What Marketers Need to Know about the Updated FTC Green Guides

By Jacquelyn A. Ottman and David G. Mallen

HOW TO MAKE CREDIBLE CLAIMS

CONTENTS

INTRODUCTION: GREENWASH! 3 INTRODUCTION: RISKS OF GREENWASH TO CORPORATE REPUTATION 6 THE CHALLENGES OF COMMUNICATING GREEN 8 THE FTC GREEN GUIDES: GREENWASH! AN OVERVIEW 11 NATIONAL ADVERTISING DIVISION 12 THE 2012 FTC GREEN GUIDES: WHAT’S NEW 14 - Case Study: Tested Green 14 - Case Study: Panasonic and GreenPan 15 - Case Study: Green Seal 17 - Case Study: Degradable Claims 18 - Case Study: Zero VOC Paint 19 HOW TO FURTHER ESTABLISH CREDIBILITY AND AVOID GREENWASH 24 By Jacquelyn A. As marketers move toward - Case Study: HSBC Empowers Ottman and David G. Big Change With “There’s No greener products, messages are Mallen Small Change” Campaign 25 - Case Study: Patagonia Footprint often confusing buyers Chronicles 27 - Case Study: BIFMA 29 CONCLUSION 33 THE OTTMAN CHECKLIST FOR CREDIBLE GREEN MARKETING 34 Shoppers are actively seeking out greener products, energized TODAY’S HELPFUL LINKS 36 by the prospects of healthier alternatives, preserving the environ- ABOUT THE AUTHORS 36 ment for future generations, saving time and money in the long run CONSUMERS APPENDIX 1: THE 2012 and higher-quality products. (See Why Americans Are Motivated to FTC GREEN GUIDES 37 Purchase Environmental Products, P. 4.) Cone Communications, a ARE APPENDIX 2: ECOLABELS 37 corporate responsibility and public relations agency, has been meas- uring consumer’s receptivity to cause-related marketing for 20 SHOPPING DISCLOSURE: The views expressed in years. According to the Cone Communications Green Gap Trend this report are those of the authors and do not necessarily represent the views Tracker and its 2008 Cone Green Gap Survey, as of 2013, a record WITH A of NAD, ASRC or the Council of Better high 71% of American consumers reported that they routinely or Business Bureaus Inc. or the Federal NEW Trade Commission. This report does not sometimes consider the environment when they shop, up from 66% constitute legal advice. in 2008. Propelled by sales of organic foods, natural personal-care, AGENDA. household cleaning and laundry products, sustainable apparel and PowerPoint slides of charts hybrid-engine cars, the U.S. market for “green products” was esti- and web links are available for CONSUMERS buyers to download. Click this icon mated at $290 billion in 2010 by the Natural Marketing Institute. above reading pane. Thanks to media attention to environmental issues, the ARE ASKING introduction of eco-oriented curricula in schools and marketing This document and information contained herein are the copyrighted property of Crain Communications support behind one of the biggest opportunities for sales, NEW Inc. and Advertising Age (Copyright 2013) and are for your personal, noncommercial use only. You brand-burnishing and innovation to come along in generations, may not reproduce, display on a website, distribute, QUESTIONS. sell or republish this document, or the information today’s consumers are shopping with a new agenda. They are contained therein, without the prior written consent of Advertising Age. Copyright 2013 by Crain plucking products off supermarket shelves according to 21st- Communications Inc. All rights reserved. century criteria. In addition to quality, performance, conven-

ADVERTISING AGE SEPTEMBER 16, 2013 · 3 HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS

ience and attractiveness, consumers are asking new questions: ENVIRONMENTAL BUZZWORDS Where was this coffee sourced? Were the workers paid a fair A myriad of marketing words often confuses consumers. wage? Can I recycle this package in my community? The myriad new marketing buzzwords that such green-seek- OZONE- ing has spawned literally spans all aspects of the product life FRIENDLY SUSTAINABLE Recyclable FEEDSTOCK cycle, including the growing, mining and processing of a prod- RECYCLED CARBON uct’s raw materials; the impact of its manufacture, distribution GREENHOUSE GASES BIOENERGY FOOTPRINT and marketing; and the impacts consumers incur during its use, NATURAL BIO-BASED after-use (, reuse, etc.) and eventual disposal. CONTENT Clean But there’s a phenomenon called “greenwash” that threatens to Photodegrable derail the green-marketing revolution. Environmentalist Jay BIODEGRADABLE Energy Westerveld coined the term “greenwash” in a 1986 essay that criti- NATURALLY NONTOXIC ENVIRONMENTALLY Eco-Smart DERIVED cized hotels that encouraged guests to reuse towels for environmen- RENEWABLE tal reasons but then made little or no effort to recycle waste. LIFE CYCLE FRIENDLY Compostable Whether intentional or not, greenwash engenders skepticism that can stop consumers from seeking alternatives for lightening their environmental footprint and safeguarding their health. Defined as marketing efforts that are perceived as ill-conceived, inauthentic or WHY AMERICANS ARE MOTIVATED TO misleading, greenwash raises a red flag with corporations who might otherwise more aggressively develop and market their own PURCHASE ENVIRONMENTAL PRODUCTS legitimate eco-innovative initiatives. Health concerns, preserving the environment and saving The potential for even the best-intentioned marketers to money or time are top reasons. confuse consumers with misleading green claims, ads and other 2013 2012 communications is high. Green issues are highly technical, com- plex and fast moving. New environmentally preferable designs, They believe it’s healthier for 88% materials and technologies enter the marketplace daily. Against themselves, their families or this backdrop, consumers do not understand basic principles of 88% their communities. environmental science, much less (as surprising as it may seem) such oft-used buzzwords as “recyclable” and “biodegradable.” More than half of Americans believe erroneously that common They want to preserve 87% environmental marketing terms such as “green” or “environ- the environment for mentally friendly” actually mean a product has a positive (40%) future generations. 85% or neutral (22%) impact on the environment. Only 22% of them can correctly identify these terms as meaning lighter impact, or less impact than it used to have (2%). (See When Americans See It will save them time or 84% a Product Advertised as ‘Green’ or ‘Environmentally Friendly,’ money in the long run (e.g., They Think It Means, P. 5.) saves water, electricity). 90% What’s more, because green methods are often so new, the market’s leading players—the product designers, raw-material suppliers, manufacturers, retailers, marketers and the media, They believe it’s a better and even regulators and legal counsel—typically lack education 78% product (e.g., better design, and experience with many environmental issues. Call it a case higher quality). 82% of the blind leading the blind. If manufacturers are to develop legitimately greener products and packages, and if consumers are going to be able to make responsible choices, then the mar- ketplace needs to understand the issues; consumers need bet- It’s a way for them to show 58% others they care ter education; and mechanisms and processes are needed to about the environment. 60% enable industry to clearly and straightforwardly communicate the environmental benefits of their products and packages. SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER Tools such as life cycle assessment, eco-labels, seals and certifi- cations have been developed. These tools will be discussed in

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WHEN AMERICANS SEE A PRODUCT ADVERTISED AS ‘GREEN’ OR ‘ENVIRONMENTALLY FRIENDLY,’ THEY THINK IT MEANS Consumers are often confused about just what is and isn’t helping the environment when they shop.

The product has a positive 40% (i.e., beneficial) impact on 36% the environment. 48%

The product has a 22% lighter impact than other 25% similar products. 18%

The product has a 22% neutral impact on the 18% environment. 14%

9% They don’t believe it means anything. 11% 7%

2% The product has a negative 3% impact, but less than it used to. 4%

5% 2013 They don’t know what it means. 6% 2012 10% 2008

SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER

this report, but its main focus is the Federal Trade Commission’s Since avoiding greenwash by communicating a product’s or Green Guides, and what the 2012 revisions mean for marketers. company’s environmental performance credibly and effectively This report starts by looking at the risks to industry of green- involves much more than making truthful environmental mar- wash, followed by a closer assessment of the key challenges asso- keting claims, this report includes five additional strategies that ciated with credible green marketing. It will then provide an businesses can use to help eco-aware consumers make informed overview of the FTC Green Guides, describing what they are and purchasing decisions. A practical checklist of questions that mar- what they are not. After that, we will dive into the various claims keters and their legal and technical counsel can ask in order to and concepts the 2012 Green Guides now espouse, illustrated by put the report’s lessons to work is also included. Finally, we will hypothetical examples and actual case studies from the annals of offer some conclusions, including projections going forward, the Federal Trade Commission, the National Advertising Division together with helpful links. A copy of the revised FTC Green of the Better Business Bureau and other areas. Guides is included in the Appendix.

ADVERTISING AGE SEPTEMBER 16, 2013 · 5 HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS RISKS OF GREENWASH TO CORPORATE REPUTATION

Accusations of can come from many sources, including the media, environmentalists or even a brand’s own consumers

When claims are perceived as unclear—and likely decep- tive—marketers can be labeled as greenwashers and their mar- BEING PERCEIVED AS A keting communications as greenwash. Accusations of green- washing can emanate from many sources, including regula- GREENWASHER CAN SERIOUSLY tors, environmentalists, the media, consumers, competitors and the scientific community. DAMAGE A COMPANY’S CREDIBILITY. Being perceived as a greenwasher can seriously damage a company’s credibility. Stakeholders can become skeptical, and STAKEHOLDERS CAN BECOME a backlash against companies and brands can ensue. Advertising that is unfair or deceptive can also expose mar- SKEPTICAL,AND A BACKLASH keters to significant legal risks and considerable accompanying expense. Ultimately, the impact of greenwash can hit the bot- AGAINST COMPANIES AND BRANDS tom line if disillusioned customers shift their purchases to more trustworthy competitors. CAN ENSUE.ADVERTISING THAT IS With an eye toward making headlines, advocates strategical- ly target the most well-known companies and brands. BP’s $200 UNFAIR OR DECEPTIVE CAN ALSO million Beyond Petroleum campaign, launched in 2000, was criticized for touting what appeared to be a corporate commit- EXPOSE MARKETERS TO ment to , which, in fact, was reported to rep- resent less than 1% of total global sales. SIGNIFICANT LEGAL RISKS. Bill Ford Jr.’s reputation—and that of his family’s venerable automaker—took a hit when, as chairman of the Ford Motor Co., he was unable to fulfill his pledge to build greener cars as part of the “Heroes of the Planet” campaign. With the company ed the automaker continue to produce gas-guzzling SUVs. He falling on hard times and cheap gas prices prevalent, he report- wound up paying dearly for the consequences.1 Relatedly, in edly bent to the collective will of senior associates who advocat- the summer of 2008, General Motors took flak from advocate bloggers for announcing plans to “reinvent the automobile” 1. Emilia Askari, “USA: Ford CEO Says He’s Green,” CorpWatch, October 31, 2001; with its Chevy Volt, while continuing to manufacture perhaps www.corpwatch.org/article.php?id=1453, accessed August 1, 2010, as reported in the New Rules of Green Marketing: Strategies, Tools and Inspiration for Sustainable Branding, p. 132 the most environmentally unfriendly car on the planet: the

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now-defunct Hummer. Media attention on greenwashing gets magnified by influen- IF CONSUMERS DISCOVER AN ENVIRONMENTAL tial environmental news websites such as Grist.org, Treehugger.com and Worldchanging.com, and thousands of CLAIM IS MISLEADING,THEY WILL: vigilant green bloggers and tweeters who are on call 24/7. Greenwashing even has a website of its own, GreenwashingIndex.com (www.greenwashingindex.com). It was founded in 2007 by the EnviroMedia agency in collabo- ration with University of Oregon. GreenwashingIndex.com lets visitors rate the authenticity of green-marketing claims 78% using its GreenwashingIndex.com Scoring Criteria. Stop buying Consumers can read greenwashing news and submit ads to be the product evaluated by other website visitors. Marketing campaigns spotlighted on the site include Easyjet, which claimed that flying the airline generates less than a typical airline or even driving a passen- 22% ger car; Monsanto, the giant producer of genetically modified Continue buying seeds, which pledged to practice ; and the product Fiji bottled water, claiming that “every drop is green,” despite the fact that the water is shipped thousands of miles across the sea to where tap water is readily available. The site gives visitors instructions on how to post and rate an SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER ad using the Greenwashing Index Scoring Criteria, which includes five points for a consumer to consider when rating an ad: 1) The ad misleads with words; 2) The ad misleads with visu- als and/or graphics; 3) The ad makes a green claim that is vague or seemingly unprovable; 4) The ad overstates or exaggerates how green the product/company/service actually is; 5) The ad leaves out or masks important information, making the green claim sound better than it is. The ratings scale runs from “1” for 8 in10 “authentic” to a score of “5” for “bogus.” A score of a “3” labels the ad “suspect.” PROPORTION OF AMERICANS WHO Eight in 10 Americans responding to a Cone Communications survey in 2012 said they don’t believe compa- DON’T BELIEVE COMPANIES ARE nies are addressing the full extent of their environmental ADDRESSING THE FULL EXTENT OF THEIR impact. Less than half (46%) say they trust companies’ green claims. (See American’s Beliefs About Environmental Messages ENVIRONMENTAL IMPACT.

By Companies, P. 10.) Underscoring the potential risks to the SOURCE: 2012 CONE COMMUNICATIONS SURVEY bottom line, 78% report they would be willing to stop buying a company’s product if they discovered that they were misled by an environmental claim. (See If Consumers Discover an Environmental Claim is Misleading, right.) Greenwashing not only threatens to undermine credibility and brand reputation, it can expose companies to significant legal risks, including government enforcement, lawsuits by 46% consumers or competitors and review by the National Advertising Division, the investigatory arm of the advertising PERCENTAGE OF AMERICANS WHO DON’T industry’s system of self-regulation, discussed in more detail further on in this report. TRUST COMPANIES’ GREEN CLAIMS SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER

ADVERTISING AGE SEPTEMBER 16, 2013 · 7 HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS THE CHALLENGES OF COMMUNICATING GREEN

Defining what constitutes a green product is complex and constantly evolving, so how should a marketer approach its communications?

Communicating a product’s green attributes without mis- leading consumers challenges even the most well-prepared mar- A NEW CONSUMER MALADY IS keters. That’s because defining what constitutes a green product is complex and constantly evolving. Every situation is technically SETTING IN:“GREEN FATIGUE.” unique. Consumers can’t tell which products are greener at the point of sale, and what can be considered “green” (or better stat- NEARLY HALF (48%) OF ed, “greener”) is largely situational. All of this underscores the need to proceed with caution when making green claims. CONSUMERS SURVEYED BY CONE Marketers should incorporate a life cycle or holistic approach and follow the FTC Green Guides to underscore their brand’s credibil- COMMUNICATIONS GREEN GAP ity. Later in this report we also include strategies that will help make your green claims credible. Let’s start by looking at some of TREND TRACKER 2013 REPORT the tough challenges facing green marketers. BEING “OVERWHELMED BY THE ■ Environmental science is still evolving. As science evolves and new designs, technologies, materials and other AMOUNT OF ENVIRONMENTAL potential solutions come to market, new environmental chal- lenges (as well as opportunities) come to the fore. Since the FTC MESSAGES”THEY HEAR AND SEE. Green Guides were last revised in 1998, new terms have arisen, such as “,” “carbon neutral” and “sustainable,” as well as new tools such as carbon offsets. Currently, availabili- ty of freshwater is emerging as a big issue, bringing with it new fatigue.” Nearly half (48%) of consumers surveyed by Cone terms such as “” and “embedded water.” The Communications Green Gap Trend Tracker 2013 report being challenge for the FTC is to keep pace with this continuous stream “overwhelmed by the amount of environmental messages” they of new terms and buzzwords. In order to do so, it has refused on hear and see, and 71% wish companies would do a better job help- occasion to define some terms, leaving the industry to either use ing them to understand the environmental terms they use, among as-yet-undefined terms with caution, or to work with industry them “compostable,” “recyclable” and “all natural.” and trade groups to define such terms on their own. Not surprisingly, a new consumer malady is setting in: “green ■ Consumers don’t have the wherewithal to determine

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what is green at the point of sale. Consumers can’t see the green electrons flowing through their wires when they buy wind AMERICANS’ BELIEFS ABOUT power from a local utility. They can’t detect the lack of toxic chem- icals that don’t coat the kitchen floor when they apply a “natural” ENVIRONMENTAL MESSAGES BY COMPANIES cleaner. These are just two of many examples demonstrating the A majority of consumers want companies to be more clear intangibility of environmental benefits—they can’t be directly about what environmental terms mean. experienced either in-store or at home. Underscoring the need to build credibility for one’s claims, consumers must take it on faith 63% that greener products are, in fact, as green as claimed. I understand the environmental Walk down a supermarket aisle and try to amass a basketful terms companies 63% use in their advertising. of green products. Not every “greener” product is labeled with 61% an eco-label or other claim. Some products, such as vinegar and baking soda, considered environmentally preferable (and cheaper) than conventional cleaning aids, are not marketed as such. No wonder 79% of respondents to Cone Communications I am overwhelmed by the 48% 2013 Green Gap Survey would like more information at the number of environmental 52% messages I hear and see. point of sale, up from 73% in 2008. Several mobile apps now 52% provide the tech-savvy consumer with all kinds of additional information about the environmental impact of products and companies. (Some are listed on the EPA’s website (http://www.epa.gov/mygreenapps/). While these may prove 46% useful over time, they will not cure the problem if the eco-label I trust companies to tell me the truth. 44% or green messages at the point of sale are not clear or accurate. 47% ■ What exactly is a “green” product? There may be no such thing as a “green” product. Every product, no matter how thoughtfully designed, made or packaged, uses resources and It is OK if a company is not 69% environmentally perfect as long creates waste. Even products that bear the most respected and 75% popular eco-labels may not be considered truly “green.” For as it is honest about its environmental efforts. instance, a compact fluorescent light bulb that merits the U.S. n/a Environmental Protection Agency’s Energy Star label for ener- gy efficiency still contains a tinge of mercury. The Toyota Prius I wish that companies would with its fuel-sipping hybrid engine totes a nickel-metal hydride do a better job helping me to understand the environmental 71% battery, a significant source of hazardous materials. terms they use to describe 71% their products and services ■ What appears to be an environmentally preferable (e.g., “compostable,” n/a attribute may have little or no environmental benefit at “recyclable,” “all natural”). all. Counterintuitively, a package that contains 100% postcon- sumer recycled content may not necessarily be environmental- I actively seek out 45% ly superior to one containing 10% postconsumer material if the environmental information 43% recycled content must be shipped from far away. The makers of about the products I buy. Mueller’s Pasta found that converting to recycled carton mate- n/a rial would add about 20% to the thickness of its package mate- rial and this would partially offset any environmental savings, given the extra energy needed to ship the redesigned boxes. I trust that companies are following U.S. government 56% guidelines regarding making 2013 ■ What may be considered “greener” may be n/a clear and accurate environ- 2012 situational. Geography, climate or other factors can influence mental marketing claims. n/a 2008 what makes a product or service ultimately “greener” to the end consumer. For instance, organic strawberries grown in California SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER may wind up being less “green” than conventionally grown coun-

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cycle—not just the single attributes (typically disposal-oriented) that may be uppermost in its consumers’ minds. A tool called life- 71% WISH COMPANIES WOULD cycle assessment (LCA) can help to quantify the environmental impact involved in making environmentally preferable products. DO A BETTER JOB HELPING Although a good tool for guiding internal product development decision-making, LCA should be used for many sound reasons, THEM UNDERSTAND THE though with caution when relied upon as a marketing tool. LCA-based comparisons with one’s own products can be fair- ENVIRONMENTAL TERMS THEY ly straightforward, but comparisons with competitors’ products can be tricky since products may have been optimized for dif- USE TO TALK ABOUT THEIR ferent environmental benefits, or more practically speaking, the (likely proprietary) data may not be readily available. PRODUCTS AND SERVICES Comparing the environmental impacts of two different tech- nologies can be tricky, if not impossible, since it entails making (E.G.,“COMPOSTABLE,” value judgments and comparing factors that are incommensurate. For instance, in the case of diapers, what is more important to “RECYCLABLE,”“ALL society, landfill space associated with disposing of diapers and the potential underground water pollution associated with leakage, or NATURAL.”) the water, energy and detergent associated with laundering? LCAs of two products based upon the same technology can yield very dissimilar results, making comparisons for marketing purposes unfair. For instance, two competitive clothes washers might have been made in different countries using different types of energy (e.g., coal in the U.S., nuclear in France), each with their respective impact and pollutants. Similarly, as Steelcase found when developing the Environmental Product Declaration for its 79% globally manufactured and marketed Think chair (as discussed in Case Study: BIFMA, P. 29), the same product made in three differ- PERCENTAGE OF AMERICANS WHO WOULD ent global regions would require separate LCAs. LIKE MORE INFORMATION ABOUT Finally, LCAs do not adequately address such qualitatively based environmental concerns as habitat destruction, GREEN PRODUCTS AT POINT OF SALE depletion, odors, visual pollution, noise pollution, toxicity or biodegradability; nor do they encompass such social issues as fair SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER trade, labor practices and community responsibility, suggesting the need for a supplemental, more holistic assessment. Consumers, at least for now, are not knowledgeable enough terparts in New Jersey if they have to travel across the country about LCA to ask the right questions when presented with their before they are consumed. Similarly (and perhaps oversimplisti- results. Experts in industry, government and academia are cally) considering the impacts of dumping soiled diapers in a land- working to further develop and legitimize the use of LCA and fill, cotton diapers may be environmentally preferable on the East other approaches as marketing tools. For the time being, it may Coast, where there is plentiful water for washing, but may be detri- be best to use LCA to help a company guide internal product- mental in the Southwest, where the water supply is tight. Perhaps development decisions, such as comparing material choices the 1970s saying “think global, act local” was right. “Green” seems and identifying areas for improved operations or product per- at best to be a relative term, with some products being “greener” formance. Although LCA will continue to be an important tool for certain reasons or in certain circumstances. (Editorial note: for use in developing scientific support for green claims, LCA This is why the authors of this report prefer to use the term “green- may not be sufficient to substantiate claims of a general envi- er” rather than the more definitive “green.”) ronmental benefit since virtually no product can demonstrate that it has no negative environmental impact. ROLE FOR LIFE-CYCLE ASSESSMENT With a good understanding of its risks and the challenges, The complexity and challenges of product greening suggest and the overall context with in which green marketing takes that the prudent marketer will mind all aspects of a product’s life place, we are now ready to dive into the FTC Green Guides.

