As the FTC updates its guidance on green marketing, some advocates are pushing it to provide clarity on commonly used (and abused) terms.
By Saijel Kishan, BLOOMBERG NEWS
July 7, 2022
Sustainable. Natural. Carbon neutral.
These are some of the labels that have become ubiquitous in the world of eco-conscious consumerism and that experts say are prone to deceive or mislead. Americans may get more clarity on those terms and others when the nation’s consumer watchdog updates its environmental guidance for marketers for the first time in a decade.
This year the Federal Trade Commission is set to start revising its so-called Green Guides, in what will likely be a years-long process. Although the guidance doesn’t carry the weight of regulation, making false environmental claims has proved costly for companies: Walmart Inc. and Kohl’s Corp. agreed in April to pay a combined $5.5 million in penalties for falsely marketing rayon textile products as bamboo, following FTC complaints.
Amid mounting societal concern about climate change and other harms to the planet, companies are rushing to meet rising demand for things like biodegradable household products, electric vehicles and plane journeys whose emissions are canceled out by carbon offsets. With that has come increased concerns about greenwashing — when companies exaggerate the environmental benefits of their products or services.
A global consumer watchdog, the International Consumer Protection Enforcement Network, reported last year that as many as 40% of sustainability claims made online may be misleading.
The FTC first introduced the Green Guides in 1992 to prevent marketers from making deceptive or misleading claims as consumers started to become interested in reducing their environmental footprints. The agency updated the guides twice that decade and then again in 2012. In that edition, the FTC advised on truthful usage of the words “compostable” and “non-toxic.” The publication gave guidance on carbon offsets and renewable energy and cautioned marketers not to broadly claim a product is “eco-friendly” without qualification, since consumers may perceive that to connote environmental benefits the product doesn’t have. It also advised marketers not to call a product “recyclable” without qualification unless recycling facilities are available to at least 60% of consumers where a product is sold.
Not included were entries on “sustainable” or “natural,” which the FTC said it lacked sufficient evidence to base guidance on. The FTC said the Green Guides don’t address the “organic” label because it doesn’t want to duplicate efforts by the U.S. Department of Agriculture’s National Organic Program.
FTC spokesman Mitch Katz declined to comment on the agency’s work on the update.
Hilary Jochmans, a government affairs consultant in Washington, last year led a group of fashion brands — including Reformation and denim maker Amendi — as well as experts and advocates that called on the FTC to overhaul its guidance. “The word ‘sustainable’ is everywhere, and there’s a lot of leeway on how it’s being used,” said Jochmans, the founder of PoliticallyinFashion, an initiative to engage the fashion industry on legislative and regulatory issues. While there needn’t be hard and fast definitions, “we do need guardrails,” she said.
Todd Cort, a senior lecturer on sustainability at the Yale Center for Business and the Environment, said “sustainable materials” could do with clarification amid a global push for lower-carbon buildings. “I see a lot of potential use of this term going forward — for example, ‘sustainable’ concrete, steel, wood and plastics,” he said. Cort said consumers would also benefit from FTC guidance on “natural” because the term is often abused in marketing.
FTC guidance on the use of “carbon” in labeling, including in the term “carbon neutral,” would be helpful, according to Randi Kronthal-Sacco, a senior scholar at New York University’s Stern Center for Sustainable Business.
“While the use of ‘carbon’ is still in its infancy, there is consumer confusion on these terms given the lack of communication of what they mean,” said Kronthal-Sacco, who helped launch the Sustainable Market Share Index, which measures purchases of consumer-packaged goods marketed as sustainable relative to their conventional counterparts.
Calling a manufacturing process “circular” — a word often used to promote products that can be reused, repaired or remanufactured — can obscure the fact that companies using it may lack the ability to reuse the materials they receive, said Abbie Morris, who runs Compare Ethics, a UK company that verifies brands’ environmental and social claims. Morris has pressed authorities in Britain to standardize environmental labels.
The FTC should do away with some of the symbols and numbers used on plastic items that give the impression they are recyclable, said Liza Tucker, an advocate at Consumer Watchdog, a nonprofit in Los Angeles. Apart from plastics used for some packaged foods and household items bearing the numbers 1 (which designates polyethylene terephthalate, or PET) and 2 (high-density polyethelyne, or HDPE), “everything else should carry a label that says ‘trash can,’” Tucker said, since it’s essentially not recyclable.
The FTC’s updates to its Green Guides begin as the US Securities and Exchange Commission proposes rules for money managers to ensure investment funds that use the label environmental, social and governance, or ESG, accurately describe their holdings.