New Eco Regs?

The National Marketing Institute estimates in a recent report that consumers with environmental concerns represent over $230 billion in spending power.

This fact has not been lost on media companies and advertisers. The Sundance Channel responded by launching a three-hour, primetime programming block known as The Green, which is hosted by Robert Redford.

The programming during the block only allows sponsors that meet the network’s standards of environmental friendliness. An advisory board of environmentalists to Sundance helps it determine whether advertisers really are eco-minded and should be tied to the programming.

Discovery Communications is launching a new 24-hour lifestyle and entertainment cable network with an emphasis on environmentalism and green living called Planet Green.

Many advertisers now tout themselves or their products as being environmentally friendly. Marketers also typically make claims on packaging that their products have certain environmentally positive attributes. Some assert that they’re involved in programs that reduce their impact on greenhouse gas emissions, such as through carbon offsets and use of or support of renewable energy.

The Federal Trade Commission also has been watching all the bandwagon hopping. As a result, the agency decided to revisit, earlier than it originally planned, its 1998 guidelines for environmental advertising claims, known as the Green Guides. A formal review of renewable energy, carbon offset and environmentally “sustainable” claims is now underway.

In January the FTC held a workshop concerning carbon offset programs and renewable energy certificates and the marketing of or related to such programs.

The agency is also planning additional workshops on various eco-marketing issues, and took public comments through last month on what it should be doing to regulate advertising and marketing that makes environmental claims.

As stated in its current publication Complying with the Environmental Marketing Guides: “The FTC looks at all advertising from the consumer’s perspective. What message does the advertising actually convey to consumers?”

In its recent request for public comments, the FTC noted that all green claim “qualifications and disclosures [need to] be sufficiently clear and prominent to prevent deception.”

Under current law, marketers “must make clear whether: their claims apply to the product, the package or a component of either; that claims not overstate an environmental attribute or benefit, expressly or by implication; and that marketers present comparative claims in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception.”

As with any type of advertising claim, the marketer must also have a reasonable basis through objective and verifiable evidence to support its express and implied claims to meet the FTC’s requirement of substantiation.

General environmental claims will be more difficult than specific claims to substantiate and are more likely to be deemed to be deceptive. Accordingly, the FTC advises that general green claims such as “eco-friendly” be accompanied by clear, conspicuous and understandable qualifications that explain an objective basis for a claim that can be substantiated. For example, an “environmentally preferable” assertion should be further qualified with a statement that “This product has no air polluting potential and is 100% biodegradable.”

While the FTC may end up establishing specific regulatory guidelines for the types of eco-marketing claims that did not exist 10 years ago, it need only apply the same standards it currently applies to general environmental claims.

New terms and technologies will continuously emerge. Consumers will be protected if explanatory qualification statements follow such claims and references.

Pending the FTC review of these issues later this year, both the current Green Guides and application of best practices in advertising and marketing generally provide guidance on how to work environmental claims into marketing campaigns that are not unfair or deceptive, as applied under the FTC Act.

With the increase in public concern about global warming and the environment, and the call by many environmental groups for people to support only eco-friendly companies and to take efforts to reduce their own carbon footprint, eco-marketing will no doubt continue to expand.

Time will tell if 2008 will bring material changes to, or increases in, FTC regulation in this area. However, it is reasonable to expect that suspect environmental claims are likely to continue to meet regulatory scrutiny and care should be taken when advertisers develop such campaigns that they have substantiation for their claims and that both express and implied claims are conveyed in manner that is not likely to result in consumer confusion.

Alan L. Friel is a lawyer with the Los Angeles office of Kaye Scholer LLP, which advises clients in the advertising and media industries. He can be reached at AFriel@Kayescholer.com or 310-788-1052.

The following check list is recommended as a starting point to avoid suspect green advertising claims:

1. Do you have valid substantiation for each express or implied claim made?

2. If claims are of a general nature, use new terms of art or use environmental symbols or images to convey green attributes, are they followed with a clear, conspicuous, accurate and verifiable explanation qualifying the basis of the claim?

3. If seals of approval or certifications are included, have you included an explanation of the basis of the award? Also, if the seal implies a third party has evaluated and certified the product, is it from a bona fide, independent and qualified third party?

4. If environmental symbols are used, can you substantiate the meaning reasonable customers would give to the symbol and substantiate the implied claim made by such use? The FTC calls for consumer research to form the basis for new symbols and provides specific guidance for the use of the “three chasing arrows” recycle symbol and the Society of Plastics Industry codes.

5. Have you specified the exact basis for the claim? Care should be taken in distinguishing products, practices, packaging and components, as applicable.

6. Do the claims exaggerate or overstate attributes or benefits?

7. Are the claims made in a manner that would be understandable to the typical consumer?

8. Are comparative claims clear as to the basis of the comparison? For instance, if the packaging is said to have “50% more recycled content,” explain to what it is being compared, such as “our previous package.” This also applies to “source reduction” claims such as “50% less plastic.”

9. If degradable, biodegradable, photodegradable, compostable, recyclable, recycled, ozone safe, no CFCs or refillable claims are made, are they done so in a manner that is consistent with the FTC’s current Green Guides? Note that the FTC finds “please recycle” on products or packaging to be deceptive if such item is capable of being recycled by a substantial majority of the consumers where it is sold.

10. If carbon offset, sustainability or renewal energy claims are made, have you explained in a manner that a typical consumer would understand what exactly is meant by these claims? Keep in mind that the FTC has concerns that consumers may have misperceptions about the meaning of these types of statements and is currently examining the issue.