10 · SEPTEMBER 16, 2013 ADVERTISING AGE HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS THE FTC GREEN GUIDES: AN OVERVIEW

Advertising that runs afoul of the FTC Green Guides can expose marketers to false advertising lawsuits or other regulatory action

The Federal Trade Commission (FTC) is the U.S. govern- ment agency that promotes consumer protection and may bring enforcement actions for unfair or deceptive acts or prac- IN DEVELOPING THE 2012 GREEN tices in and affecting commerce. The Federal Trade Commission’s Guides for the Use of Environmental Marketing GUIDES,THE FTC CONSIDERED NOT Claims (“the Green Guides”) offer important information to advertisers. JUST TECHNICAL DEFINITIONS OF In 1992, the FTC published its first edition of the Green Guides to put forth its views on what might constitute unfair or TERMS, BUT MORE IMPORTANTLY, deceptive advertising and offer general guidance on how to support environmental marketing claims. The Green Guides THE CONSUMER TAKEAWAY.THE were updated in 1996 and again in 1998 to clarify the kind of exvidence needed to support environmental claims. Since FTC COMMISSIONED CONSUMER then, the American public has become more aware of and con- cerned about such issues as climate change, greenhouse gas SURVEYS TO ASCERTAIN emissions, renewable energy and materials, and sustainability in general. An explosion in the number of green claims around CONSUMERS’ UNDERSTANDING OF these issues is now taking place in the U.S. (and global) market- place, prompting the FTC to jump in once again. VARIOUS ENVIRONMENTAL TERMS. In 2007, the FTC took the first steps toward creating what are now the 2012 updates. It started with a review of the exist- ing Green Guides, a process that included conducting three public workshops, and the issuing of proposed revisions. It also reviewed more than 500 comments submitted by industry not just technical definitions of terms, but more importantly, stakeholders, environmental groups and consumers, including the consumer takeaway. The FTC commissioned consumer sur- 340 unique comments. These can be viewed here: veys to ascertain consumers’ understanding of various environ- www.ftc.gov/os/comments/greenguiderevisions/. mental terms. This research informed the FTC’s effort in provid- In developing the 2012 Green Guides, the FTC considered ing general guidance and advice to marketers on the use of cer-

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tain specific claims and appropriate qualifications in order to prevent misleading consumers. In October 2012, the FTC issued NATIONAL ADVERTISING DIVISION its revised Guides for the Use of Environmental Marketing Claims (2012 Green Guides).

The National Advertising WHAT THE FTC GREEN GUIDES ARE— Division (NAD) is the investiga- AND WHAT THEY ARE NOT tory arm of the advertising The FTC Green Guides are not rules or regulations. They do industry’s system of self-regula- not carry the force of law and are not independently enforce- tion and seeks to promote truthful and nonmisleading able. Rather, they are administrative interpretations of laws advertising. The policies and procedures of the NAD are administered by the FTC to help marketers avoid deceptive established by the Advertising Self-Regulatory Council environmental claims under Section 5 of the FTC Act. This is the (ASRC) and administered by the Council of Better federal law that prohibits “unfair or deceptive acts or practices Business Bureaus (CBBB). This system of advertising self- in or affecting commerce.” Marketers should not, however, be regulation is a source of pride for the advertising industry. tempted into thinking that the Green Guides are merely sugges- It began in 1971, when the Association of National tions. If an advertiser makes a claim that does not accord with Advertisers (ANA), the American Association of the Green Guides, the FTC may take enforcement action under Advertising Agencies (AAAA) and the American the FTC Act. Advertising that runs afoul of the Green Guides Advertising Federation (AAF) formed an alliance with the may also violate state consumer-protection laws and expose CBBB to create an independent self-regulatory body to advertisers to enforcement action from state agencies and false- help protect the integrity of advertising by promoting advertising lawsuits, including consumer class-action lawsuits. high standards of truth and accuracy. In 2008, the Direct Additionally, the advertising industry’s self-regulatory Marketing Association (DMA), Electronic Retailing forum, the National Advertising Division (NAD) (see left), looks Association (ERA) and Interactive Advertising Bureau to the FTC Green Guides when reviewing environmental mar- (IAB) joined the partnership. The governing body, former- keting claims, and when the NAD cites its findings and recom- ly known as the National Advertising Review Council, mendations to advertisers, it seeks to harmonize those with the changed its name to the Advertising Self-Regulatory guidance set forth by the FTC. Finally, it is important to Council (ASRC) in 2012. remember that the FTC is not an agency that seeks to promote The NAD provides a process by which anyone can environmental policy or achieve particular measures of sus- challenge the truth and accuracy of claims made in tainability. The goal is to ensure that marketers make nonde- national advertising. Competitors and, on occasion, con- ceptive environmental claims so that consumers can have sumers, use the NAD as an alternative to bringing a legal truthful and useful information. Marketers should have a strong incentive to understand, action in court. The NAD uses a unique, hybrid form of and adhere to, the Green Guides. In addition to serving as a alternative dispute resolution, working closely with in- tool for helping achieve credibility in environmental market- house counsel, marketing executives and scientific ing, the Green Guides can help marketers steer clear of trou- experts to decide whether claims have been substantiat- ble. As seen below, the FTC and state agencies periodically ed. In the event that the NAD finds that advertising claims pursue enforcement actions against companies for making are not substantiated, it recommends that the claims be unsupported green claims. Additionally, false advertising law- modified or discontinued. The NAD self-regulatory suits, including consumer class actions, may be brought process is a voluntary one, but companies comply with against companies that are alleged to be greenwashing. The NAD recommendations approximately 95% of the time. cost of defending such complaints can be considerable and The NAD’s findings, published in NAD Case Reports, can the negative publicity can damage a brand and further under- help marketers understand claim substantiation and adver- mine trust in environmental marketing. tising law and guidance. Between 1988 and 2012, the NAD issued more than 40 decisions involving a wide range of WHAT ARE GREEN CLAIMS? environmental or “green” marketing claims for products The FTC Green Guides cover any claims about the environ- ranging from paints to plastics to frying pans. Some of mental attributes of a product, package or service, including these will be described in this report. A digest of these claims in labeling, advertising or any other form of marketing decisions may be found at www.asrcreviews.org. or promotional materials in any media. The Green Guides apply not only to express claims, but also to environmental

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CLAIM SUPPORT THE FTC EXPLAINS THAT THE The FTC advises marketers to make sure that environmental claims (express and implied) are truthful, nonmisleading and sup- GREEN GUIDES ‘APPLY TO ported by “a reasonable basis.” Because claims of environmental benefits are typically science-based, the “reasonable basis” will ENVIRONMENTAL CLAIMS typically include “competent and reliable scientific evidence.” The determination of what constitutes “competent and reliable ...WHETHER ASSERTED scientific evidence” and proper substantiation is a great challenge for marketers and involves the interplay of science, communica- DIRECTLY OR BY IMPLICATION tion and legal rules and guidelines. The FTC Green Guides are a valuable tool for helping marketers navigate these waters. THROUGH WORDS... While the 2012 Green Guides examine new categories of claims and provide new analysis and examples, there are over- DEPICTIONS, PRODUCT BRAND arching principles that remain the same and should be followed by any marketer seeking to build credible and accurate environ- NAMES, OR THROUGH ANY mental marketing claims: ■ Be clear and specific. Marketers are liable for what con- OTHER MEANS.’ sumers may incorrectly interpret as well as what they correctly take away. Prevent unintended deception with the use of sim- ple, crystal-clear language. For example, given that claims about products often appear on packages, be sure to distinguish between claims that refer to a product’s packaging and those that refer to the product itself. Also, marketers making compar- ative claims should be clear to avoid consumer confusion about claims that may be implied based upon a “reasonable con- any comparisons. A claim that states “20% more recycled con- sumer’s” net impression of the advertisement or other mar- tent” is ambiguous. More than what? The comparison should be keting materials. Pictures, images and even brand names can made clear; for example, “20% more recycled content than our be considered green claims and can contribute to an implied previous product.” message of environmental benefit. The FTC explains that the Green Guides “apply to environmental claims ... whether ■ Don’t play games with type size or the proximity of asserted directly or by implication through words ... depic- the claim to its qualifiers. When it is necessary to provide a tions, product brand names, or through any other means.” qualification to an environmental marketing claim, the qualifi- The original Green Guides presented environmental claims cation should be clear, prominent and understandable. in different categories. These included “General Environmental Benefit Claims” (such as “eco-friendly” or ■ Avoid vague, trivial or irrelevant claims that can cre- “green”) and also claims that focused on particular environ- ate a false impression of a product’s or package’s environ- mental attributes (claims that a product is “compostable,” mental benefit. Avoid claiming an environmental benefit that “biodegradable,” “ozone-safe,” “recyclable” and “made from isn’t meaningful or is unlikely to be realized, for example, recycled content”). For each category, the Green Guides advertising a product as “recyclable” in an area where there are offered general guidance on the meaning of the claims to con- few municipal recycling facilities. sumers and the type of evidence required to ensure that the claim is substantiated and not misleading. ■ Do not overstate. Don’t call a product “green” or “eco- The 2012 Green Guides clarify and revise provisions from friendly” on the basis of a single environmental benefit. For prior versions and also include new categories of claims intro- example, rather than claim that a product is “green,” simply duced in the marketplace in recent years. These include state the environmental attribute (e.g., “the package is now claims relating to carbon offsets, the use of certifications and made from recyclable material”). seals of approval (including seals by manufacturers), claims that a product is “nontoxic” or “free of” a substance under- ■ Tell the whole story. Provide complete information. stood to be harmful to the environment or human health, and Consider a product’s entire life cycle when making claims claims regarding the use of “renewable energy,” as well as about environmental impact. Don’t omit information that is those about the use of “renewable materials.” necessary to keep the claim from being misleading.

ADVERTISING AGE SEPTEMBER 16, 2013 · 13 HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS THE 2012 FTC GREEN GUIDES: WHAT’S NEW

A summary of the updated guidance offered by the FTC and practical suggestions for how to apply it to your marketing

Let’s take a closer look at the 2012 Green Guides. In this section, we will examine the various categories of green claims, summarize the updated guidance offered by the FTC and pro- CASE STUDY: TESTED GREEN vide examples, analysis and practical suggestions for applying the Green Guides in advertising and marketing. FTC enforcement action against tested GENERAL ENVIRONMENTAL BENEFIT CLAIMS green certification Probably the most common green claims are the most gen- eral ones, and they are also among the most problematic. In 2011, the FTC brought an enforcement action against a We’ve all seen products that use terms like “eco-friendly,” company that sold for hundreds of dollars a “Tested Green” “planet friendly,” “green” and even “greenest” accompanied certification to more than 100 customers. According to the by images of the proverbial babies, planets and daisies. All of FTC, the certifications were deceptive since the products were these can convey a claim of general environmental benefit. neither “tested” nor “green.” The resulting settlement pro- hibits the company from using the certification and could sub- Here’s why it’s risky. ject it to financial penalties for future violations. According to the 2012 Green Guides, marketers should avoid such unqualified terms as “environmentally safe,” “earth- friendly” and “eco-friendly.” Such broad terms are susceptible determine whether the use of images or brand names consti- to different meanings and are therefore very difficult to substan- tutes a general environmental claim, the FTC examines the “net tiate. Also, because such terms and claims imply that a product impression” of the marketing material. The U.S. self-regulatory or service has no negative environmental impact or has a net authority, the NAD, also uses this approach when analyzing environmental benefit, the claim, in the words of the 2012 advertising claims. Green Guides, “may be virtually impossible to substantiate.” If such terms, or other general environmental benefit claims Although the FTC provides some specific examples of gener- are used, marketers should include clear and prominent quali- al environmental benefit claims (for example, “eco-friendly”), fying language to make clear the basis of the claim and to avoid general environmental benefit claims may also be communicat- a deceptive or misleading implied claim. Marketers should not ed by means of depictions and even product brand names. exaggerate negligible benefits and should analyze any negative Depending on the context, images of forests, the Earth or trade-offs if a qualified claim conveys that a product is environ- endangered animals may convey an environmental claim. To mentally preferable overall.

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If an environmental claim draws a comparison (e.g., “Now resents an emission reduction if the reduction (or activity that greener!” or “A better environmental choice!”), the claim caused the reduction) was already required by law. should be qualified to clearly identify the basis of the compari- Claims based on carbon reductions that haven’t happened son. For example, if a package now weighs 15% less than before yet can be a risky proposition for marketers. In 2010, for exam- but has not been improved in any other material respect, the ple, a class-action lawsuit was filed against Fiji Water over the claim “greener than our previous package” would be deceptive claim that the company was “carbon negative.” Although Fiji unless, first, there is clear and prominent qualifying language detailed various efforts to offset its carbon emissions, the suit (“We’ve reduced the weight of our package by 15%”), and sec- alleged that because Fiji Water used a forward-crediting model, ond, reducing the package’s weight would mean the product the “carbon negative” status would not be realized for several had less environmental impact overall. Any language used to decades, a fact not clearly disclosed. qualify general environmental benefit claims should be both clear and meaningful. The FTC’s guidance is consistent with the idea that while many products can offer environmental benefits, few, if any, are CASE STUDY: truly green. The key for communicating those benefits is to qualify the claims in a way that is clear and meaningful. The remaining sections of the Green Guides address specific envi- PANASONIC AND GREENPAN ronmental benefits. CARBON OFFSETS Panasonic plasma televisions The emergence of carbon-offset claims was a key impetus for and GreenPan — not ‘green’ enough? updating the Green Guides. Concerns about greenhouse-gas emissions have caused businesses and consumers to think cre- atively about ways to reduce their “carbon footprint”—the net In a 2007 decision, the NAD greenhouse-gas emissions caused by energy-consuming activi- recommended that Panasonic discontinue the claim that its ties. For example, capturing methane (a greenhouse gas) from plasma televisions were waste and using it to produce energy reduces greenhouse gas. “environmentally friendly.” This kind of reduction can be quantified and then sold to busi- Although Panasonic estab- nesses and consumers to “offset” the carbon emissions that lished that its televisions did result from their own activities. not contain lead or mercury There are many opinions about the best way to trace claims (while competing LCD models related to carbon offsets and to calculate a carbon footprint. did), this single attribute was insufficient to support a claim of Marketers sometimes sell products whose manufacture emits “environmentally friendly,” a claim of a general environmen- greenhouse gasses that are offset by funding projects such as tal benefit (NAD Case Report No. 4697). wind farms, tree planting or methane-capture facilities that may have happened already. The 2012 Green Guides make clear that the use of the term “carbon offsets” in marketing can be inher- In 2012, the NAD recommended that GreenPan, ently misleading if the communication does not specify the par- maker of nonstick cookware, modify or discontinue ticular manner in which reductions in carbon emissions have claims that its products were “eco-friendly.” The been obtained. A carbon offset is not legitimate if the same off- manufacturer makes its pans without using polyte- set is sold to multiple purchasers. Since not all carbon-offset trafluoroethylene (PTFE) and perfluorooc- partners are legitimate, marketers are advised to properly vet tanoic acid (PFOA), chemicals used in partners prior to making claims about their participation. the nonstick coating of competing Given the complexity of carbon-offset accounting, the 2012 cookware. The NAD found that while Green Guides advise marketers to employ competent and reli- GreenPan could legitimately claim that its product did not contain PTFE able scientific evidence and accounting methods to properly or PFOA, this single attribute was not quantify claimed emission reductions and to ensure that a sufficient to support the broad claim that reduction is sold only once. The 2012 Green Guides also advise the product was “eco-friendly,” or that it was overall a better marketers to disclose if an offset represents an emissions reduc- environmental choice than competitive products (NAD Case tion that will not occur for two years. Finally, the FTC warns Report No. 5519). marketers that it is deceptive to claim that a carbon offset rep-

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CERTIFICATIONS AND SEALS OF APPROVAL tion, SCS Global Services and other organizations will, for a fee, One very popular way of communicating a green attribute (or vouch that an advertised claim is adequately substantiated and multiple attributes) is through the use of seals or certifications provide an accompanying eco-label for marketing use. Finally, used in labeling and advertising. These are especially prevalent on companies can create eco-labels (“self-declarations”) for their consumer products such as paper and packaging, forest products, own products that promise environmental and social benefits, food, cleaning products and household appliances. According to or simply signify corporate commitment to the environment. the EcolabelIndex.com (http://www.ecolabelindex.com/),a Some eco-labels focus on a single product attribute (e.g., global directory of eco-labels and environmental schemes, at least energy efficiency) while multi-attribute labels examine two or 435 different eco-labels or green certifications are used in nearly more environmental impacts through the entire product life 200 countries and 24 industry sectors. cycle. Examples of multi-attribute labels include EPEAT (elec- Eco-labels, certifications and seals of approvals do not nec- tronics) and Global Organic Textile Standards. Unlike many gov- essarily mean the same thing. Some eco-labels are claims made ernments that offer multi-attribute seals, the U.S. has opted for by the manufacturer or by some other party, such as a laborato- voluntary single-attribute eco-labels. Examples include those ry, a trade group, the government or an independent organiza- offered by the Environmental Protection Agency, including the tion. Others are certifications that assure that a product com- Energy Star seal (energy efficiency), WaterSense (water-efficient plies with specified standards. We will refer broadly to “eco- appliances and plumbing fixtures), Design for Environment labels” while recognizing that not all such labels are equal or (safer chemical formulations in cleaning and other products) equally reliable. and SmartWay (fuel-efficient and low-emission vehicles and Eco-labels can be awarded by governments looking to pro- other forms of transportation used in distribution and delivery tect domestic markets or affect policy (e.g., Energy Star), envi- operations). In addition, the U.S. Department of Agriculture runs ronmental groups or other NGOs that want to protect a natural the USDA Organic and USDA BioPreferred (certified bio-based resource or cause (Rainforest Alliance), industry or trade content) labeling programs. (See Appendix 2, P. 47) groups looking to defend or capture new markets (BIFMA’s level Eco-labels have much to recommend them: They are easy to certification for industrial and commercial furniture) and retail- spot on packages; they are popular with consumers; and, eco- ers looking to protect shoppers (such as the Wal-Mart labels can influence purchasing. Eighty-one percent of respon- Sustainability Index http://corporate.walmart.com/global- dents in the 2012 Cone Trend Tracker Survey said when pur- responsibility/environment-sustainability). Independent for- chasing an environmental product, they are most likely to be profit and not-for-profit organizations can offer certifications influenced by a symbol or certification. for various industries or product categories with accompanying However, eco-labels are not without risk. Eco-labels can vary eco-labels of their own, for example, the Veriflora certification in the rigor applied to the criteria and the rules around verifica- and eco-labeling program for floriculture and horticulture cre- tion, with some requiring independent third-party certification ated by SCS Global Services and the GS-1 Standard for Sanitary and stakeholder review, while others allowing manufacturers to Paper Products created by Green Seal. self-verify. Third-party-certified eco-labels can rest upon propri- Through a process known as independent claim certifica- etary standards that are owned and controlled by the organiza- FTC GUIDE TO ENDORSEMENTS AND TESTIMONIALS

Endorsements are an important tool for advertisers because they can carry great weight with consumers. But the law says they also have to be truthful and not misleading. The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising, revised in 2009, are designed to help marketers ensure they meet this standard. For example, using unrepresentative testimonials may be misleading if they are not accompanied by information describing what con- sumers can generally expect from use of the product or service. These guides also state that if there is a connection between the endorser and the marketer of a product that would affect how people evaluate the endorsement, it should be disclosed. This requirement is important to marketers when they use eco-labels, seals or certifications. According to the FTC, consumers might consider a seal appearing to be from an entity other than the manufacturer an endorsement. Marketers may be required to disclose “connection[s] between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement.”

