green building claims can come up in a variety of contexts. In Shaw Development v. Southern Builders (No. 19-C-07-011405, Somerset County, Maryland), the contractor agreed that the luxury condominium project would be environmentally friendly. The contract required that the completed condominiums be certified by USGBC. The contract was a standard AIA form that included the certification requirement through specifications and incorporation of a Project Manual. The certification requirement read:
Project is designed to comply with a Silver Certification Level according to the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) Rating System, as specified in Division I Section “LEED Requirements.”
When USGBC did not certify the completed condominiums, the developer sued the contractor, claiming $635,000 in lost tax credits. Maryland offers state tax credits of up to 8 percent of a project’s total cost for buildings that 1) are greater than 20,000 square feet and 2) are certified under the USGBC standards.
Although the Shaw Development case settled before trial, it demonstrates the importance of a complete understanding of the green building certification process before making representations or taking on contractual obligations.
