FTC to revise its guidance on environmental marketing as it seeks public comment on the Green Guides

The Federal Trade Commission (FTC or Commission) has announced that it will seek public comment on its Guides for the Use of Environmental Marketing Claims (the Green Guides), formally commencing the periodic review it announced last year.¹ The agency will also consider whether to pursue rulemaking to establish environmental marketing regulations that, unlike the Green Guides, would carry the force of law, including substantial civil penalties for any violations. Comments must be received by February 21.²

The Green Guides, which have not been updated since 2012, will likely be revised to include new terms and claims; and guidance on certain claims may be made stricter.

Parties (and, in some cases, state laws themselves) sometimes look to the Green Guides to supply standards around claims regarding recyclability, sustainability, toxicity, and a range of other environmental attributes. Thus, the updated Green Guides likely will impact existing and future lawsuits and litigation trends. Clearer standards in the updated Green Guides could heavily influence state regulation of environmental marketing claims.

And, of course, if the FTC does pursue actual environmental marketing regulations, even greater impacts will be felt. Such clearer guidance could spur plaintiffs’ lawyers but could also provide the certainty needed to entice entities to enter into environmental markets, possibly generating more investment because of greater confidence about how to advertise environmental offerings or undertakings without the risk of litigation.

The comment period is now open, and commenters may file online or by mail through February 21. In its review, the FTC will consider several specific issues that have arisen or evolved since it last revised the Green Guides, including claims related to carbon impact, biodegradability, and organic products.

Why the Green Guides matter

Since first issued in 1992, the Green Guides have been the most notable federal-level tool concerning environmental marketing claims. The Green Guides characterize consumer expectations and reasonable interpretations of environmental marketing claims and are intended to help marketers avoid making unfair or deceptive claims under Section 5 of the FTC Act. The Green Guides include general principles, specific guidance on particular claims, and examples of misleading and accurate claims, and apply to express and implied claims made on labels, in advertisements, and in promotional materials for products, packages, and services.

The core principles in the Green Guides are that advertisers should make clear, prominent, and understandable statements; consumers should be able to easily interpret whether claims apply to a product, its packaging, or the company’s business operations; advertisers should not overstate environmental benefits; and the basis for any comparative claim should be clear. The Green Guides address a variety of common environmental marketing claims, including claims that a product is recyclable, made with recycled content, compostable, made with renewable materials, non-toxic, third-party certified or approved, or associated with general environmental benefits, and provide examples as to how claims may be qualified or substantiated to ensure they are not misleading.

Though the Green Guides themselves are advisory and cannot be enforced, failing to comply with them can serve as evidence of a violation of Section 5 of the FTC Act, and they are an important tool for understanding the FTC’s position on environmental claims under federal law.

Many state laws restricting the use of environmental marketing claims also specifically incorporate portions of the Green Guides, including statutes in Alabama, California, Indiana, Maine, Maryland, Michigan, Minnesota, Rhode Island, and Washington. This effectively makes the incorporated portions of the FTC’s guidelines enforceable law in those states. The Green Guides are also instructive for courts evaluating claims of false or misleading advertising.

Active federal enforcement

The FTC has brought approximately 90 enforcement actions and issued one advisory opinion related to environmental marketing claims since the Green Guides were introduced. In such actions, the Commission can seek injunctive relief and consumer redress against marketers that violate the FTC Act, as well as civil penalties for any violations of an FTC order.
In its enforcement actions, the Commission has taken aim at claims regarding energy efficiency, ozone impacts, composting and biodegradation, the use of terms like “all natural” and “organic,” claims regarding renewable materials and recycled content, and unsubstantiated environmental certifications. Some enforcement actions have resulted in multi-million- or even multi-billion-dollar settlements.

Other federal agencies including the Environmental Protection Agency (EPA), Food and Drug Administration (FDA), and Department of Agriculture (USDA), as well as the industry-led National Advertising Division (NAD), also regulate product labeling and environmental marketing claims. When scrutinizing food-related claims, the FTC coordinates closely with the FDA to ensure its assessment reflects both agencies’ standards.

Relationship with state law and regulations

State regulators, attorneys general, and courts may refer to the Green Guides when interpreting and enforcing consumer protection statutes and, as mentioned above, legislation in a number of states expressly incorporates the Green Guides. In some states, criminal liability may attach to violations of these statutes.³ Laws in several states also provide that compliance with the Green Guides is a defense to any suit or complaint alleging that environmental marketing claims are deceptive.⁴

Private actions seeking to enforce the Green Guides

Environmental marketing claims have become a key focus in consumer class actions and impact litigation. Plaintiffs across the country have challenged marketers’ claims regarding sustainability, carbon or climate impact, recyclability and end-of-life disposal, health effects in humans and animals, and general environmental benefits. Although the Green Guides do not create legal obligations or provide a private right of action, litigants have invoked them – with varying success – in asserting that certain claims do or do not mislead reasonable consumers, and some courts have embraced the Green Guides as evidence of consumer expectations.

In addition to legal action by consumers and environmental groups, competitor companies may challenge such claims. A company may bring suit under the Lanham Act, which gives standing to parties with competitive or other relevant commercial interests to challenge deceptive marketing.

What to expect from the review process and revised Green Guides

The FTC is seeking public input on the current content of the Green Guides and proposals to modify them. The Commission is also seeking comment on whether the Green Guides should be converted into formal rules, which could be enforced with significant financial penalties for non-compliance.

In addition to its open-ended requests for feedback and proposals, the Commission is seeking comment on the potential for deception in advertising claims relating to specific issues, including:

• carbon offsets and climate impact, including the terms “net zero,” “carbon neutral,” and “low carbon”
• energy use and energy efficiency
• claims that products are recyclable, compostable, or degradable
• claims related to recycled content
• claims that products are organic
• claims that products, packaging, or business practices are sustainable.

The FTC also seeks input on local, state, federal, and international laws and regulations relevant to the Green Guides. Although the request for comment does not specifically reference greenwashing – ie, whether a particular claim is problematic because of the advertiser’s overall environmental practices – the requests are sufficiently general that commenters may raise greenwashing as an issue for the Commission’s consideration.

The FTC is also interested in consumer perception research conducted since its last review of the Green Guides to assist its assessment of how consumers today understand, and may be deceived by, various claims. One issue commenters are likely to focus on is standards and guidance regarding recyclability-related labeling and circular economy dynamics. Since the last revision of the Green Guides, attention has increased around variation in the types of recycling systems and waste disposal environments available across the country, and plaintiffs have sought to hold marketers liable for what actually happens to waste after consumers dispose of it.

The comment period will remain open through February 21. A lengthy review process, which could include additional requests for comment, hearings, or public workshops, is likely to follow before any final agency action.

DLA Piper will continue to monitor and report on the FTC’s review of the Green Guides. Our firm maintains robust, cross-disciplinary practices in environmental commodities, consumer goods, environmental regulation, and federal policy and government affairs. Please feel free to contact any of the authors should you have any questions.

 

[1] https://www.ftc.gov/system/files/ftc_gov/pdf/GreenGuides-FRN-11-5-22.pdf
[2] https://www.federalregister.gov/documents/2022/12/20/2022-27558/guides-for-the-use-of-environmental-marketing-claims
[3] See, for example, Calif. Bus. & Prof. Code §17581; Minn. Stat. § 8.31.
[4] For example, Calif. Bus. & Prof. Code § 17580.5.