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tion that developed them, or upon nonproprietary consensus- organization. based standards that are developed from a broad range of stake- If by its appearance or wording a certification or eco-label holders. Additionally, eco-labels can come from trade associa- conveys to the consumer a general environmental benefit tions and membership groups that have a material connection. claim, it should be qualified. The FTC offers the example of an Ideally, eco-labels signify that a product has met the criteria out- environmental seal featuring a globe icon with the text lined in a published standard such as those verified by ANSI, the “EarthSmart.” Because this seal conveys the claim of a general American National Standards Institute. Their criteria include environmental benefit, the seal should be qualified and the openness, a balanced representation of stakeholders, due claim made more specific with clear and prominent language, process, consensus and a right to appeal. such as: “EarthSmart certifies that the product meets Although eco-labels can be an effective means of communi- EarthSmart standards for reduced chemical emissions during cating an environmental benefit or attribute, the 2012 Green product usage.” Guides make clear that marketers should not misrepresent that The disclosure requirement becomes more challenging if the a product, package or service has been endorsed or certified by certification is based on broad multi-attribute standards. The FTC an independent third party (including a government agency). Green Guides provide illustrative examples but these are not For example, a product that contains a logo for “environmental intended to provide the only effective way to qualify claims. If excellence” would be misleading if the marketer self-awarded the designation and no independent, third-party certifier objec- tively evaluated the product using independent standards. Several large companies have attempted to put forth their own GREENSEAL self-certifications. SC Johnson (Greenlist), NEC (Eco Products), Sony Ericsson (GreenHeart), GE (Ecomagination), Timberland (Green Index), Hewlett-Packard (HP EcoHighlights) and Coca- This product meets the Green Seal™ Cola (PlantBottle) are among the best-known examples. Standard for Sanitary Paper When companies use self-certifications, they are declaring Products, GS-1, based on chlorine- their own environmental and social achievements. While these free processing, energy and water have some distinct advantages—such as controlling costs, allowing efficiency, and content of 100% recovered material with a minimum flexibility in the information provided to consumers and potential- of 25% postconsumer material. ly applying across borders—these self-declarations do not, howev- er, carry the endorsement or the credibility of an impartial third REPRINTED WITH PERMISSION FROM GREEN SEAL party. Even if the self-certifying criteria are valid and the environ- mental benefits meaningful, marketers may run into problems Founded in 1989, the not-for-profit organization Green Seal since consumers are likely to believe that an independent third provides a seal of approval for products that meet specific cri- party bestowed the certification. So self-certifiers should clearly teria within categories for which they have created standards. Companies pay to have products evaluated and annually identify the basis for “awarding” the seal to a product or company. monitored. Products that meet or exceed the standards are For example, SC Johnson created its Greenlist logo to inform authorized to display the Green Seal certification mark on consumers that ingredients were carefully selected from an their product and promotional material. To avoid mislead- internally developed designated list of preferred chemicals. ing consumers into thinking that certified products are However, in 2011, SC Johnson faced consumer class-action law- greener than they are or totally green, the certification mark suits in California and Wisconsin because, the lawsuits alleged, must be accompanied by a statement listing the specific consumers might believe that the Greenlist logo that appeared attributes and standard for which the product has been cer- tified. All manufacturers of products in a category are eligi- on its Windex brand was awarded by an independent third ble to apply for the Green Seal. party. (The company continues to use its Greenlist process for The group has finalized standards spanning a wide range internal product-development efforts.) 2 of commercial and consumer-product and -service cate- If a marketer uses a name, logo or seal of approval of a third- gories, including cleaners and cleaning services, floor-care party certifier, the certification could be considered an endorse- products, food-service packaging, lodging properties, paints ment and, therefore, subject to the criteria for endorsements pro- and coatings, papers and newsprints, lodging and restau- rants, and windows and doors. Wausau Paper, Andersen vided in the FTC’s Endorsement Guides (see FTC Guide to Windows, Clorox, Kimberly-Clark, Hilton and ServiceMaster Endorsements and Testimonials, P. 16). This may require the mar- cleaning franchises are just a few of the organizations keter to disclose any material connections with the certifying whose products now bear the Green Seal certification mark: a blue globe with a green check. 2. “SC Johnson Settles Cases Involving Greenlist Labeling,” SC Johnson press release, July 8, 2011.

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qualifying language is needed to prevent a misleading message consumers may not understand or appreciate the distinction. about the scope of the environmental benefit conveyed by a seal, Marketers claiming an item is “compostable” should have the key is to provide it in a clear and conspicuous manner. Green competent and reliable scientific evidence that all of the materi- Seal (www.greenseal.org), one of the oldest and most credible als in the item will break down or become part of usable com- multi-attribute labeling organizations in the U.S. has long required post or soil amendment in an appropriate industrial or munici- its labeling partners to incorporate qualifying language with its pal compost facility or in a home composter or pile. eco-label. (See Green Seal sidebar, P. 17.) The FTC’s survey evidence indicated that 62% of consumers The FTC does not maintain a list of approved third-party cer- do not have access to large-scale composting facilities and tifiers. Instead, the FTC Act gives marketers flexibility to sub- another 28% do not know if they have access to such facilities. stantiate their claims with any competent and reliable scientific However, a substantial percentage of consumers understood an evidence. The FTC notes, “Marketers can choose for themselves unqualified “compostable” claim to mean that a compostable whether they want to rely on third-party certification as all or facility is available in the area where they live. Also, 71% of part of their substantiation, and, if so, whom they select as a respondents believed that an item labeled “compostable” certifier.” Marketers partnering with NGOs or other third par- would decompose in a home compost pile or device. ties should look to trusted logos and ensure that the seal or logo Consequently, if an item cannot be composted safely in a timely contains clear and succinct qualifying language in case it com- manner at home (and if large-scale composting facilities are not municates a claim of a general environmental benefit or a third- available to a substantial majority of consumers), marketers should party endorsement. Use of an eco-logo or third-party certifica- clearly and prominently qualify compostable claims if municipal tion does not eliminate a marketer’s obligation to ensure sub- composting facilities are not available to a substantial majority of stantiation of any claims communicated by the certification. consumers or communities where the item is sold. Claims should clearly indicate the limited availability of industrial composting COMPOSTABLE CLAIMS facilities and that the item is not suitable for backyard composting. The practice of composting—biologically breaking down organic waste (food, leaves, grass trimmings, paper, etc.) into DEGRADABLE CLAIMS soil amendment or fertilizer—is of increasing interest to environ- Although consumers often confuse “biodegradable” and “com- mentally conscious consumers. Nevertheless, confusion exists postable,” the terms have different meanings: the former refers to over what the term actually means and when marketers can the complete decomposition into elements found in nature within truthfully claim that a product or package is “compostable.” the waste stream (be it a landfill or water stream); the latter means Also, the lack of programs to divert residential food waste limits to decompose as part of a scientifically controlled aerobic (with the use of compostable claims to a few communities, or closed air) or anaerobic (without air) composting facility, whether indus- communities, such as an Olympic Village, a military base or a col- trial, municipal or in one’s backyard. lege campus, that may have access to composting facilities. The It is difficult for marketers to substantiate unqualified 2012 Green Guides distinguish between products or packaging that “biodegradable” claims for any product entering the solid-waste are “compostable” and those that are “biodegradable.” However, stream. Nearly all consumers recognize the term “biodegradable,” CASE STUDY:DEGRADABLE CLAIMS

In 1991, Mobil Corp. agreed to stop advertising its Hefty brand plastic trash bags as “degradable” and paid financial penalties to seven states that, along with the FTC, brought lawsuits alleging that the “degradable” claim was misleading and unsubstantiated. Although Mobil claimed on its package that the bags would break down when exposed to light, air and water, these three elements are not present in landfills where the overwhelm- ing majority of such bags would wind up. In 2009, the FTC charged Kmart and two other companies, Tender Corp. and Dyna-E International, with making false and unsubstantiated claims that its paper plates were “biodegradable.” The FTC observed that approximately 91% of total municipal solid waste in the U.S. is disposed of in either landfills, incinerators or recycling facilities. These disposal methods do not present conditions that would allow even some of the products generally perceived of as highly degradable, such as food wastes or paper, to completely break down, i.e., decompose into elements found in nature, within one year.

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‘FREE OF’ CLAIMS but it’s not clear if they know what it means. According to the FTC’s available survey evidence, 60% of respondents stated that Walk down any supermarket aisle and you are likely to find they would expect an item labeled “biodegradable” to fully products emblazoned with “free of” claims: sugar-free, salt- decompose within one year of customary disposal. In the U.S., free, gluten-free—all claims that cater to health concerns. Their most trash is sent to landfill. As a result, the Green Guides state that environmental counterparts include chlorine-free, BPA-free, marketers should not claim without qualification that a product is ozone-free, pesticide-free and other claims that products are degradable or biodegradable for items that enter the solid-waste without some substance perceived as harmful to human health stream because the item is unlikely to decompose within one year. or the environment. Because a product can break down through different chemical Earlier versions of the Green Guides provided examples of processes, companies marketing various types of new materials “free of” claims (e.g., “chlorine-free”) and nontoxic claims (e.g., sometimes distinguish between items that are “biodegradable,” claiming a pesticide is “essentially nontoxic”), but these were “oxo-biodegradable,” “photodegradable” and so on. The FTC not identified as distinct categories of green claims. In the 2012 noted that regardless of the prefix, consumers interpret these Green Guides, the FTC created new sections to deal with these variants like any other “degradable” claim. kinds of claims. The EPA recommended that the FTC provide Some companies, including manufacturers of new kinds of clarity because the analysis for “free of” and “nontoxic” claims plastics, maintained the FTC’s one-year guideline for biodegrad- able claims was unrealistic. However, the FTC explained that this time frame was based on survey evidence reflecting consumer understanding and expectation. Some commenters also urged CASE STUDY:ZERO VOC PAINT the FTC to adopt a particular testing standard (such as ASTM 5511) as substantiation for a biodegradable claim. The FTC declined to adopt a particular substantiation protocol and noted that the suggested protocols “do not replicate actual, highly vari- In 2009, NAD reviewed Mythic Paint’s claim in advertising of “No VOCs” (volatile organic compounds form smog in able landfill conditions such as the size of the disposed item, its the presence of sunlight). NAD determined that because the compression and levels of moisture and temperature.” levels of VOC present were low enough to be considered de Marketers should also be aware that individual states can minimis, the claim was not misleading. However, because pass laws that are more restrictive than FTC Green Guides. For the addition of colorants to the base paints resulted in high- example, in 2008, California enacted a law that prohibits label- er levels of VOCs, the NAD recommended that the advertis- ing plastic bags and plastic food and beverage containers as er modify its claims to disclose that the “no VOCs” claim “biodegradable,” “degradable” or “decomposable,” or other- did not apply for all color variants. The NAD also found that wise implying that the item would break down in a landfill or the advertiser falsely dispar- other environment. aged competitors by claiming Finally, not all waste is solid waste. A liquid surfactant, for that because competitive paints had VOCs (albeit at example is customarily disposed of in a sewage system. If a mar- low levels), the rival products keter has competent and reliable scientific evidence demon- created fumes dangerous to strating that the surfactant will break down and decompose into human health. The NAD rec- elements found in nature in a reasonably short period of time in ommended that the unsup- the sewage system, the product may be marketed as ported disparaging claims be “biodegradable.” discontinued (NAD Case The NAD has also reviewed “biodegradable” claims on at least Report No. 5257). four occasions and has recommended that companies marketing Shortly after issuing the a plastic additive (or plastic product) as “biodegradable” discon- 2012 Green Guides, the FTC took action against Sherwin- tinue the claim. Although each advertiser conducted laboratory Williams and PPG Architectural Finishes, claiming their Dutch Boy Refresh and Pure Performance interior paints, tests showing the degradation of the plastic components, the NAD respectively, contain “zero” VOCs. According to the FTC, observed that laboratory testing in controlled conditions does not while this may be true for the uncolored base paints, it is represent what takes place in a landfill, the typical location for the not true for tinted paint, which typically has much higher customary disposal of solid waste (NAD Case Reports Nos. 4990, levels of the compounds, and which consumers usually 5092, 5256 and 5388). These decisions underscore the impor- buy. The two companies agreed to settlements with the tance of consumer relevance. A product that only degrades in FTC and have agreed to stop making the “zero VOC” conditions never encountered in the consumer experience claims. shouldn’t be marketed as “biodegradable.”

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is not the same. For example, if a marketer claims a product is lines routinely tracked the expanding hole in the ozone layer. “free of” a substance perceived as harmful (chlorine, BPAs, The concern led to 152 countries signing the 1988 Montreal volatile organic compounds, etc.), the claim would imply noth- Protocol, and subsequent changes in the formulation of aerosol ing about the toxicity or overall safety of the product. propellants and refrigerants. The 2012 Green Guides provide that if a product does not The FTC Green Guides of 2012 do not offer new guidance on contain a substance perceived as harmful or bad for the envi- “ozone safe” claims. The Green Guides provide that marketers ronment, marketers should not claim the product is free of that should not state or imply that a product is safe or friendly to the substance if the product contains or uses a substance that poses ozone layer. If, for example, an air freshener claims to be the same or similar environmental risk as the free-of substance. “ozone friendly” but contains VOCs, which may cause smog, the For example, if a company claims to use a “chlorine free” claim is misleading because it suggests that the product is safe bleaching process but the process releases other harmful for the atmosphere as a whole. byproducts, the free-of claim may be misleading because it overstates the environmental benefit. RECYCLABLE CLAIMS If only trace amounts of a substance are used in the product, Because consumers are very focused on disposability issues package or service, a free-of claim may be made if 1) the level of (something they have direct control over), claims that products substance is not greater than a trace contaminant or background or packages are “recyclable” can be very appealing. The issue is level; 2) the presence of the substance does not cause the material that recycling facilities, although widespread, are not available in harm consumers would associate with that substance; and 3) the all communities. So while a “recyclable” claim may be attractive substance has not been intentionally added to the product. (and technically truthful), there is no environmental benefit if Marketers are not necessarily required to do a full life-cycle assessment to evaluate the environmental risk of any substitute substance. However, if a marketer combines a claim that a prod- uct is free of a substance with a general environmental benefit RESIN IDENTIFICATION CODES claim (e.g., “Environmentally Friendly: Chlorine Free”), con- The FTC warns conspicuous use of an RIC code can be a sumers would likely believe that the product is more environ- recyclable claim. mentally beneficial overall because the product is free of that substance. In such a case, marketers should analyze trade-offs to determine if the claim can be substantiated. NONTOXIC CLAIMS 1 2 An important distinction between “free-of” claims and “nontoxic” claims concerns the “trace amount” exception. If there are only trace amounts of a substance, a marketer may be PETE HDPE able to claim the product is “free of” that substance (provided it meets the other requirements above). But there is no allowance for “trace” toxicity. According to the FTC, if a mar- keter makes a “nontoxic” claim, the marketer should have com- petent and reliable scientific evidence that the product, pack- 3 4 5 age or service is nontoxic for both humans and the environ- ment, unless the marketer clearly and prominently qualifies the claim to avoid deception. V LDPE PP Some commenters urged the FTC to discourage the use of “nontoxic” claims and even the EPA noted that marketers will “rarely, if ever, be able to adequately qualify and substantiate such a claim of ‘nontoxic’ in a manner that will be clearly under- stood by consumers.” The FTC agreed that there are difficulties 6 7 inherent in substantiating unqualified “nontoxic” claims and advised caution when making them. PS OTHER OZONE-SAFE AND OZONE-FRIENDLY SOURCE: SOCIETY OF THE PLASTICS INDUSTRY When the Green Guides were originally issued in 1992, head-

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the product cannot, as a practical matter, be easily recycled. process (“pre-consumer” waste) or after consumer use (“post-con- The FTC Green Guides allow marketers to make unqualified sumer waste.”) Although the Green Guides do not require mar- “recyclable” claims if a product may be recycled in facilities keters to distinguish between “pre-consumer” and “post-con- available to a “substantial” majority (60%) of consumers. If sumer” materials, some marketers choose to make the distinction recycling facilities are not available to at least 60% of the con- in their marketing. For “pre-consumer” content to be considered sumers or communities where a product is sold, any “recycla- “recycled” content, the key issue is whether the materials were des- ble” claim needs to be qualified; for example, “This product tined for the waste stream. If for example, a manufacturer uses raw may not be recyclable in your area.” The lower the level of material and scraps that would not normally have entered the access to recycling facilities, the more a marketer should waste stream, the manufacturer should not make a recycled con- emphasize the limited availability of recycling for the product. tent claim. If a product or package is made only partly from recy- And what does it mean to say that recycling facilities are avail- cled material, the recycled content claim should be qualified (for able in a “community”? That’s defined as an “area within a rea- example, “made from 30% recycled material”). sonable distance of where the consumers to whom the product is advertised, live, work and shop.” REFILLABLE The FTC also cautions advertisers that the con- Guidance for addressing the claim “refillable” spicuous use of the Resin Identification Code (RIC) has not changed since the FTC Green Guides were constitutes a “recyclable” claim. The RIC Code revised in 1998. Many packages can theoretically (adopted by the Society of the Plastics Industry, or be reused again, like refilling a water bottle with SPI) is the triangle composed of chasing arrows tap water, but the FTC, ostensibly in protecting with a number in the middle that is used on plas- “refillable” as a competitive claim, advises mar- tic containers of eight ounces or more. According Recyclable where keters not to make unqualified refillable claims to the SPI, the sole purpose of the RIC Code is to facilities exist unless they themselves provide a way for con- identify the type of plastic resin used, not to sug- sumers to refill the package. For example, if a gest a material is recyclable. However, its similari- product is marketed as having a “refillable con- ty with the chasing-arrows recycling logo is confus- tainer,” the claim is not deceptive if the marketer ing to consumers. So unless recycling facilities for also sells larger containers of the product that can a container are available to a substantial majority be used to refill the smaller one, such as is now of consumers or communities, the 2012 Green commonly seen with some household cleaning Guides advise marketers to qualify the claim to aids. disclose the limited availability of recycling pro- 100% recycled content grams. Further, placing the RIC in an inconspicu- 25% postconsumer MADE WITH RENEWABLE ENERGY ous location on the container will not constitute a Interest in renewable energy has led to a recyclable claim. RECYCLED VS. RECYCLABLE — market for renewable-energy certificates Qualify so consumers (RECs). These are salable or tradable commodi- RECYCLED CONTENT aren’t misled by chasing- ties confirming that energy was generated from The FTC survey research found that many arrows logo alone. a renewable energy source (typically wind or consumers confuse the terms “recycled” and solar power). The purchase of an REC allows “recyclable.” Claiming that a product or package the owner to claim to have purchased or sup- has been recycled or is “made with recycled content” is very differ- ported the use of renewable energy. Like carbon offsets, the REC ent from claiming that it is “recyclable” (although some materials, market has given rise to confusion and concerns about account- such as glass and aluminum can be both). It is important for mar- ing and “additionality,” ensuring that the renewable energy use is keters to understand (and make clear to consumers) the distinction. truly additional and wouldn’t have happened anyway. One example of a marketing technique that is likely to confuse The 2012 Green Guides provide that when marketers make “recyclable” with “recycled” (or “made with recycled content”) is renewable-energy claims, they clearly and prominently specify the use of the three-chasing-arrows symbol (Möbius loop) without the source of the renewable energy (e.g., wind or solar). If a prod- qualification. Marketers using this symbol should include addition- uct or package is made with traditional energy sources (fossil al language making clear if the material is “recyclable” or made fuels), marketers can make a “renewable energy” claim only if its from “recycled content.” (See chart, above) purchase of RECs matches the use. According to the FTC Green Guides, marketers should make Marketers should not make unqualified “made with renew- recycled content claims only for materials that have been recovered able energy” claims unless all, or virtually all, of the significant or diverted from the waste stream during the manufacturing manufacturing processes are powered with renewable energy (or

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nonrenewable energy matched by RECs). If a marketer generates ble. Finally, some plastics made from bio-based materials are renewable energy but sells RECs, it should not claim that it uses recyclable; for instance, Coke’s PlantBottles are made with up (or “hosts”) renewable energy because by selling RECs, the man- to 30% plant-based material, yet are recyclable in a convention- ufacturer has transferred the right to characterize its energy use al PET waste stream. as renewable. For instance, if an advertiser markets a clothing line If you suspect that your consumers expect your renewable as “made with wind power” and the marketer buys wind energy products or packaging to be recyclable or compostable, simply fol- (or RECs) for 50% of the energy used to make the clothing, the low the FTC Green Guides discussed within the appropriate sec- claim would be deceptive. This can be remedied with clear quali- tions above for guidance. fying language (“we purchase wind energy for half of our manu- Some commenters urged the FTC to provide guidance on a facturing facilities”). The key is to be clear and transparent. closely related issue—“bio-based” claims. It declined to do so. Currently, the USDA, which implements the BioPreferred MADE WITH RENEWABLE MATERIALS Program including a voluntary bio-based-product labeling initia- Claims that a product is “made with renewable materials” can tive, defines, certifies and provides guidance on labeling bio- be confusing because, as FTC’s survey research showed, many based products. According to USDA, biobased products are com- consumers do not understand the difference between claiming mercial or industrial products (other than food) that are com- that a product is “made with renewable materials” and claims posed of, in whole, or in significant part, biological products, that a product is “biodegradable,” “recyclable” or “made with renewable agricultural materials, forestry materials or an inter- recycled content.” Because of this confusion, the FTC suggests mediate ingredient or feedstock. Bio-based, the amount of “new” providing context for a “made with renewable materials” claim (nonfossil) carbon a product contains given its total carbon, is by specifying the renewable material used, how the materials measured via a standard test. This new carbon found in products were sourced and why they are renewable. can be sourced from agricultural materials, such as plants. The The FTC does not define the term “renewable materials,” FTC explained that it did not wish to subject marketers to poten- though it does provide certain examples. Instead of using an tially contradictory advice on use of the term “bio-based” from unqualified claim that flooring is “made with renewable materi- two different federal agencies. Marketers remain responsible for als,” the marketer should provide qualifying language; for exam- substantiating such claims based on how consumers perceive ple, “Our flooring is made from 100% , which grows at them. Visit biopreferred.gov for more information, including the the same rate as or faster than we use it.” If a portion of the prod- program’s published brand guidelines. uct or package is made with renewable materials, that too, Some companies use a claim similar to “bio-based” and market should be explained with qualifying language (“Our bottle is products as “plant-based.” The FTC Green Guides do not address made from 30% renewable materials”), unless the item is made “plant-based,” but marketers using such claims should, as when entirely with renewable materials (except for minor and inciden- making “made from renewable materials” claims, provide qualify- tal components). ing language to indicate the portion or percentage that is plant- Because consumers seem to equate the use of renewable based. materials with recycling and biodegradable or compostable mate- rials, it may also be advisable to include information about the SOURCE REDUCTION disposal of products or packages made from renewable materials. When marketers claim that a product or package has been Counterintuitively, not all products and packages made from reduced in weight, volume or toxicity due to design, material or renewable materials are easily compostable or recyclable. That’s ingredient reformulations, they should clearly and prominently because some packages made with 100% renewable materials qualify the claim to indicate the amount of reduction as well as may only break down in municipal but not backyard facilities. the basis of the comparison (for example, “10% less waste than Also, some products are made only partially from renewable our previous product”). materials, so being able to compost the renewable materials depends upon whether the renewable materials can be separated WHAT THE 2012 FTC GREEN GUIDES DON’T COVER from the other materials. Several claims commonly associated with environmental Also, some renewable materials are recyclable (e.g., paper), benefits are not covered by the 2012 Green Guides, including but the actual recyclability depends upon how easy it is to sep- “sustainable,” “organic” and “natural.” arate the renewable material from other materials it may be What does “sustainable” mean? There is no consensus defi- made with or commingled with during use. For example, paper nition, but the term usually includes a variety of economic, cups are typically coated with petroleum-based plastic, so they social and environmental considerations. Although com- will not necessarily be compostable; and when mixed with food menters requested that the FTC provide guidance on use of the or drink, the same paper cups will not necessarily be recycla- term “sustainable,” it did not do so. The FTC explained that

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claim as conveying that a product contains no artificial ingredi- ents, then the marketer must be able to substantiate that ALTHOUGH STAKEHOLDERS impression. And if reasonable consumers would understand a claim of “natural” or “sustainable” to be a claim of a general REQUESTED THAT THE FTC PROVIDE environmental benefit, or a comparative claim, the marketer is GUIDANCE ON USE OF THE TERM obliged to substantiate those claims. INTERNATIONAL ISSUES “SUSTAINABLE,” IT DID NOT DO SO. Because so many marketers operate in the global economy, there was great interest in whether the FTC would consider inter- THE FTC EXPLAINED THAT BECAUSE national laws and standards in its review process. In particular, some commenters requested that the FTC harmonize its guid- THERE IS SUCH A WIDE RANGE OF ance with the International Organization for Standardization (ISO) 14021 environmental-marketing claims standard. In some MEANINGS, IT DID NOT HAVE ANY specific areas, the 2012 Green Guides do align with international standards, and ISO 14021 in particular. BASIS OR LEGAL AUTHORITY FOR For example, the FTC noted that its guidance on “free of” claims is consistent with the ISO 14021 and Canada 14021 (which allow a PROVIDING GENERAL GUIDANCE. “free of” claim if the substance is only present in “trace” amounts). However, the FTC observed that the goals and purposes of the ISO and the Green Guides are not always congruent. The FTC Green Guides seek to prevent the dissemination of misleading claims, not to encourage or discourage particular because there is such a wide range of meanings, it did not have environmental claims or consumer behavior based on environ- any basis or legal authority for providing general guidance on mental policy concerns. International standards, such as ISO “sustainable” claims. For instance, the FTC observed that sur- 14021, in contrast, can focus not only on preventing misleading vey evidence indicated that the term “sustainable” meant claims, but also on encouraging demand for and supply of many different things to consumers, including that a product products that cause less environmental stress (usually by the was “strong or durable” or “long lasting.” “Sustainable” claims issuing country). may also convey social and economic messages. Although “sus- One area where this creates potential conflict is with tainable” and “green” mean different things to different peo- respect to “recyclable” claims. The 2012 FTC Guides permit a ple, the purview of the Green Guides is limited to environmen- “recyclable” claim only where recycling facilities are available tal marketing. Thus social considerations such as community to a “substantial majority.” In contrast, ISO 14021 uses a “rea- development and fair trade—aspects of sustainability—are out- sonable proportion” standard. Although the ISO standard side the scope of the guides. might encourage more recycling, the FTC noted that it may The FTC also noted the term “natural” is susceptible to many also permit unqualified recyclable claims where less than a different meanings depending on the context. As a result, the FTC majority of communities have access to recycling facilities for declined to offer general guidance on the use of “natural.” a given product or package. Although certain industries, such as personal-care products are International standards also take a different approach to life- working to define “natural” (at least within the context of that cycle assessment (LCA). ISO 14044 is an international standard- industry), the FTC explained that it would not endorse any partic- ized assessment method by which companies can evaluate their ular standard or provide a definition. products’ environmental benefits and trade-offs. The FTC, how- With respect to the claim “organic,” (like “bio-based” above), ever, does not mandate an LCA nor endorse any particular LCA the FTC explained that it sought to avoid providing advice that is methodology. For marketers, these different approaches need duplicative or inconsistent with the USDA’s National Organic not be seen as conflicting. Although the FTC does not offer gen- Program. eral guidance on life-cycle analysis, the Green Guides recognize Although the FTC declined to define these terms or provide that marketers may have to evaluate the full environmental general guidance on their use, the commission reminded mar- impact of their products in order to substantiate claims imply- keters that such terms, as with all advertising claims, remain ing broad environmental superiority. LCAs are valuable tools subject to the FTC Act and must not be deceptive or misleading. for marketers for understanding the environmental impact of If, for example, reasonable consumers interpret a “natural” their products and services.

ADVERTISING AGE SEPTEMBER 16, 2013 · 23 HOW TO MAKE CREDIBLE GREEN MARKETING CLAIMS HOW TO FURTHER ESTABLISH CREDIBILITY AND AVOID GREENWASH

Five more strategies businesses can take to make green claims that hold up to scrutiny

Paying close heed to the FTC Green Guides is just one, albeit sig- communications (as discussed in more detail below). Only a com- nificant, way to underscore credibility and avoid greenwash. Other mitted chief executive with a clear vision for his or her company strategies exist, too, reflecting the larger context in which green can add the necessary weight to the message that environmental marketing occurs. The following five strategies represent important soundness is a corporate priority. steps businesses can take within their corporate operations and The need to start by communicating the commitment of one’s with their communications, to win their stakeholders’ trust. CEO cannot be overstated. Only the CEO can forge an emotional link between a company and its customers, acting as a symbolic 1. WALK YOUR TALK watchdog who supervises corporate operations and ensures envi- Perceptions of the company making the claim and its indus- ronmental compliance. That’s the benefit of CEOs at corporate-sus- try (oil and gas vs. food and drink, for instance), as well as tainability pioneers such as Interface (Ray Anderson), Patagonia brand familiarity, can affect the credibility of one’s environmen- (Yvon Chouinard), Timberland ( Jeff Swartz), Tom’s of Maine (Tom tal claims—as well as the likelihood of being dubbed greenwash. and Kate Chappell) and Stonyfield (Gary Hirshberg), who all main- A company perceived as strongly committed to ethical values, tain high profiles. The Chappells even went so far as to include a sustainability and sound environmental policies gains the good signed message on the side panel of Tom’s toothpaste boxes and graces of consumers. Companies in the vanguard of corporate other natural personal-care products. By projecting a personal greening—and best able to take advantage of its opportunities commitment to the environment, CEOs win their stakeholders’ for sales, reputation building and innovation—have many of the trust. Such leaders are especially believable because they are per- following attributes in place. ceived as having a personal stake in the outcome.

■ A visible and committed CEO. With consumers scrutinizing ■ Empower employees. The best-intentioned CEOs will only products at every phase of the life cycle, corporate greening must be as effective as their employees. Only when employees are on top extend to every department—manufacturing, marketing, research of the issues and given the authority to make changes will a compa- and development, and consumer and public affairs—and through- ny develop greener products and put into place sustainable prac- out the supply chain of product, packaging and even marketing tices. Employees have many reasons to engage in the environmen-

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HSBC EMPOWERS BIG CHANGE WITH ‘THERE’S NO SMALL CHANGE’

Paperless checking and electronic statements were just two of the suggestions the global bank had for consumers looking to be greener

HSBC, the global banking giant headquartered in the “green-living kits” packed with such enviro-goodies as U.K., is concerned about global climate change for many compact fluorescent light bulbs, a ChicoBag reusable shop- reasons, principally thousands of office buildings and ping tote, coupons for organic flowers and a free issue of branches around the world need to be lit, heated, cooled The Green Guide magazine. For every new account and ventilated, and its need to deliver power to millions of opened, HSBC donated to local environmental charities, computers, printers, copiers and other office equipment. totaling $1 million by the end of the campaign. For 20 years, the bank made steady, significant invest- To extend reach to small business and “premier” cus- ments in what eventually became an industry-leading car- tomers, HSBC worked with local nonprofits to sponsor bon-management plan that helped the green-business seminars, an Earth Day company achieve carbon neutrality in 2006. event in New York’s Central Park and a In recognition of its efforts, HSBC won the Green Drinks networking event. Partnering EPA’s Climate Protection Award in 2007; with credible organizations was critical to and for two years straight, 2005 and 2006, the campaign strategy. In the words of JWT the EPA and the U.S. Department of Energy Senior VP Linda Lewi, “When we devel- named the company Green Power Partner oped the creative platform for ‘There’s No of the Year. With this strong track record of Small Change,’ we knew how the brand environmental achievement on an issue behaved as it executed the campaign relevant to a broad swath of consumers, would be as important as what it said, and HSBC was ready to put forth a powerful so we developed a grassroots communica- message. With 120 million customers tions plan that partnered with green organi- worldwide, the bank could champion the zations to provide the everyday sustainable power of small changes. Hence was born solutions and outreach efforts to our target HSBC’s “There’s No Small Change” mar- consumers.” keting campaign, developed by the New By adopting a strategy focused on credi- York office of JWT, the advertising agency ble education, empowerment and authen- with strategic support from J. Ottman Consulting (author of ticity, HSBC energized its employees, earned credibility this report.) among its audience of green consumers and businesspeo- Launched in the U.S. during spring 2007, it gave con- ple and built its business. The effort yielded 46,420 new sumers empowering tips for reducing their own carbon accounts (103% of goal and for only 65% of the acquisition footprints. Newspaper ads, in-branch posters, brochures cost of a typical customer), a 50% uplift in online bill pay- and other collateral suggested ways customers could make ing, higher deposit balances in both personal and premier a difference in all aspects of their lives; “get green power,” accounts and three times the standard cross-sell ratio (peo- “reduce paper waste” and “bank wisely,” including switch- ple who opened a checking account and bought another ing to HSBC’s paperless checking and electronic state- product). The campaign won one of the first-ever Green ments. Effie awards from the American Marketing Association, A leading environmental group provided carbon calcula- sponsored by Discovery Communications’ Planet Green tors, which the bank distributed at its branches and network.3 through a special website, to help customers measure sav- ings from such actions as powering down computers and 3. Nicole Rousseau, VP-retail marketing, HSBC U.S., email message to the author, Sept. 24, 2009, as reported in The New Rules of Green Marketing: Strategies, Tools and Inspiration for copiers at night. New customers were presented with Sustainable Branding, P. 117.

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nies to help define the standards by which they will be judged. It also leads to opportunities for cost-effective eco-solutions while THE BEST-INTENTIONED CEOS beating competitors in meeting regulations and consumer expecta- tions. Finally, proactive companies are better prepared to with- WILL ONLY BE AS EFFECTIVE stand the scrutiny that overtly green companies often face. In 2005, HSBC became the first major bank and member of the AS THEIR EMPLOYEES. ONLY FTSE 100 to address climate change by becoming carbon neutral. Its carbon-management program consisted of four key steps: 1) WHEN EMPLOYEES ARE ON measure its carbon footprint; 2) reduce energy consumption through an aggressive program of energy-efficiency upgrades in TOP OF THE ISSUES AND corporate offices and bank branches; 3) buy renewable forms of electricity to power whatever energy it could not reduce through GIVEN THE AUTHORITY TO efficiencies; and 4) offset whatever carbon it could not reduce via efficiency and paid offsets. By shooting for carbon neutrality and by MAKE CHANGES WILL A instigating an industry-leading carbon-management plan, HSBC gained the needed credibility to launch its Effie-Award-winning COMPANY DEVELOP GREENER “There’s No Small Change” U.S. retail marketing program in spring PRODUCTS AND PUT IN 2007. (See P. 26.) ■ Communicate your values. In their quest to find trusted SUSTAINABLE PRACTICES. brands, consumers increasingly seek to support companies that align with their values. Many sustainability leaders, including Method, Whole Foods, Kashi (“Ten Whole Grains on a Mission”), Stonyfield, Patagonia (“Don’t Buy This Jacket”) and Tom’s of Maine have long communicated their “core values” to tal issues their firm faces; relying on secure jobs for their liveli- socially conscious consumers to establish authentic emotional hoods, they have a direct stake in their company’s success. connections. Also called “purpose marketing” or “pro-social However, just like consumers, employees need to be educated marketing,” values-based marketing avoids hard-sell ads (even about environmental issues in general, and of course about the attribute-based green pitches focused upon recycled content or specifics of their company’s processes and products. So enlist out- biodegradability) in favor of soft-sell campaigns displaying val- side speakers to bring employees up to speed about such issues as ues. Since consumers are apt to use online media to research climate change, clean technology and green consumer behavior. corporate practices and policies, consider using social media to Set up an intracompany blog or wiki to help employees identify establish meaningful connections and start an ongoing dialogue ways to get involved, locate other colleagues with similar interests with consumers. and make a difference in your community. Some companies give employees money to offset home energy use, or subsidize purchas- ■ Green your marketing practices. Much attention has been es of hybrid vehicles. directed to printed marketing and media messaging, especially direct mail which has been a target of environmentalists looking to ■ Be proactive. Consider the reputational hit taken by retailers reduce paper and impacts associated with mailing pieces with a whose fashions were made in Bangladesh. Most big businesses perceived minuscule open rate. Paper sourced with recycled con- adhere to voluntary international frameworks for a environmental tent and/or that has been sustainably harvested and printed with policy and plans. They have an independent third party certify soy-based inks has long been recognized as a way to reduce the their audits and voluntarily report their results. But the most credi- environmental impacts, as has been the use of electronic media to ble companies go beyond what regulators and other stakeholders replace the former. But television and other broadcast-advertising expect. So proactively and publicly commit to solve the emerging production, public-relations events and outdoor billboards all come environmental and social problems, such as protecting the rain- with their respective impacts, too. forests or eliminating sweatshops. The media industry is growing so quickly—it is the fifth largest Being proactive has many benefits. It projects leadership and industry in the U.S.—and with it attention to the environmental sends a message to investors that risks are minimized. Regulators impacts of server farms, networks, computers and mobile devices, are less likely to impose restrictions on companies whose actions and to the impacts associated with their respective mining, refining transcend minimum standards. Being proactive also allows compa- and manufacturing. The industry consumes prodigious amounts of

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energy to operate (much of it from coal-fired power plants), and unlike paper, e-marketing materials cannot be composted at the end of their short useful lives. CASE STUDY: Just as there is a growing call for disclosure of the impacts of product supply chains, there is likely to be increasing demand for PATAGONIA ‘FOOTPRINT CHRONICLES’ disclosure of the environmental and social aspects and impacts associated with their advertising and marketing supply chains. This will be the case especially where expenditures for advertising and marketing supplies constitute a significant or material percentage of a brand’s revenues and for brands claiming environmental benefits. Some brands are currently working with organizations such as the Institute of Sustainable Communication’s Strategic Advertising Partnership (http://www.sustainablecommunication.org/ sustainable-advertising-partnership) to explore ways to collab- orate to develop life-cycle-analysis product-category rules for print and digital products that would enable standardized report- ing and verification of the environmental impacts associated with their advertising- and marketing-supply-chain activities. In the inter- im, they are striving to understand the flows of energy, materials and waste associated with their marketing expenditures and seek- ing to reduce the amount of energy and materials employed over- all, increase their use of renewable and recycled resources, mini- mize waste to landfill or incineration and maximize the use of prod- ucts and services that are local, diverse and ethical.4 2. BE TRANSPARENT Provide the information consumers seek to evaluate your brand’s environmental benefits. Today’s consumers have a seemingly insatiable appetite for information about the products they buy and the businesses Patagonia, the Ventura, California-based outdoor- behind them. But of all the sources that consumers consult in equipment manufacturer, maintains “The Footprint their quest for information about a product’s environmental Chronicles” microsite at patagonia.com that lets visitors claims, only 11% of consumers in Cone Communications’ survey trace the environmental impacts of 10 of the company’s said they consult corporate websites, suggesting an opportuni- products from design through delivery, including compo- ty to provide consumers with in-depth information beyond that nents and their origins, innovations used to reduce envi- which can be included on-pack. ronmental impacts and what the company thinks it can To underscore credibility, provide access to the details of prod- improve on. Patagonia encourages customer comments— ucts and corporate practices and actively report on progress. One a move that builds loyalty—and is not hesitant to critique outstanding example of providing transparency is the pioneering itself. As the company learns more, it applies this knowl- edge to its broad spectrum of products. label that appears on all boxes of Timberland shoes. Resembling the For example, despite its reputation for using recycled nutrition label that appears on food packaging, it delineates corpo- fibers, Patagonia is not afraid to reveal on its site that it rate-related impacts including climate, chemicals used and still uses 36% virgin polyester to make its Capilene 3 mid- while a Green Index rating as available, lets weight underwear bottoms, carefully explaining it does so one compare the environmental impact of one pair of Timberland to achieve the desired performance and durability.5 footwear to the next. One highly respected framework that is widely used around the world for transparently reporting corporate environmental per- 5. Patagonia, “The Footprint Chronicles”; www.patagonia.com/web/us/footprint/index.jsp?slc+en_US&sct+US, accessed Oct. 1, formance, and doing so with consistency (so stakeholders can 2010, as reported in The New Rules of Green Marketing: Strategies, Tools and Inspiration make comparisons) and accountability, is the Global Reporting for Sustainable Branding, P. 138). In 2008, “The Footprint Chronicles” won high accolades as the People’s Voice winner in the Corporate Communications category at the Webby Awards (aka “the Oscars of the internet”). 4. Don Carli, Institute of Sustainable Communication, telecommunication with author, March 24, 2013

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SC Johnson now disclose the ingredients (but understandably not the exact formulas) of their products. Seventh Generation WHICH ECO-LABELS WORK BEST? AWARENESS even lets consumers ask “Science Man” specific questions.

■ Don’t hide behind bad news! You might ask: It’s one Recycled logo thing to report on the good, but what about the bad? Companies perceived as making progress need not worry about failure to Energy Star achieve perfection. Consumers understand that the greenest USDA Certified Organic cars will still pollute, the simplest of packaging eventually needs to be recycled or thrown away and the most energy-efficient light Fair Trade Certified MORE LIKELY TO bulbs will consume their share of coal, gas or nuclear energy. PURCHASE However, consumers get angry when they suspect that bad infor- Rainforest Alliance Certified mation has been intentionally hidden. Carbon Trust Sigg, makers of popular and eco-trendy reusable aluminum bottles, learned this lesson the hard way. Thought to be BPA-free LEED Certified by consumers and the media, Sigg’s bottles came under fire Green-E when an open letter to customers from CEO Steve Wasik in August 2009 disclosed that bottles produced prior to August Marine Council 2008 contained trace amounts of BPA in their inner epoxy liner— Sustainable and that the company had known about it since 2006. Although Forestry Initiative (SFI) Sigg was quick to use public outreach to address consumer and Cruelty Free retailer concerns, the damage was done. Customer trust was compromised. Articles and blog posts quickly sprang up, enti- Forest Stewardship Council (FSC) tled “How Sigg Lost My Trust” and “Et Tu, Sigg?”, written by Sigg customers who felt betrayed by the company’s lack of trans- 0% 20 40 60 80 100% parency. Competitor brands such as CamelBak and Klean

SOURCE: NATURAL MARKETING INSTITUTE, 2009 LOHAS CONSUMER TRENDS DATABASE Kanteen were quick to capitalize on the situation by reassuring shoppers that their products were BPA-free.6

Initiative (GRI) (https://www.globalreporting.org/). The GRI is a 3. ENLIST THE SUPPORT OF THIRD PARTIES nonprofit that works in partnership with the United Nations Some of the most popular and credible forms of third-party Environment Programme (UNEP), the International Organization support include eco-labels, environmental product declarations for Standardization (ISO) and other global groups. It provides com- and cause marketing. Some of these were addressed specifically panies and organizations with a voluntary global standard and in the FTC Green Guides, as discussed above. This section will framework to measure, benchmark and report on economic, envi- provide some additional do’s and don’ts vis-à-vis maximizing ronmental and social performance. More than 1,500 companies, their effectiveness and credibility. including BP, Coca-Cola, GM, IBM, Novartis, Philips and Unilever have adopted this standard for reporting. ■ Eco-labels. In addition to the specific opportunities and challenges of third-party eco-labels discussed above, green mar- ■ Get radical. Thwart the most discriminating of critics by keters need to understand which ones best generate purchase visibly making progress toward measurable and worthy goals, influence among consumers. Only a handful of eco-labels—the communicating transparently and responding to the public’s chasing-arrows recycling logo (93%), Energy Star (93%) and concerns and expectations. Many sustainability pathfinders such USDA’s Certified Organic (75%) among them—have broken as Patagonia with its “Footprint Chronicles” (See P. 27) are now through the clutter to gain awareness and, more importantly, reporting with “radical transparency.” In the future, the law may purchase influence among consumers (or institutional cus- require disclosure of product-related environmental impacts tomers). (See chart above left, this page.) and processes. Get a jump on competitors and regulators—and What if no third-party eco-label exists in your industry or score points with consumers—by voluntarily disclosing as much product category? Chances are you’re not alone (only about one as possible about your products. In the hotly contested category of green cleaning products, 6. Natalie Zmuda, “Sigg Tries to Control Brand Damage After Admitting Its Bottles” Contain BPA,” Advertising Age, Aug. 31, 2009; adage.com/article?article_ several competitors, including Seventh Generation, Method and id=138712, accessed Aug. 1, 2010, as reported in The New Rules of Green Marketing, P. 139.

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in 10 industries has a third-party seal), but you’re not out of luck. way when what was perceived as a paid endorsement (for an One excellent option is to work with others in your industry to undisclosed sum) of Clorox’s Green Works incited widespread develop a standard (with accompanying eco-label) that can be veri- criticism of the nonprofit by its core supporters. Negative press fied by a reputable certifying organization. This is the path commer- ensued and sparked a change in leadership at the Sierra Club. cial furniture manufacturers took under the guidance of the Both organizations ultimately disclosed the financial compensa- Business and Institutional Furniture Manufacturers Alliance tion that Sierra Club received for its support.8 (BIFMA), the industry’s trade organization. It developed the BIFMA e3 standard and level certification (http://levelcertifXed.org) in line with American National Standards Institute (ANSI) standards-devel- opment protocols. (See Case Study: BIFMA, right.) Considering that many eco-labels are not widely recognized, CASE STUDY:BIFMA help create demand for your eco-label with marketing communi- cations consistent with your seal’s brand guidelines, as available. The Energy Star label enjoys strong awareness thanks largely to Office furniture manufacturers create the promotional efforts of the many manufacturers of labeled standard and eco-label certification program products, coupled with public service advertising and retailer efforts. Be sure to look for opportunities to distinguish your com- To help their customers assess the sustainability of office mitment to your selected eco-label from competitors using the furniture products, several manufacturers—big and small— same label. Earning Energy Star’s Partner of the Year award is joined together via trade association BIFMA in an open, one good example. consensus-based process to create the ANSI/e3 Furniture Sustainability Standard and level third-party certification ■ Environmental product declarations. More often used program. As LEED is to buildings, level is to office furni- ture. It is a single methodology used to present a product’s in Europe and Asia than the U.S., and especially within the insti- multi-attribute environmental characteristics tutional market, environmental product declarations (EPDs) pro- in a clear, easily understood manner from vide detailed and third-party-verified explanations of a given an unbiased source. product’s full life-cycle impacts. An excellent example is the EPD As a multi-attribute standard, the level issued per ISO 14025 by Steelcase for its Think office chair. program not only provides information Displayed at the company’s website, Steelcase.com, the EPD on indoor air quality and material com- position, and it also covers shares the results of three separate life-cycle assessments, need- issues related to life-cycle ed to accurately assess impacts in North America, Europe and assessment, social responsi- Asia, and describes the various certifications from different bility and ecosystem countries around the globe. View the entire EPD created for the impacts. North American market at the following link: http://www.steel- For an office-furni- ture product to achieve case.com/en/products/category/seating/task/think/docu- a level certification, a ments/environmental%20product%20declaration_04- manufacturer must contract 0012421.pdf. The EPDs for the Asian and European markets are with one of six recognized independ- posted elsewhere and distributed to customers and prospects in ent, third-party certification bodies. those markets.7 That certification body then STEELCASE designates products ■ THINK CHAIR with a level 1, level 2 or Endorsements and awards. Endorsements and awards level 3 compliance bestowed by credible third parties can boost credibility and halo mark based on points LEVEL 2 CERTIFIED.WITH brand imagery. When launching the Prius, for example, Toyota CERTAIN FABRIC OPTIONS, achieved. proudly touted the fact that the Sierra Club, the National Wildlife LEVEL 3 CERTIFIED. Currently, 51 office furniture Federation and the United Nations had each bestowed some manufacturers offer more than 2,300 products that have been inde- type of award or endorsement on the car. pendently certified to meet the But endorsements are not without risk to the endorser or the ANSI/BIFMA e3 Furniture Sustainability Standard and, endorsed. Sierra Club and Clorox learned this lesson the hard therefore, include the level mark.

7. The New Rules of Green Marketing: Strategies, Tools, and Inspiration for Sustainable Source: Lisa Young, chief marketing officer, telecommunication with author, April 2, 2013) http://www.scscertified.com/products/cert_pdfs/Steelcase_2012_NOC1_SCS-SCF-01905_s.pdf Branding, P.153 8. Anya Kamentz, ‘Cleaning Solution,” Fast Company, September 2008, P. 121.

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■ Cause marketing and beyond. With cause-related mar- keting, everybody wins. Best known as promotional efforts in which a business donates a portion of product revenue to a rele- vant nonprofit, cause-related marketing can distinguish brands (and their retailers and distributors) in a cluttered marketplace, halo imagery and build sales, while enabling the brand to have an impact that goes far beyond writing a check as with tradition- al philanthropy. Consumers can contribute to favorite sustain- ability causes with little or no added expense or effort, while nonprofit partners enjoy financial support, heightened publicity and the potential to attract new members. Attesting to its popu- larity, the International Events Group Sponsorship Report pre- dicts that spending on cause marketing will rise 17.9% to $1.78 bil- lion in 2013, up from $1.51 billion in 2009.9 More than 1,200 mostly smaller companies embrace the “1% for the Planet” campaign, in which they contribute 1% of sales to a growing list of more than 1,500 environmental groups around DAWN—Procter & Gamble’s Dawn dishwashing liquid the world. Procter & Gamble’s Dawn dishwashing liquid leads is used to clean waterfowl after an oil spill one high-profile brand-specific campaign. The brand donates $1 to the Marine Mammal Center and the International Bird Rescue Research Center for every specially marked package bought. This cause-related marketing campaign neatly capitalizes upon Dawn’s highly publicized role in cleaning oil-despoiled waterfowl REASONS CONSUMERS GIVE FOR NOT and acts as a subtle demonstration of the product’s efficacy. Despite its effectiveness as a marketing tool, and its philan- RECYCLING PRODUCTS PROPERLY thropic roots, cause marketing is not without risks. In recent Americans gave the following reasons for not using or years, widely adopted cause-related marketing campaigns, such disposing of a “green” product as intended. as the sea of pink ribbons that fill store shelves during Breast Cancer Awareness Month in October have fallen under scrutiny, with consumers demanding increased transparency on social None of these: I always impact and greater alignment with business practices. In use and dispose of response to consumer outrage over unethical cause-related mar- I don’t have “green”products properly. enough time. keting and false claims of philanthropic support, New York’s attorney general in 2012 issued best practices to promote trans- 8% 30% parency in cause-marketing campaigns. The guidelines state that companies should clearly and prominently disclose key informa- It’s not 10% tion about each campaign, including the specific amount that important or will be donated to charity from each purchase. Companies using a priority for me to do so. ribbons and similar symbols on products must also make clear to consumers if a purchase will trigger a donation or if the symbols 19% are used merely for awareness of a cause. Cause marketing can backfire in other ways, too. 33% Underscoring the need for green marketers to adopt a life-cycle focus, some visitors to Dawn dishwashing liquid’s Facebook page and YouTube commercial protested the bird-related marketing I don’t know how to do I don’t have the proper so properly. resources, such as disposal campaign, noting that Procter & Gamble tests its products on bins or community access.

9. "2013 Sponsorship Outlook: Spending Increase Is Double-edged Sword -- IEG Sponsorship Report," International Events Group, Jan. 7, 2013, accessed Feb. 27, 2013; http://www.sponsor- SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER ship.com/IEGSR/2013/01/07/2013-Sponsorship-Outlook--Spending-Increase-Is-Dou.aspx. 10. Andrew Adam Newman, “Tough on Crude Oil, Soft on Ducklings,” The New York Times, Sept. 25, 2009, p. B6, as reported in The New Rules of Green Marketing, P. 125.

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animals. The claims forced the company to defend its policies and remind detractors that it has invested more than $250 mil- lion to develop alternative testing methods.10 IT IS ONE THING TO DESIGN The large number of brands employing greener design prac- tices as well as new products being developed as highly sustain- PRODUCTS TO BE GREENER, able from the start, are creating opportunities for more meaning- ful cause-related marketing than the largely promotional add- BUT THEIR IMPACT ons of Earth Days gone by. (It even suggests a long-term phase- out of cause marketing as we know it as brands increasingly inte- THROUGHOUT THEIR TOTAL grate green into their strategic fabric.) Several brands are already leveraging their expertise and PRODUCT LIFE CYCLE CANNOT assets to support environmental causes in new and creative ways. From reducing packaging and water use to finding sustain- BE MINIMIZED UNLESS PEOPLE able ingredients, brands are tackling issues that are both mar- ketable and profitable. This trend has been especially prevalent USE AND DISPOSE OF THEM in the apparel industry, where Levi’s has marketed “Water

Social media 4. PROMOTE RESPONSIBLE CONSUMPTION THROUGHOUT THE LIFE CYCLE Is a potato-chip bag made from corn truly compostable if con- Company’s website sumers toss it in the trash rather than a composting bin? Is an 5% Energy Star-rated light bulb really so energy-efficient if it remains on after everyone leaves the room? 11% It is one thing to design products to be greener, but their impact throughout their total product life cycle cannot be mini- mized unless people use and dispose of them responsibly. To In store 13% 45% understand the impacts, especially of usage, consider that more than 90% of the energy associated with laundry detergent takes place in the use stage, when the water is heated. The decision to pick up a cold-water detergent or simply turn the dial down is squarely in the consumers’ hands. So key to underscoring credibility is engaging consumers in 26% the proper use and disposal of one’s products, including encouraging them to use only what is needed, and consciously reducing waste. Chances are, you’ll find a willing audience for Online search On the product package or label your messages. Nearly all consumers (90%) agree that it is their responsibility to properly use and dispose of products, and a similar number (85%) acknowledge the corporate role in provid- SOURCE: 2013 CONE COMMUNICATIONS GREEN GAP TREND TRACKER ing such information, according to Cone Communications.

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laundry detergent. 5. FOCUS ON PRIMARY BENEFITS As discussed in more detail in Ottman and colleagues’ oft- quoted article “Avoiding Green Marketing Myopia” (http://www.greenmarketing.com/files/Stafford- MyopiaJune06.pdf), the surest route to avoiding the risk of being labeled a greenwasher may be to avoid using green claims alto- gether—and to spotlight the primary benefits a product meets. Eco-aware or not, all consumers want to know how even the greenest of products can benefit them personally. Happily, thanks to advances in materials, design and technology, many of today’s greener products provide added value in the form of enhanced benefits such as saving money. So focusing on the reasons consumers purchase your product in the first place—sometimes referred to as “quiet green”—can broaden appeal beyond the niche of deep-green consumers. It may also help overcome a premium price hurdle, given that some consumers perceive greener products as less efficacious or not worth the money. To be clear, focusing one’s messaging on the personal benefits of greener products, rather than their green attributes does not mean focusing exclusively on such benefits—to do so would be to go back to conventional marketing altogether. Today's consumers want to know the backstory about products and packages, so focusing on primary benefits in the context of a full story that incorporates environmental responsibility as a desirable extra benefit is preferred. Better yet, integrate relevant environmental and social benefits within your brand's already established mar- ket positioning, and you've got the stuff for a meaningful sale. BENEFITS OF GREEN—An ad for Nissan’s Leaf electric Does your product save consumers money? Ads for Sears’ sedan shows ‘miles travelled for dollar.’ Kenmore HE5t Steam washer, which uses 77% less water and 81% less energy than older models, grabs readers with a compelling promise: "You pay for the washer. It pays for the dryer." Ads for However, consumers need information and infrastructure to Nissan’s Leaf electric sedan shifted after an early emphasis on a engage in their most popular eco-activity: recycling. Slightly polar bear appreciatively hugging an owner to the more com- over half of all consumers (52%) report that they don’t know pelling “miles traveled for dollar” concept. how to use or dispose of a “green” product as intended, with Does your product appeal to the style-conscious? American the majority (33%) lacking proper resources in their communi- Apparel was created as a brand that provides excellent working ty. (See Reasons Consumers Give for Not Recycling Products conditions for its employees and uses organic cotton. But in Properly, P. 30) 2004, when its “sweatshop free” label was not bringing in the A product’s label is a useful place to start since nearly half of numbers that CEO Dov Charney was hoping for, he switched to consumers (45%) report looking there for information about a promoting a sexy, youthful image for his company, complete with product’s environmental claims, while another 42% will go racy, controversial ads. Three years later, the company had 180 online, to search engines (26%), company website (11%) or social stores and revenue estimated at $380 million. Sounds heretical? media (5%), according to Cone’s survey. (See Where Consumers Keep in mind that the same sustainably responsible clothing is Look for Environmental Information, P. 31.) still being sold to consumers, together with all the same benefits Some companies attempt to design “responsible consump- to society and the environment.11 tion” into their products. Some outstanding efforts in this regard include the dashboard device in Toyota’s Prius that gives drivers 11. The New Rules of Green Marketing: Strategies, Tools, and Inspiration for Sustainable real-time information on fuel efficiency, and Tide Coldwater Branding, p. 113.

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Embracing the FTC Green Guides is part of a larger approach to establishing credibility

One approach to the FTC Green Guides is to view them as a nomic considerations. The fact that the Green Guides have a nar- cautionary statement—a warning from the green police intended rower focus is partly attributable to the various jurisdictional to keep marketers out of trouble. Certainly, understanding the mandates of government agencies. But what it also reflects is that Green Guides and learning from the examples will help reduce government moves slowly. Environmental laws, regulations and the risk that a marketer will end up in legal trouble for false or guidance from agencies like the FTC will inevitably struggle to misleading advertising. But there’s more to credible marketing keep pace with changing consumer attitudes and demands and, than merely staying out of trouble. Combined with a smart, for- significantly, with the rapidly evolving environmental science. ward-thinking approach, the Green Guides can be a useful tool As laid out in more detail in another paper by author Ottman, for building credibility—the very key to effective and responsible “Moving Sustainability Forward” the government’s inability to green marketing. keep pace suggests that industry itself must play a leading role in Embracing the Green Guides is part of larger approach to setting the standards, initiating dialogue, educating consumers establishing credibility, one that involves understanding the sci- and ensuring that green-marketing claims are credible. ence in order to carefully assess the environmental impact of (http://www.greenmarketing.com/files/Moving%20Sustaina products and services. It also involves thinking holistically and bility%20ForwardRev1.pdf) The FTC Green Guides are an engaging in a dialogue with opinion leaders and with technical important tool for green marketing, but companies can take and legal experts to properly assess risks and understand the many other steps to establish credibility. Through education, trade-offs associated with environmental benefits and impacts. internal policies and instilling values from the top down, compa- The best green-marketing campaigns may be creative in con- nies can do far more to establish a commitment to sustainability cept and bold in execution, but in terms of actually claiming than by slapping a daisy or picture of the Earth on a product environmental benefit, they need to be clear and conservative to package. Companies can enlist the support of credible third par- avoid overstatement. And they need to be honest. Everyone is ties and employ life-cycle assessments and similar tools to fully watching and, in the blogosphere and on social media, they are understand their environmental impact and the consequences talking. Credibility and brand integrity depend upon more than of the trade-offs in their business decisions. In proactively good intentions. Marketers need to be proactive and transpar- addressing the full life-cycle impacts of their products or servic- ent. Even if a marketer manages to avoid legal trouble, the mere es, they must take the lead in ensuring that products are perception of greenwashing can tarnish brands and hurt sales. designed and educational initiatives are in place to ensure that What about the future of green marketing? The FTC Green consumers use and dispose of products responsibly, as well as Guides speak only to environmental marketing claims, whereas, make more thoughtful and responsible shopping decisions. consumers and activists understand “green” to encompass other The stakes are high. Not just for the planet, but for your aspects of sustainability as well—such as social, health and eco- brand. Trust is everything.

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THE OTTMAN CHECKLIST FOR CREDIBLE GREEN MARKETING

Use the following checklist as a summary of key points made in this report, as well as a practical tool for use in ensuring the credibility of your green marketing claims and programs.

HAVE WE BUILT A FOUNDATION FOR EFFECTIVENESS? SUBSTANTIATING SPECIFIC ENVIRONMENTAL ■ Have we defined our values and what sustainability MARKETING CLAIMS means to us? ■ Do our specific claims involve a holistic understanding of our products’ environmental and social impact and do ■ Are we walking our talk? Is a sustainability mindset firmly they avoid focusing solely on one or two environmental embedded within our company’s culture, core values and attributes? business strategy? ■ Are we avoiding claims that are virtually impossible to sup- ■ Are we communicating our values to all stakeholders? port, such as general environmental marketing claims and ■ Does our CEO openly believe in and support sustainability? claims of biodegradability for products and packages that ■ Do our employees understand the key environmental and wind up in landfills? sustainability issues affecting our business? Are they ■ Are we avoiding deceptive or misleading claims, empowered to act? in other words: CAN WE FULLY SUBSTANTIATE OUR CLAIMS AND COMPLY ■ Are our claims meaningful, specific, complete and WITH THE FTC GREEN GUIDES AND OTHER REQUIREMENTS? without exaggeration? ■ Are we being straightforward with type size, SETTING THE STAGE proximity, etc.? ■ Are we building a fact base for our environmental market- ■ Are we avoiding overstatement? ing claims by evaluating our products’ and packages’ envi- ■ Are we avoiding vague, trivial or irrelevant claims ronmental impact throughout their life cycle: raw materials, that can create a false impression of a product’s envi- manufacturing and production, distribution, marketing to ronmental benefits? in-use, after-use and end-of-life management? ■ Are we providing complete information? ■ Are we working with suppliers to understand environmen- ■ Have we obtained all necessary substantiation from tal impacts throughout our products’ supply chains? our suppliers for all claims that we make about their ■ Have we educated ourselves about various green marketing materials, processes, etc.? pitfalls by consulting secondary literature, legal precedent ■ If we are marketing products outside the U.S., are we com- and reviewing past cases of the FTC and the NAD? plying with legal requirements and guidelines provided by ■ Are we taking steps to educate all of our internal and other countries? Are we avoiding making contradictory external personnel involved with making environmental claims in different countries in order to maintain credibility? claims, e.g., our in-house and outside counsel, marketing, Do our claims translate properly into foreign languages? advertising, communications, sustainability and environ- mental staff and vendors, about the relevant terms that THIRD-PARTY SEALS AND ENDORSEMENTS affect our business within the environmental lexicon? ■ Have we considered the use of credible certifications and ■ Have we thoroughly assessed all of our current campaigns, eco-labels issued by independent third parties including claims and use of brand names, package designs and government, industry associations and NGOs? imagery (corporate graphics, seals, logos, etc.) to ensure they ■ In selecting the appropriate third-party labels, have we follow the revised FTC Green Guides? considered the levels of awareness and purchase influ- ence that exist among consumers for these labels? ■ Are we providing the appropriate disclosures to our certifications and eco-labels on product, packaging and/or

CONTINUED ON P. 35

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CONTINUED FROM P. 35 guidelines such as those promulgated by the Global advertising? Are we making sure any supporting Reporting Initiative (GRI) to ensure consistency in reporting? information is available on a website? CONSUMERS ■ If there are no third-party standards and eco-labels in our ■ How sophisticated are our consumers about common envi- industry, are we taking advantage of opportunities to join ronmental marketing terms? Are we avoiding the mistake of with industry peers to create a consensus-based standard assuming that our target audience knows more about envi- such as those of the American National Standards Institute ronmental issues affecting our products, the science behind that could then be verified by third parties? our products, etc. than they actually do? ■ Have we considered the use of an environmental product ■ Have we tested the net takeaway of our messages and images declaration as an alternative to eco-labels, with the ability among consumers for comprehension and believability? to provide more detailed, LCA-type data or disclosure, ■ Are we being prudent about using LCA as a marketing tool? especially with institutional purchasers? Are we fully aware of its shortcomings in this regard as well ■ Are we taking advantage of any opportunities to get as, relatedly, lack of consumer understanding about LCA claims for which no standards exist certified by an inde- and how to interpret its results? pendent body? ■ When touting our products’ environmental benefits, are we ■ Are we disclosing our relationships with third parties, being transparent about those environmental and social including any certifiers or paid endorsements? Are we impacts not measured by LCA? following the FTC’s Endorsement and Testimonial guide- lines (as well as the Green Guides)? RETAILERS ■ ■ What can we learn from reputable experts about the prop- Do we understand what types of proof our retailers may er use of terms not defined by the FTC Green Guides, such require in order to support our environmental-marketing as “natural,” “sustainable” and “water footprint.” claims? Have we completed any required surveys? Have we submitted our products for any required testing? CORPORATE SELF-DECLARATIONS ■ If we are using a corporate self-declaration, what is the BE THOROUGH basis or standard upon which we are making the declara- ■ Are we prepared to address the environmental impact of our tion? Is it crystal-clear to consumers that our company or marketing practices and materials? Beyond the common prac- organization has issued the self-declaration and not a tices of using recycled paper and soybean inks, are we work- third party? ing to disclose the environmental impacts associated with our print, broadcast and digital-marketing supply chains? CAUSE-RELATED MARKETING ■ Have we considered the benefits and risks of cause ARE WE PROMOTING RESPONSIBLE CONSUMPTION OF OUR marketing? Are we following best practices in promoting PRODUCTS THROUGHOUT THEIR LIFE CYCLE? transparency in our cause-marketing campaigns? ■ Are we engaging our consumers in proper use of our prod- ■ Are we ensuring that cause marketing, just like green ucts as well as in conserving resources in general, including marketing efforts in general, considers a holistic approach encouraging them to use only what is needed, and con- to our brand? sciously reducing waste? ■ Are we focusing on causes and environmental benefits that ■ Are we making provisions to have our products dis- are most relevant to our brand? posed of responsibly or returned for recycling, reuse, remanufacturing or repair? ARE WE COMMUNICATING TRANSPARENTLY AND EFFECTIVELY WITH OUR CONSUMERS AND RETAILERS? SHOULD WE SIMPLY FOCUS ON THE CONSUMER BENEFITS OUR TRANSPARENCY PRODUCTS PROVIDE? ■ Are we providing all the information consumers and other ■ Have we considered opportunities to promote our products stakeholders seek to evaluate our brand’s environmental by focusing on primary benefits either exclusively (and benefits? Specifically, are we providing access to details of thereby avoiding the use of environmental-marketing claims products and corporate practices and actively reporting on altogether) or as a complement to environmental attributes? progress? Are we reporting the bad as well as the good? For instance, are we addressing specific direct benefits of ■ Are we making it easy for stakeholders to evaluate our cor- our products to save money? Protect health?

porate environmental performance by following industry SOURCE: J. OTTMAN CONSULTING, INC. USED WITH PERMISSION

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ABOUT THE AUTHORS HELPFUL LINKS*

FTC GREEN GUIDES JACQUELYN A.OTTMAN http://www.ftc.gov/opa/2012/10/green- DAVID G. MALLEN guides.shtm is founder and principal of -based is deputy director of the National Advertising Upon publishing its revised 2012 Green J. Ottman Consulting (http://www.greenmarket- Division (NAD), the investigative arm of the Guides, the FTC also released several business- and consumer-education ing.com). Since 1989, the firm has advised more Advertising Self-Regulation Council (ASRC), resources designed to help users under- than 60 Fortune 500 businesses and several U.S. administered by the Council of Better Business stand the guides. These include: government labeling programs, including HSBC, Bureaus, and is responsible for the review of a 1) “Environmental Claims—Summary of Johnson & Johnson, Energy Star and USDA broad range of national advertising campaigns Green Guides,” a four-page distillation of Certified Biobased labels, on strategies for green in traditional and digital media. the changes: marketing and eco-innovation. In the course of analyzing legal, communica- http://www.ftc.gov/os/2012/10/greenguidessum- Ottman is the author of four books, including tion and claim substantiation issues, he has mary.pdf her latest, The New Rules of Green Marketing: resolved hundreds of advertising disputes and 2) “The Green Guides,” a video explain- Strategies, Tools and Inspiration for Sustainable provided legal guidance to industry on the ing highlights of the changes: Branding (http://www.greenmarketing.com/our- advertising of food and drug products, telecom- http://business.ftc.gov/multimedia/videos/green- guides book) which was named by Cambridge munication services, computer and internet University as one of the top 40 sustainability technology, environmental claims and con- 3) A new page on the FTC Business books of the year. sumer household products. Center, with links to legal documents, the Green Guides and other related content: A sought-after speaker who has keynoted Mallen is a popular public speaker and fre- http://business.ftc.gov/advertising-and-market- conferences around the globe, and she has been quently lectures on advertising self-regulation, ing/environmental-marketing quoted in Forbes, Fortune, Businessweek, The green marketing, scientific claim substantiation, 4) A Business Center blog post: Wall Street Journal and The New York Times. sensory testing and international advertising http://business.ftc.gov/blog/2012/10/green-day She regularly contributes to The Huffington Post, issues. 5) Related consumer information: Sustainable Brands Weekly and other online and Before joining the NAD, Mallen practiced law http://www.consumer.ftc.gov/features/feature- offline publications. She blogs at greenmarket- at Kensington & Ressler in New York City, spe- 0013-going-green ing.com/blog and at wehatetowaste.com. cializing in litigation. He graduated from Cornell NATIONAL ADVERTISING DIVISION Prior to founding her firm, Ottman was an University, where he majored in biology and OF THE BETTER BUSINESS BUREAU executive at New York advertising agencies, society, and Albany Law School of Union http://www.asrcreviews.org where she was responsible for advertising and University. new-product introductions for Procter & Gamble, NAD CASE REPORTS Ralston Purina and other consumer-packaged- David G. Mallen http://www.asrcreviews.org/category/prs/ goods accounts. Ottman received her AB degree Deputy director, J. OTTMAN CONSULTING INC. from and attended New York National Advertising Division http://www.greenmarketing.com University’s Stern School of Business. 212-705-0121 dmallen [at] nad.bbb.org 1) “The New Rules of Green Marketing: Jacquelyn A. Ottman Strategies, Tools and Inspiration for Founder and principal, Sustainable Branding” by Jaquelyn A. J. Ottman Consulting Inc. Ottman (Berrett-Koehler Publishers, 212-879-4160 2011) http://www.greenmarketing.com/our- jaottman [at] greenmarketing.com book ACKNOWLEDGEMENTS 2) “Moving Sustainability Forward.” The authors would like to thank the follow- A green paper by J. Ottman Consulting ing people for their advice and contributions: describing how industry can work Don Carli, Institute for Sustainable proactively with government, suppliers, retailers and consumers to advance sus- Communications tainability. Mark Eisen, J. Ottman Consulting http://www.greenmarketing.com/files/Moving% Kate Lewis, USDA BioPreferred 20Sustainability%20ForwardRev1.pdf 3) “Avoiding Green Marketing Myopia: Steven Mojo, Galatech Ways to Improve Consumer Appeal for Lee Peeler, Advertising Self-Regulatory Environmentally Preferable Products,” by Council Jacquelyn Ottman, Edwin R. Stafford and Cathy L. Hartman, published in David Rinard, Steelcase Environment, June 2006. http://www.green- Arthur Weissman, GreenSeal marketing.com/files/Stafford- MyopiaJune06.pdf Martin Wolf, Seventh Generation *NOTE: ALL THESE LINKS ARE ALSO ON POWER Jonathan Yohannen, Cone POINT SLIDE NO. 8 Communications

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APPENDIX 1:THE 2012 FTC GREEN GUIDES

PART 260–GUIDES FOR THE USE OF ENVIRONMENTAL raise issues that are addressed by more than one example and in MARKETING CLAIMS more than one section of the guides. The examples provide the Sec. 260.1 Purpose, Scope, and Structure of the Guides. Commission’s views on how reasonable consumers likely interpret 260.2 Interpretation and Substantiation of Environmental certain claims. The guides are based on marketing to a general audi- Marketing Claims. ence. However, when a marketer targets a particular segment of 260.3 General Principles. consumers, the Commission will examine how reasonable mem- 260.4 General Environmental Benefit Claims. bers of that group interpret the advertisement. Whether a particular 260.5 Carbon Offsets. claim is deceptive will depend on the net impression of the adver- 260.6 Certifications and Seals of Approval. tisement, label, or other promotional material at issue. In addition, 260.7 Compostable Claims. although many examples present specific claims and options for 260.8 Degradable Claims. qualifying claims, the examples do not illustrate all permissible 260.9 Free-Of Claims. claims or qualifications under Section 5 of the FTC Act. Nor do they 260.10 Non-Toxic Claims. illustrate the only ways to comply with the guides. Marketers can use 260.11 Ozone-Safe and Ozone-Friendly Claims. an alternative approach if the approach satisfies the requirements of 260.12 Recyclable Claims. 260.13 Recycled Content Claims. Section 5 of the FTC Act. All examples assume that the described 260.14 Refillable Claims. claims otherwise comply with Section 5. Where particularly useful, 260.15 Renewable Energy Claims. the Guides incorporate a reminder to this effect. 260.16 Renewable Materials Claims. § 260.2 INTERPRETATION AND SUBSTANTIATION OF 260.17 Source Reduction Claims. ENVIRONMENTAL MARKETING CLAIMS. Authority: 15 U.S.C. 41-58. Section 5 of the FTC Act prohibits deceptive acts and practices in or affecting commerce. A representation, omission, or practice is § 260.1 PURPOSE, SCOPE, AND STRUCTURE OF THE GUIDES. deceptive if it is likely to mislead consumers acting reasonably under (a) These guides set forth the Federal Trade Commission’s current the circumstances and is material to consumers’ decisions. See FTC views about environmental claims. The guides help marketers avoid Policy Statement on Deception, 103 FTC 174 (1983). To determine if making environmental marketing claims that are unfair or deceptive an advertisement is deceptive, marketers must identify all express under Section 5 of the FTC Act, 15 U.S.C. § 45. They do not confer and implied claims that the advertisement reasonably conveys. any rights on any person and do not operate to bind the FTC or the Marketers must ensure that all reasonable interpretations of their public. The Commission, however, can take action under the FTC claims are truthful, not misleading, and supported by a reasonable Act if a marketer makes an environmental claim inconsistent with basis before they make the claims. See FTC Policy Statement the guides. In any such enforcement action, the Commission must Regarding Advertising Substantiation, 104 FTC 839 (1984). In the prove that the challenged act or practice is unfair or deceptive in vio- context of environmental marketing claims, a reasonable basis often lation of Section 5 of the FTC Act. requires competent and reliable scientific evidence. Such evidence (b )These guides do not preempt federal, state, or local laws. consists of tests, analyses, research, or studies that have been con- Compliance with those laws, however, will not necessarily preclude ducted and evaluated in an objective manner by qualified persons Commission law enforcement action under the FTC Act. and are generally accepted in the profession to yield accurate and (c) These guides apply to claims about the environmental attributes of reliable results. Such evidence should be sufficient in quality and a product, package, or service in connection with the marketing, quantity based on standards generally accepted in the relevant scien- offering for sale, or sale of such item or service to individuals. These tific fields, when considered in light of the entire body of relevant guides also apply to business-to-business transactions. The guides and reliable scientific evidence, to substantiate that each of the mar- apply to environmental claims in labeling, advertising, promotional keting claims is true. materials, and all other forms of marketing in any medium, whether asserted directly or by implication, through words, symbols, logos, § 260.3 GENERAL PRINCIPLES. depictions, product brand names, or any other means. The following general principles apply to all environmental market- (d) The guides consist of general principles, specific guidance on the ing claims, including those described in 260.4-16. Claims should com- use of particular environmental claims, and examples. Claims may port with all relevant provisions of these guides.

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(a) QUALIFICATIONS AND DISCLOSURES: To prevent deceptive ly preceding product or to its competitors’ products. The advertis- claims, qualifications and disclosures should be clear, prominent, er should have substantiation for both interpretations. Otherwise, and understandable. To make disclosures clear and prominent, the advertiser should make the basis for comparison clear, for marketers should use plain language and sufficiently large type, example, by saying “20% more recycled content than our previ- should place disclosures in close proximity to the qualified claim, ous bathroom tiles.” and should avoid making inconsistent statements or using distract- Example 2: An advertiser claims that “our plastic diaper liner has ing elements that could undercut or contradict the disclosure. the most recycled content.” The diaper liner has more recycled (b) DISTINCTION BETWEEN BENEFITS OF PRODUCT, PACKAGE, content, calculated as a percentage of weight, than any other on the AND SERVICE: Unless it is clear from the context, an environmen- market, although it is still well under 100%. The claim likely con- tal marketing claim should specify whether it refers to the product, veys that the product contains a significant percentage of recycled the product’s packaging, a service, or just to a portion of the prod- content and has significantly more recycled content than its com- uct, package, or service. In general, if the environmental attribute petitors. If the advertiser cannot substantiate these messages, the applies to all but minor, incidental components of a product or claim would be deceptive. package, the marketer need not qualify the claim to identify that Example 3: An advertiser claims that its packaging creates “less fact. However, there may be exceptions to this general principle. waste than the leading national brand.” The advertiser implement- For example, if a marketer makes an unqualified recyclable claim, ed the source reduction several years ago and supported the claim and the presence of the incidental component significantly limits by calculating the relative solid waste contributions of the two the ability to recycle the product, the claim would be deceptive. packages. The advertiser should have substantiation that the com- Example 1: A plastic package containing a new shower curtain is parison remains accurate. labeled “recyclable” without further elaboration. Because the con- Example 4: A product is advertised as “environmentally prefer- text of the claim does not make clear whether it refers to the plas- able.” This claim likely conveys that the product is environmental- tic package or the shower curtain, the claim is deceptive if any part ly superior to other products. Because it is highly unlikely that the of either the package or the curtain, other than minor, incidental marketer can substantiate the messages conveyed by this state- components, cannot be recycled. ment, this claim is deceptive. The claim would not be deceptive if Example 2: A soft drink bottle is labeled “recycled.” The bottle is the marketer accompanied it with clear and prominent language made entirely from recycled materials, but the bottle cap is not. limiting the environmental superiority representation to the partic- Because the bottle cap is a minor, incidental component of the ular attributes for which the marketer has substantiation, provided package, the claim is not deceptive. the advertisement’s context does not imply other deceptive claims. (c) OVERSTATEMENT OF ENVIRONMENTAL ATTRIBUTE: An envi- For example, the claim “Environmentally preferable: contains 50% ronmental marketing claim should not overstate, directly or by recycled content compared to 20% for the leading brand” would implication, an environmental attribute or benefit. Marketers not be deceptive. should not state or imply environmental benefits if the benefits are negligible. § 260.4 GENERAL ENVIRONMENTAL BENEFIT CLAIMS. Example 1: An area rug is labeled “50% more recycled content (a) It is deceptive to misrepresent, directly or by implication, that a than before.” The manufacturer increased the recycled content product, package, or service offers a general environmental benefit. of its rug from 2% recycled fiber to 3%. Although the claim is tech- (b) Unqualified general environmental benefit claims are difficult to nically true, it likely conveys the false impression that the manu- interpret and likely convey a wide range of meanings. In many facturer has increased significantly the use of recycled fiber. cases, such claims likely convey that the product, package, or serv- Example 2: A trash bag is labeled “recyclable” without qualifica- ice has specific and far-reaching environmental benefits and may tion. Because trash bags ordinarily are not separated from other convey that the item or service has no negative environmental trash at the landfill or incinerator for recycling, they are highly impact. Because it is highly unlikely that marketers can substanti- unlikely to be used again for any purpose. Even if the bag is techni- ate all reasonable interpretations of these claims, marketers should cally capable of being recycled, the claim is deceptive since it not make unqualified general environmental benefit claims. asserts an environmental benefit where no meaningful benefit (c) Marketers can qualify general environmental benefit claims to pre- exists. vent deception about the nature of the environmental benefit being (d) COMPARATIVE CLAIMS: Comparative environmental marketing asserted. To avoid deception, marketers should use clear and claims should be clear to avoid consumer confusion about the com- prominent qualifying language that limits the claim to a specific parison. Marketers should have substantiation for the comparison. benefit or benefits. Marketers should not imply that any specific Example 1: An advertiser notes that its glass bathroom tiles con- benefit is significant if it is, in fact, negligible. If a qualified general tain “20% more recycled content.” Depending on the context, the claim conveys that a product is more environmentally beneficial claim could be a comparison either to the advertiser’s immediate- overall because of the particular touted benefit(s), marketers

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should analyze trade-offs resulting from the benefit(s) to determine improvement. 25% less plastic than our previous packaging.” The if they can substantiate this claim. plastic bottles are 25% lighter but otherwise are no different. The (d) Even if a marketer explains, and has substantiation for, the prod- advertisement conveys that the bottles are more environmentally uct’s specific environmental attributes, this explanation will not beneficial overall because of the source reduction. To substantiate adequately qualify a general environmental benefit claim if the this claim, the marketer likely can analyze the impacts of the source advertisement otherwise implies deceptive claims. Therefore, mar- reduction without evaluating environmental impacts throughout keters should ensure that the advertisement’s context does not the packaging’s life cycle. If, however, manufacturing the new bot- imply deceptive environmental claims. tles significantly alters environmental attributes earlier or later in Example 1: The brand name “Eco-friendly” likely conveys that the the bottles’ life cycle, i.e., manufacturing the bottles requires more product has far reaching environmental benefits and may convey energy or a different kind of plastic, then a more comprehensive that the product has no negative environmental impact. Because it analysis may be appropriate. is highly unlikely that the marketer can substantiate these claims, the use of such a brand name is deceptive. A claim, such as “Eco- § 260.5 CARBON OFFSETS. friendly: made with recycled materials,” would not be deceptive if: (a) Given the complexities of carbon offsets, sellers should employ (1) the statement “made with recycled materials” is clear and promi- competent and reliable scientific and accounting methods to prop- nent; (2) the marketer can substantiate that the entire product or erly quantify claimed emission reductions and to ensure that they package, excluding minor, incidental components, is made from do not sell the same reduction more than one time. recycled material; (3) making the product with recycled materials (b) It is deceptive to misrepresent, directly or by implication, that a makes the product more environmentally beneficial overall; and (4) carbon offset represents emission reductions that have already the advertisement’s context does not imply other deceptive claims. occurred or will occur in the immediate future. To avoid decep- Example 2: A marketer states that its packaging is now “Greener tion, marketers should clearly and prominently disclose if the car- than our previous packaging.” The packaging weighs 15% less than bon offset represents emission reductions that will not occur for previous packaging, but it is not recyclable nor has it been two years or longer. improved in any other material respect. The claim is deceptive (c) It is deceptive to claim, directly or by implication, that a carbon off- because reasonable consumers likely would interpret “Greener” in set represents an emission reduction if the reduction, or the activi- this context to mean that other significant environmental aspects of ty that caused the reduction, was required by law. The examples in the packaging also are improved over previous packaging. A claim this section assume that the certifiers’ endorsements meet the cri- stating “Greener than our previous packaging” accompanied by teria provided in the Expert Endorsements (255.3) and clear and prominent language such as, “We’ve reduced the weight Endorsements by Organizations (255.4) sections of the of our packaging by 15%,” would not be deceptive, provided that Endorsement Guides. reducing the packaging’s weight makes the product more environ- Example 1: On its website, an online travel agency invites con- mentally beneficial overall and the advertisement’s context does sumers to purchase offsets to “neutralize the carbon emissions from not imply other deceptive claims. your flight.” The proceeds from the offset sales fund future projects Example 3: A marketer’s advertisement features a picture of a that will not reduce greenhouse gas emissions for two years. The laser printer in a bird’s nest balancing on a tree branch, surround- claim likely conveys that the emission reductions either already have ed by a dense forest. In green type, the marketer states, “Buy our occurred or will occur in the near future. Therefore, the advertise- printer. Make a change.” Although the advertisement does not ment is deceptive. It would not be deceptive if the agency’s website expressly claim that the product has environmental benefits, the stated “Offset the carbon emissions from your flight by funding new featured images, in combination with the text, likely convey that projects that will begin reducing emissions in two years.” the product has far-reaching environmental benefits and may con- Example 2: An offset provider claims that its product “will offset vey that the product has no negative environmental impact. your own ‘dirty’ driving habits.” The offset is based on methane cap- Because it is highly unlikely that the marketer can substantiate ture at a landfill facility. State law requires this facility to capture all these claims, this advertisement is deceptive. methane emitted from the landfill. The claim is deceptive because Example 4: A manufacturer’s website states, “Eco-smart gas-pow- the emission reduction would have occurred regardless of whether ered lawn mower with improved fuel efficiency!” The manufactur- consumers purchased the offsets. er increased the fuel efficiency by 1/10 of a percent. Although the manufacturer’s claim that it has improved its fuel efficiency techni- § 260.6 CERTIFICATIONS AND SEALS OF APPROVAL. cally is true, it likely conveys the false impression that the manufac- (a) It is deceptive to misrepresent, directly or by implication, that a turer has significantly increased the mower’s fuel efficiency. product, package, or service has been endorsed or certified by an Example 5: A marketer reduces the weight of its plastic beverage independent third party. bottles. The bottles’ labels state: “Environmentally-friendly (b) A marketer’s use of the name, logo, or seal of approval of a third-

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party certifier or organization may be an endorsement, which Activities, February 10, 1998, Circular No. A-119 Revised, Office of should meet the criteria for endorsements provided in the FTC’s Management and Budget at www.whitehouse.gov/omb/circu- Endorsement Guides, 16 C.F.R. Part 255, including Definitions (§ lars_a119. 255.0), General Considerations (§ 255.1), Expert Endorsements (§ Example 2: A manufacturer advertises its product as “certified by 255.3), Endorsements by Organizations (§ 255.4), and Disclosure of the American Institute of Degradable Materials.” Because the Material Connections (§ 255.5). advertisement does not mention that the American Institute of (c) Third-party certification does not eliminate a marketer’s obligation Degradable Materials (“AIDM”) is an industry trade association, the to ensure that it has substantiation for all claims reasonably com- certification likely conveys that it was awarded by an independent municated by the certification. certifier. To be certified, marketers must meet standards that have (d) A marketer’s use of an environmental certification or seal of been developed and maintained by a voluntary consensus stan- approval likely conveys that the product offers a general environ- dard body.2 An independent auditor applies these standards objec- mental benefit (see § 260.4) if the certification or seal does not con- tively. This advertisement likely is not deceptive if the manufactur- vey the basis for the certification or seal, either through the name er complies with § 260.8 of the Guides (Degradable Claims) or some other means. Because it is highly unlikely that marketers because the certification is based on independently-developed and can substantiate general environmental benefit claims, marketers -maintained standards and an independent auditor applies the should not use environmental certifications or seals that do not standards objectively. convey the basis for the certification. Example 3: A product features a seal of approval from “The Forest (e) Marketers can qualify general environmental benefit claims con- Products Industry Association,” an industry certifier with appropri- veyed by environmental certifications and seals of approval to pre- ate expertise in evaluating the environmental attributes of paper vent deception about the nature of the environmental benefit being products. Because it is clear from the certifier’s name that the prod- asserted. To avoid deception, marketers should use clear and uct has been certified by an industry certifier, the certification like- prominent qualifying language that clearly conveys that the certifi- ly does not convey that it was awarded by an independent certifier. cation or seal refers only to specific and limited benefits. The use of the seal likely is not deceptive provided that the adver- Example 1: An advertisement for paint features a “GreenLogo” tisement does not imply other deceptive claims. seal and the statement “GreenLogo for Environmental Example 4: A marketer’s package features a seal of approval with Excellence.” This advertisement likely conveys that: (1) the the text “Certified Non-Toxic.” The seal is awarded by a certifier GreenLogo seal is awarded by an independent, third-party certi- with appropriate expertise in evaluating ingredient safety and fier with appropriate expertise in evaluating the environmental potential toxicity. It applies standards developed by a voluntary attributes of paint; and (2) the product has far-reaching environ- consensus standard body. Although non-industry members com- mental benefits. If the paint manufacturer awarded the seal to its prise a majority of the certifier’s board, an industry veto could over- own product, and no independent, third-party certifier objective- ride any proposed changes to the standards. This certification like- ly evaluated the paint using independent standards, the claim ly conveys that the product is certified by an independent organi- would be deceptive. The claim would not be deceptive if the zation. This claim would be deceptive because industry members marketer accompanied the seal with clear and prominent can veto any proposed changes to the standards. language: (1) indicating that the marketer awarded the Example 5: A marketer’s industry sales brochure for overhead GreenLogo seal to its own product; and (2) clearly conveying that lighting features a seal with the text “EcoFriendly Building the award refers only to specific and limited benefits.2 Voluntary Association” to show that the marketer is a member of that consensus standard bodies are “organizations which plan, devel- organization. Although the lighting manufacturer is, in fact, a op, establish, or coordinate voluntary consensus standards using member, this association has not evaluated the environmental agreed-upon procedures. ... A voluntary consensus standards attributes of the marketer’s product. This advertisement would body is defined by the following attributes: (i) openness, (ii) be deceptive because it likely conveys that the EcoFriendly balance of interest, (iii) due process, (iv) an appeals process, (v) Building Association evaluated the product through testing or consensus, which is defined as general agreement, but not neces- other objective standards. It also is likely to convey that the light- sarily unanimity, and includes a process for attempting to resolve ing has far-reaching environmental benefits. The use of the objections by interested parties, as long as all comments have seal would not be deceptive if the manufacturer accompa- been fairly considered, each objector is advised of the disposition nies it with clear and prominent qualifying language: (1) of his or her objection(s) and the reasons why, and the consensus indicating that the seal refers to the company’s membership members are given an opportunity to change their votes after only and that the association did not evaluate the product’s envi- reviewing the comments.” Memorandum for Heads of Executive ronmental attributes; and (2) limiting the general environmental Departments and Agencies on Federal Participation in the benefit representations, both express and implied, to the partic- Development and Use of Voluntary Consensus Assessment ular product attributes for which the marketer has substantia-

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tion. For example, the marketer could state: “Although we are a Chlorine Products Association. The claim would not be deceptive. member of the EcoFriendly Building Association, it has not eval- uated this product. Our lighting is made from 100% recycled § 260.7 COMPOSTABLE CLAIMS. metal and uses energy efficient LED technology.” (a) It is deceptive to misrepresent, directly or by implication, that a Example 6: A product label contains an environmental seal, product or package is compostable. either in the form of a globe icon or a globe icon with the text (b) A marketer claiming that an item is compostable should have com- “EarthSmart.” EarthSmart is an independent, third-party certifi- petent and reliable scientific evidence that all the materials in the er with appropriate expertise in evaluating chemical emissions item will break down into, or otherwise become part of, usable of products. While the marketer meets EarthSmart’s standards compost (e.g., soil-conditioning material, mulch) in a safe and time- for reduced chemical emissions during product usage, the prod- ly manner (i.e., in approximately the same time as the materials uct has no other specific environmental benefits. Either seal like- with which it is composted) in an appropriate composting facility, ly conveys that the product has far-reaching environmental ben- or in a home compost pile or device. efits, and that EarthSmart certified the product for all of these (c) A marketer should clearly and prominently qualify com- benefits. If the marketer cannot substantiate these claims, the postable claims to the extent necessary to avoid deception if: use of the seal would be deceptive. The seal would not be decep- (1) the item cannot be composted safely or in a timely manner in a tive if the marketer accompanied it with clear and prominent home compost pile or device; or (2) the claim misleads reasonable language clearly conveying that the certification refers only to consumers about the environmental benefit provided when the specific and limited benefits. For example, the marketer could item is disposed of in a landfill. state next to the globe icon: “EarthSmart certifies that this prod- (d) To avoid deception about the limited availability of municipal or uct meets EarthSmart standards for reduced chemical emissions institutional composting facilities, a marketer should clearly and during product usage.” Alternatively, the claim would not be prominently qualify compostable claims if such facilities are not deceptive if the EarthSmart environmental seal itself stated: available to a substantial majority of consumers or communities “EarthSmart Certified for reduced chemical emissions during where the item is sold. product usage.” Example 1: A manufacturer indicates that its unbleached coffee fil- Example 7: A one-quart bottle of window cleaner features a seal ter is compostable. The unqualified claim is not deceptive, provid- with the text “Environment Approved,” granted by an independ- ed the manufacturer has substantiation that the filter can be con- ent, third-party certifier with appropriate expertise. The certifier verted safely to usable compost in a timely manner in a home com- granted the seal after evaluating 35 environmental attributes. This post pile or device. If so, the extent of local municipal or institution- seal likely conveys that the product has far-reaching environmental al composting facilities is irrelevant. benefits and that Environment Approved certified the product for Example 2: A garden center sells grass clipping bags labeled as all of these benefits and therefore is likely deceptive. The seal “Compostable in California Municipal Yard Trimmings Composting would likely not be deceptive if the marketer accompanied it with Facilities.” When the bags break down, however, they release tox- clear and prominent language clearly conveying that the seal refers ins into the compost. The claim is deceptive if the presence of these only to specific and limited benefits. For example, the seal could toxins prevents the compost from being usable. state: “Virtually all products impact the environment. For details Example 3: A manufacturer makes an unqualified claim that its on which attributes we evaluated, go to [a website that discusses package is compostable. Although municipal or institutional com- this product].” The referenced webpage provides a detailed sum- posting facilities exist where the product is sold, the package will mary of the examined environmental attributes. A reference to a not break down into usable compost in a home compost pile or website is appropriate because the additional information provid- device. To avoid deception, the manufacturer should clearly and ed on the website is not necessary to prevent the advertisement prominently disclose that the package is not suitable for home com- from being misleading. As always, the marketer also should ensure posting. that the advertisement does not imply other deceptive claims, and Example 4: Nationally marketed lawn and leaf bags state “com- that the certifier’s criteria are sufficiently rigorous to substantiate all postable” on each bag. The bags also feature text disclosing that the material claims reasonably communicated by the certification. bag is not designed for use in home compost piles. Yard trimmings Example 8: Great Paper Company sells photocopy paper with programs in many communities compost these bags, but such pro- packaging that has a seal of approval from the No Chlorine Products grams are not available to a substantial majority of consumers or Association, a non-profit third-party association. Great Paper communities where the bag is sold. The claim is deceptive because Company paid the No Chlorine Products Association a reasonable it likely conveys that composting facilities are available to a substan- fee for the certification. Consumers would reasonably expect that tial majority of consumers or communities. To avoid deception, the marketers have to pay for certification. Therefore, there are no marketer should clearly and prominently indicate the limited avail- material connections between Great Paper Company and the No ability of such programs. A marketer could state “Appropriate facil-

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ities may not exist in your area,” or provide the approximate per- into small pieces if left uncovered in sunlight.” The advertiser pos- centage of communities or consumers for which such programs are sesses competent and reliable scientific evidence that within one available. year, the product (3 The Guides’ treatment of unqualified degrad- Example 5: A manufacturer sells a disposable diaper that states, able claims is intended to help prevent deception and is not intend- “This diaper can be composted if your community is one of the 50 ed to establish performance standards to ensure the degradability that have composting facilities.” The claim is not deceptive if com- of products when littered.) will break down, after being exposed to posting facilities are available as claimed and the manufacturer has sunlight, into sufficiently small pieces to become part of the soil. substantiation that the diaper can be converted safely to usable com- Thus, the qualified claim is not deceptive. Because the claim is qual- post in solid waste composting facilities. ified to indicate the limited extent of breakdown, the advertiser Example 6: A manufacturer markets yard trimmings bags only to need not meet the consumer expectations for an unqualified pho- consumers residing in particular geographic areas served by coun- todegradable claim, i.e., that the product will not only break down, ty yard trimmings composting programs. The bags meet specifica- but also will decompose into elements found in nature. tions for these programs and are labeled, “Compostable Yard Example 3: A marketer advertises its shampoo as “biodegradable” Trimmings Bag for County Composting Programs.” The claim is without qualification. The advertisement makes clear that only the not deceptive. Because the bags are compostable where they are shampoo, and not the bottle, is biodegradable. The marketer has sold, a qualification is not needed to indicate the limited availabili- competent and reliable scientific evidence demonstrating that the ty of composting facilities. shampoo, which is customarily disposed in sewage systems, will break down and decompose into elements found in nature in a rea- § 260.8 DEGRADABLE CLAIMS. sonably short period of time in the sewage system environment. (a) It is deceptive to misrepresent, directly or by implication, that a Therefore, the claim is not deceptive. product or package is degradable, biodegradable, oxo-degradable, Example 4: A plastic six-pack ring carrier is marked with a small oxo-biodegradable, or photodegradable. The following guidance diamond. Several state laws require that the carriers be marked with for degradable claims also applies to biodegradable, oxo-degrad- this symbol to indicate that they meet certain degradability stan- able, oxobiodegradable, and photodegradable claims. dards if the carriers are littered. The use of the diamond by itself, in (b) A marketer making an unqualified degradable claim should have an inconspicuous location, does not constitute a degradable claim. competent and reliable scientific evidence that the entire item will Consumers are unlikely to interpret an inconspicuous diamond completely break down and return to nature (i.e., decompose into symbol, without more, as an unqualified photodegradable claim.3 elements found in nature) within a reasonably short period of time Example 5: A fiber pot containing a plant is labeled “biodegrad- after customary disposal. able.” The pot is customarily buried in the soil along with the plant. (c) It is deceptive to make an unqualified degradable claim for items Once buried, the pot fully FOOTNOTE 1decomposes during the entering the solid waste stream if the items do not completely growing season, allowing the roots of the plant to grow into the sur- decompose within one year after customary disposal. Unqualified rounding soil. The unqualified claim is not deceptive. degradable claims for items that are customarily disposed in land- fills, incinerators, and recycling facilities are deceptive because § 260.9 FREE-OF CLAIMS. these locations do not present conditions in which complete (a) It is deceptive to misrepresent, directly or by implication, that a decomposition will occur within one year. product, package, or service is free of, or does not contain or use, (d) Degradable claims should be qualified clearly and promi- a substance. Such claims should be clearly and prominently quali- nently to the extent necessary to avoid deception about: (1) fied to the extent necessary to avoid deception. the product’s or package’s ability to degrade in the environment (b) A truthful claim that a product, package, or service is free of, where it is customarily disposed; and (2) the rate and extent of or does not contain or use, a substance may nevertheless be degradation. deceptive if: (1) the product, package, or service contains or uses Example 1: A marketer advertises its trash bags using an unquali- substances that pose the same or similar environmental risks as the fied “degradable” claim. The marketer relies on soil burial tests to substance that is not present; or (2) the substance has not been show that the product will decompose in the presence of water and associated with the product category. oxygen. Consumers, however, place trash bags into the solid waste (c) Depending on the context, a free-of or does-not-contain claim stream, which customarily terminates in incineration facilities or is appropriate even for a product, package, or service that landfills where they will not degrade within one year. The claim is, contains or uses a trace amount of a substance if: (1) the level therefore, deceptive. of the specified substance is no more than that which would be Example 2: A marketer advertises a commercial agricultural plas- found as an acknowledged trace contaminant or background tic mulch film with the claim “Photodegradable,” and clearly and level;4 (2) the substance’s presence does not cause material harm prominently qualifies the term with the phrase “Will break down that consumers typically associate with that substance; and (3) the

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substance has not been added intentionally to the product. Title VI of the Clean Air Act Amendments of 1990, Pub. L. No. 101- Example 1: A package of t-shirts is labeled “Shirts made with a 549, and others subsequently designated by EPA as ozone-deplet- chlorine-free bleaching process.” The shirts, however, are ing substances. These chemicals include chlorofluorocarbons bleached with a process that releases a reduced, but still signifi- (CFCs), halons, carbon tetrachloride, 1,1,1-trichloroethane, methyl cant, amount of the same harmful byproducts associated with bromide, hydrobromofluorocarbons, and hydrochlorofluorocar- chlorine bleaching. The claim overstates the product’s benefits bons (HCFCs). because reasonable consumers likely would interpret it to mean Example 2: An aerosol air freshener is labeled “ozone-friendly.” that the product’s manufacture does not cause any of the environ- Some of the product’s ingredients are volatile organic compounds mental risks posed by chlorine bleaching. A substantiated claim, (VOCs) that may cause smog by contributing to ground-level ozone however, that the shirts were “bleached with a process that releas- formation. The claim likely conveys that the product is safe for the es 50% less of the harmful byproducts associated with chlorine atmosphere as a whole, and, therefore, is deceptive. bleaching” would not be deceptive. Example 2: A manufacturer advertises its insulation as “formalde- § 260.12 RECYCLABLE CLAIMS. hyde free.” Although the manufacturer does not use formaldehyde (a) It is deceptive to misrepresent, directly or by implication, that a as a binding agent to produce the insulation, tests show that the product or package is recyclable. A product or package should not insulation still emits trace amounts of formaldehyde. The seller has be marketed as recyclable unless it can be collected, separated, or substantiation that formaldehyde is present in trace amounts in vir- otherwise recovered from the waste stream through an established tually all indoor and (to a lesser extent) outdoor environments and recycling program for reuse or use in manufacturing or assembling that its insulation emits less formaldehyde than is typically present another item. in outdoor environments. Further, the seller has substantiation that (b) Marketers should clearly and prominently qualify recyclable claims the trace amounts of formaldehyde emitted by the insulation do to the extent necessary to avoid deception about the availability of not cause material harm that consumers typically associate with recycling programs and collection sites to consumers. formaldehyde. In this context, the trace levels of formaldehyde (1) When recycling facilities are available to a substantial majority emissions likely are inconsequential to consumers. Therefore, the of consumers or communities where the item is sold, marketers seller’s free-of claim would not be deceptive. can make unqualified recyclable claims. The term “substantial majority,” as used in this context, means at least 60%. § 260.10 NON-TOXIC CLAIMS. (2) When recycling facilities are available to less than a substantial (a) It is deceptive to misrepresent, directly or by implication, that a majority of consumers or communities where the item is sold, mar- product, package, or service is non-toxic. Non-toxic claims should keters should qualify all recyclable claims. Marketers may always be clearly and prominently qualified to the extent necessary to qualify recyclable claims by stating the percentage of consumers or avoid deception. communities that have access to facilities that recycle the item. (b) A non-toxic claim likely conveys that a product, package, or service Alternatively, marketers may use qualifications that vary in is non-toxic both for humans and for the environment generally. strength depending on facility availability. The lower the level of Therefore, marketers making non-toxic claims should have compe- access to an appropriate facility is, the more strongly the marketer tent and reliable scientific evidence that the product, package, or should emphasize the limited availability of recycling for the prod- service is non-toxic for humans and for the environment or should uct. For example, if recycling facilities are available to slightly less clearly and prominently qualify their claims to avoid deception. than a substantial majority of consumers or communities where Example 1: A marketer advertises a cleaning product as “essential- the item is sold, a marketer may qualify a recyclable claim by stat- ly non-toxic” and “practically non-toxic.” The advertisement likely ing: “This product [package] may not be recyclable in your area,” conveys that the product does not pose any risk to humans or the or “Recycling facilities for this product [package] may not exist in environment, including household pets. If the cleaning product your area.” If recycling facilities are available only to a few con- poses no risk to humans but is toxic to the environment, the claims sumers, marketers should use stronger clarifications. For example, would be deceptive. a marketer in this situation may qualify its recyclable claim by stat- ing: “This product [package] is recyclable only in the few commu- § 260.11 OZONE-SAFE AND OZONE-FRIENDLY CLAIMS. nities that have appropriate recycling facilities.” It is deceptive to misrepresent, directly or by implication, that a (c) Marketers can make unqualified recyclable claims for a product or product, package, or service is safe for, or friendly to, the ozone layer package if the entire product or package, excluding minor inciden- or the atmosphere. tal components, is recyclable. For items that are partially made of Example 1: A product is labeled “ozone-friendly.” The claim is recyclable components, marketers should clearly and prominently deceptive if the product contains any ozone-depleting substance, qualify the recyclable claim to avoid deception about which por- including those substances listed as Class I or Class II chemicals in tions are recyclable.

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(d) If any component significantly limits the ability to recycle the item, does not specify the portion of the product that is recyclable. any recyclable claim would be deceptive. An item that is made Second, it does not disclose the limited availability of facilities that from recyclable material, but, because of its shape, size, or some can process multilayer products or materials. An appropriately qual- other attribute, is not accepted in recycling programs, should not ified claim would be “25% of the material in this package is recycla- be marketed as recyclable.5 ble in the few communities that can process multi-layer products.” Example 1: A packaged product is labeled with an unqualified Example 7: A product container is labeled “recyclable.” The mar- claim, “recyclable.” It is unclear from the type of product and other keter advertises and distributes the product only in Missouri. context whether the claim refers to the product or its package. The Collection sites for recycling the container are available to a sub- unqualified claim likely conveys that both the product and its pack- stantial majority of Missouri residents but are not yet available aging, except for minor, incidental components, can be recycled. nationally. Because programs are available to a substantial majori- Unless the manufacturer has substantiation for both messages, it ty of consumers where the product is sold, the unqualified claim is should clearly and prominently qualify the claim to indicate which not deceptive. portions are recyclable. Example 8: A manufacturer of one-time use cameras, with dealers Example 2: A nationally marketed plastic yogurt container displays in a substantial majority of communities, operates a take-back pro- the Resin Identification Code (RIC)6 (which consists of a design of gram that collects those cameras through all of its dealers. The arrows in a triangular shape containing a number in the center and manufacturer reconditions the cameras for resale and labels them an abbreviation identifying the component plastic resin) on the front “Recyclable through our dealership network.” This claim is not label of the container, in close proximity to the product name and deceptive, even though the cameras are not recyclable through logo. This conspicuous use of the RIC constitutes a recyclable claim. conventional curbside or drop-off recycling programs. Unless recycling facilities for this container are available to a substan- Example 9: A manufacturer advertises its toner cartridges for tial majority of consumers or communities, the manufacturer should computer printers as “Recyclable. Contact your local dealer for qualify the claim to disclose the limited availability of recycling pro- details.” Although all of the company’s dealers recycle cartridges, grams. If the manufacturer places the RIC, without more, in an incon- the dealers are not located in a substantial majority of communities spicuous location on the container (e.g., embedded in the bottom of where cartridges are sold. Therefore, the claim is deceptive. The the container), it would not constitute a recyclable claim. manufacturer should qualify its claim consistent with § 260.11(b)(2). Example 3: A container can be burned in incinerator facilities to The term “used” refers to parts that are not new and that 7 have not produce heat and power. It cannot, however, be recycled into undergone any re-manufacturing or reconditioning. another product or package. Any claim that the container is recy- Example 10: An aluminum can is labeled “Please Recycle.” This clable would be deceptive. statement likely conveys that the can is recyclable. If collection Example 4: A paperboard package is marketed nationally and sites for recycling these cans are available to a substantial major- labeled either “Recyclable where facilities exist” or “Recyclable— ity of consumers or communities, the marketer does not need to Check to see if recycling facilities exist in your area.” Recycling pro- qualify the claim. grams for these packages are available to some consumers, but not available to a substantial majority of consumers nationwide. Both § 260.13 RECYCLED CONTENT CLAIMS. claims are deceptive because they do not adequately disclose the (a) It is deceptive to misrepresent, directly or by implication, that a limited availability of recycling programs. To avoid deception, the product or package is made of recycled content. Recycled content marketer should use a clearer qualification, such as one suggested includes recycled raw material, as well as used,7 reconditioned, in § 260.12(b)(2). and re-manufactured components. Example 5: Foam polystyrene cups are advertised as “Recyclable (b) It is deceptive to represent, directly or by implication, that an item in the few communities with facilities for foam polystyrene cups.” contains recycled content unless it is composed of materials that A half-dozen major metropolitan areas have established collection have been recovered or otherwise diverted from the waste stream, sites for recycling those cups. The claim is not deceptive because it either during the manufacturing process (pre-consumer), or after clearly discloses the limited availability of recycling programs. consumer use (post-consumer). If the source of recycled content Example 6: A package is labeled “Includes some recyclable materi- includes pre-consumer material, the advertiser should have sub- al.” The package is composed of four layers of different materials, stantiation that the pre-consumer material would otherwise have bonded together. One of the layers is made from recyclable materi- entered the waste stream. Recycled content claims may—but do not al, but the others are not. While programs for recycling the 25% of have to—distinguish between pre-consumer and post-consumer the package that consists of recyclable material are available to a materials. Where a marketer distinguishes between pre-consumer substantial majority of consumers, only a few of those programs and post-consumer materials, it should have substantiation for any have the capability to separate the recyclable layer from the non- express or implied claim about the percentage of pre-consumer or recyclable layers. The claim is deceptive for two reasons. First, it post-consumer content in an item.

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(c) Marketers can make unqualified claims of recycled content if the deceptive, since the average amount of recycled material is 30%. entire product or package, excluding minor, incidental compo- Example 7: A manufacturer labels a paper greeting card “50% nents, is made from recycled material. For items that are partial- recycled fiber.” The manufacturer purchases paper stock from sev- ly made of recycled material, the marketer should clearly and eral sources, and the amount of recycled fiber in the stock provid- prominently qualify the claim to avoid deception about the ed by each source varies. If the 50% figure is based on the annual amount or percentage, by weight, of recycled content in the fin- weighted average of recycled material purchased from the sources ished product or package. after accounting for fiber loss during the papermaking production (d) For products that contain used, reconditioned, or re-manufac- process, the claim is not deceptive. tured components, the marketer should clearly and prominently Example 8: A packaged food product is labeled with a three-chas- qualify the recycled content claim to avoid deception about the ing-arrows symbol (a Möbius loop) without explanation. By itself, nature of such components. No such qualification is necessary the symbol likely conveys that the packaging is both recyclable and where it is clear to reasonable consumers from context that a made entirely from recycled material. Unless the marketer has sub- product’s recycled content consists of used, reconditioned, or re- stantiation for both messages, the claim should be qualified. The manufactured components. claim may need to be further qualified, to the extent necessary, to Example 1: A manufacturer collects spilled raw material and disclose the limited availability of recycling programs and/or the scraps from the original manufacturing process. After a minimal percentage of recycled content used to make the package. amount of reprocessing, the manufacturer combines the spills and Example 9: In an office supply catalog, a manufacturer advertises scraps with virgin material for use in production of the same prod- its printer toner cartridges “65% recycled.” The cartridges contain uct. A recycled content claim is deceptive since the spills and scraps 25% recycled raw materials and 40% reconditioned parts. The claim are normally reused by industry within the original manufacturing is deceptive because reasonable consumers likely would not know process and would not normally have entered the waste stream. or expect that a cartridge’s recycled content consists of recondi- Example 2: Fifty percent of a greeting card’s fiber weight is com- tioned parts. It would not be deceptive if the manufacturer claimed posed from paper that was diverted from the waste stream. Of this “65% recycled content; including 40% from reconditioned parts.” material, 30% is post-consumer and 20% is pre-consumer. It would Example 10: A store sells both new and used sporting goods. One not be deceptive if the marketer claimed that the card either “con- of the items for sale in the store is a baseball helmet that, although tains 50% recycled fiber” or “contains 50% total recycled fiber, used, is no different in appearance than a brand new item. The hel- including 30% postconsumer fiber.” met bears an unqualified “Recycled” label. This claim is deceptive Example 3: A paperboard package with 20% recycled fiber by because reasonable consumers likely would believe that the helmet weight is labeled “20% post-consumer recycled fiber.” The recy- is made of recycled raw materials, when it is, in fact, a used item. cled content was composed of overrun newspaper stock never sold An acceptable claim would bear a disclosure clearly and promi- to customers. Because the newspapers never reached consumers, nently stating that the helmet is used. the claim is deceptive. Example 11: An automotive dealer, automobile recycler, or other Example 4: A product in a multi-component package, such as a qualified entity recovers a serviceable engine from a wrecked vehi- paperboard box in a shrink-wrapped plastic cover, indicates that cle. Without repairing, rebuilding, remanufacturing, or in any way it has recycled packaging. The paperboard box is made entirely altering the engine or its components, the dealer attaches a of recycled material, but the plastic cover is not. The claim is “Recycled” label to the engine, and offers it for sale in its used auto deceptive because, without qualification, it suggests that both parts store. In this situation, an unqualified recycled content claim components are recycled. A claim limited to the paperboard box likely is not deceptive because reasonable consumers in the auto- would not be deceptive. motive context likely would understand that the engine is used and Example 5: A manufacturer makes a package from laminated lay- has not undergone any rebuilding. ers of foil, plastic, and paper, although the layers are indistinguish- Example 12: An automobile parts dealer, automobile recycler, able to consumers. The label claims that “one of the three layers of or other qualified entity purchases a transmission that has been this package is made of recycled plastic.” The plastic layer is made recovered from a salvaged or end-of-life vehicle. Eighty-five per- entirely of recycled plastic. The claim is not deceptive, provided the cent of the transmission, by weight, was rebuilt and 15% consti- recycled plastic layer constitutes a significant component of the tutes new materials. After rebuilding8 the transmission in accor- entire package. dance with industry practices, the dealer packages it for resale Example 6: A frozen dinner package is composed of a plastic tray in a box labeled “Rebuilt Transmission,” or “Rebuilt inside a cardboard box. It states “package made from 30% recycled Transmission (85% recycled content from rebuilt parts),” or material.” Each packaging component is one-half the weight of the “Recycled Transmission (85% recycled content from rebuilt total package. The box is 20% recycled content by weight, while the parts).” Given consumer perception in the automotive context, plastic tray is 40% recycled content by weight. The claim is not these claims are not deceptive.

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§ 260.14 REFILLABLE CLAIMS. to mean that the power was composed entirely of renewable ener- It is deceptive to misrepresent, directly or by implication, that a gy. If the marketer stated, “We purchase wind energy for half of our package is refillable. A marketer should not make an unqualified refill- manufacturing facilities,” the claim would not be deceptive. able claim unless the marketer provides the means for refilling the Example 2: A company purchases renewable energy from a port- package. The marketer may either provide a system for the collection folio of sources that includes a mix of solar, wind, and other renew- and refill of the package, or offer for sale a product that consumers can able energy sources in combinations and proportions that vary purchase to refill the original package. over time. The company uses renewable energy from that portfolio Example 1: A container is labeled “refillable three times.” The to power all of the significant manufacturing processes involved in manufacturer has the capability to refill returned containers and making its product. The company advertises its product as “made can show that the container will withstand being refilled at least with renewable energy.” The claim would not be deceptive if the three times. The manufacturer, however, has established no collec- marketer clearly and prominently disclosed all renewable energy tion program. The unqualified claim is deceptive because there is sources. Alternatively, the claim would not be deceptive if the mar- no means to return the container to the manufacturer for refill. keter clearly and prominently stated, “made from a mix of renew- Example 2: A small bottle of fabric softener states that it is in a able energy sources,” and specified the renewable source that “handy refillable container.” In the same market area, the manufac- makes up the greatest percentage of the portfolio. The company turer also sells a large-sized bottle that consumers use to refill the may calculate which renewable energy source makes up the great- smaller bottles. The claim is not deceptive because there is a rea- est percentage of the portfolio on an annual basis. sonable means for the consumer to refill the smaller container. Example 3: An automobile company uses 100% non-renewable energy to produce its cars. The company purchases renewable § 260.15 RENEWABLE ENERGY CLAIMS. energy certificates to match the non-renewable energy that powers (a) It is deceptive to misrepresent, directly or by implication, that a all of the significant manufacturing processes for the seats, but no product or package is made with renewable energy or that a serv- other parts, of its cars. If the company states, “The seats of our cars ice uses renewable energy. A marketer should not make unquali- are made with renewable energy,” the claim would not be decep- fied renewable energy claims, directly or by implication, if fossil tive, as long as the company clearly and prominently qualifies the fuel, or electricity derived from fossil fuel, is used to manufacture claim such as by specifying the renewable energy source. any part of the advertised item or is used to power any part of the Example 4: A company uses 100% non-renewable energy to man- advertised service, unless the marketer has matched such non- ufacturer all parts of its product, but powers the assembly process renewable energy use with renewable energy certificates. entirely with renewable energy. If the marketer advertised its prod- (b) Research suggests that reasonable consumers may interpret renew- uct as “assembled using renewable energy,” the claim would not be able energy claims differently than marketers may intend. Unless deceptive. marketers have substantiation for all their express and reasonably Example 5: A toy manufacturer places solar panels on the roof implied claims, they should clearly and prominently qualify their of its plant to generate power, and advertises that its plant is renewable energy claims. For instance, marketers may minimize “100% solar-powered.” The manufacturer, however, sells renew- the risk of deception by specifying the source of the renewable able energy certificates based on the renewable attributes of all energy (e.g., wind or solar energy). the power it generates. Even if the manufacturer uses the elec- (c) It is deceptive to make an unqualified “made with renewable ener- tricity generated by the solar panels, it has, by selling renewable gy” claim unless all, or virtually all, of the significant manufacturing energy certificates, transferred the right to characterize that processes involved in making the product or package are powered electricity as renewable. The manufacturer’s claim is therefore with renewable energy or non-renewable energy matched by deceptive. It also would be deceptive for this manufacturer to renewable energy certificates. When this is not the case, marketers advertise that it “hosts” a renewable power facility because rea- should clearly and prominently specify the percentage of renew- sonable consumers likely interpret this claim to mean that the able energy that powered the significant manufacturing processes manufacturer uses renewable energy. It would not be deceptive, involved in making the product or package. however, for the manufacturer to advertise, “We generate (d) If a marketer generates renewable electricity but sells renewable renewable energy, but sell all of it to others.” energy certificates for all of that electricity, it would be deceptive for the marketer to represent, directly or by implication, that it uses § 260.16 RENEWABLE MATERIALS CLAIMS. renewable energy. (a) It is deceptive to misrepresent, directly or by implication, that a Example 1: A marketer advertises its clothing line as “made with product or package is made with renewable materials. wind power.” The marketer buys wind energy for 50% of the ener- (b) Research suggests that reasonable consumers may interpret renew- gy it uses to make the clothing in its line. The marketer’s claim is able materials claims differently than marketers may intend. Unless deceptive because reasonable consumers likely interpret the claim marketers have substantiation for all their express and reasonably

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implied claims, they should clearly and prominently qualify their product is made with recycled content, recyclable, and renewable materials claims. For example, marketers may minimize biodegradable. The marketer has adequately qualified the the risk of unintended implied claims by identifying the material amount of renewable materials in the product. used and explaining why the material is renewable. (c) Marketers should also qualify any “made with renewable materi- § 260.17 SOURCE REDUCTION CLAIMS. als” claim unless the product or package (excluding minor, inci- It is deceptive to misrepresent, directly or by implication, that a dental components) is made entirely with renewable materials. product or package has been reduced or is lower in weight, volume, or Example 1: A marketer makes the unqualified claim that its flooring toxicity. Marketers should clearly and prominently qualify source is “made with renewable materials.” Reasonable consumers likely reduction claims to the extent necessary to avoid deception about the interpret this claim to mean that the flooring also is made with recy- amount of the source reduction and the basis for any comparison. cled content, recyclable, and biodegradable. Unless the marketer Example 1: An advertiser claims that disposal of its product gen- has substantiation for these implied claims, the unqualified “made erates “10% less waste.” The marketer does not accompany this with renewable materials” claim is deceptive. The marketer could claim with a general environmental benefit claim. Because this qualify the claim by stating, clearly and prominently, “Our flooring claim could be a comparison to the advertiser’s immediately is made from 100% bamboo, which grows at the same rate, or faster, preceding product or to its competitors’ products, the advertis- than we use it.” The marketer still is responsible for substantiating er should have substantiation for both interpretations. all remaining express and reasonably implied claims. Otherwise, the advertiser should clarify which comparison it Example 2: A marketer’s packaging states that “Our packaging is intends and have substantiation for that comparison. A claim of made from 50% plant-based renewable materials. Because we “10% less waste than our previous product” would not be decep- turn fast-growing plants into bio-plastics, only half of our product tive if the advertiser has substantiation that shows that the cur- is made from petroleum-based materials.” By identifying the rent product’s disposal contributes 10% less waste by weight or material used and explaining why the material is renewable, the volume to the solid waste stream when compared with the marketer has minimized the risk of unintended claims that the immediately preceding version of the product.

APPENDIX 2 Ecolabels and seals

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