In the wake of an historic presidential election, shakeups in Congress and an unfolding economic recession, advertisers will need to adapt to changing consumer expectations as well as a tougher regulatory oversight of "green" marketing claims. Fortunately for most companies, adapting to these new market realities means following a few basic principles. For those that cannot, or will not, adapt, 2009 could get ugly—and expensive.
Selling the environmental attributes of products has been a niche marketing strategy for decades in the U.S., but in recent years green marketing has gone mainstream. Fueled by growing media attention to global climate change and other environmental issues, the demand for "environmentally friendly" products and services has soared.
The growth in green marketing has prompted concern that some corporate advertisers are "greenwashing," or touting products or services using overbroad or unsubstantiated environmental claims. In 2007, citing concern over potential greenwashing in the voluntary carbon offset market, Congressman Ed Markey asked the Federal Trade Commission to investigate the new green claims. Subsequently, the FTC began a series of public consultations as well as consumer research to assess whether and how the commission should revise its Guides for the Use of Environmental Marketing Claims, often referred to as the Green Guides.
The FTC had been expected to release updated Green Guides in late 2009 or early 2010, but the timing now appears uncertain in light of the new administration's decision to halt, pending reviews, many types of regulatory proceedings initiated by the prior administration. .
Even in the absence of new guidance, advertisers have several incentives to act now and review their green marketing strategies. The FTC already has the legal authority to regulate false and deceptive advertising, with or without updated Green Guides. Under a new Democratic administration, the commission may ratchet up its enforcement of the current guidelines.
With larger Democratic majorities in both the House and Senate, and leadership in both houses voicing concern over greenwashing, however, executives could also face increased congressional oversight of green marketing practices.
Regulators are not the only ones likely to scrutinize corporate environmental claims more closely in the future. While climate change is no less compelling today than a year ago, more consumers may need to balance their green ideals with financial realities enforced by the current economic downturn. Those consumers still responsive to green marketing will likely expect more than flashy green catchphrases. Consumer and environmental groups alike are quick to inform consumers about companies they feel lack support for environmental claims.
Here, then, are three tips to help marketers avoid run-ins with regulators, consumers and watchdog groups.
- Put your marketing money where your facts are
A threshold question for any green marketing strategy should be: Is your client able to back up claims when challenged? While the FTC does not set definitive standards for the use of specific environmental (or other) claims, its policy states that "any party making an express or implied claim that presents an objective assertion about the environmental attribute of a product, package or service must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim," as reflected in "competent and reliable evidence." In some cases, competent and reliable evidence may require independent studies confirming the scientific basis of the claim.
- Keep it real: Qualify your claims
Another principle of defensible green advertising is that claims should not be overly broad in a manner that may mislead or confuse a consumer. In the language of the FTC's Green Guides, "[a]n environmental marketing claim should . . . [make] clear whether the environmental attribute or benefit being asserted refers to the product, the product's packaging, a service or to a portion or component of the product, package or service." Similarly, "[a]n environmental marketing claim should not [overstate] the environmental attribute or benefit, expressly or by implication." Comparative statements (whether between old and new products or between competing brands) should make "the basis for the comparison sufficiently clear to avoid consumer deception." In short, narrowly tailor your claims to avoid misleading consumers or regulators.
Hint: The FTC considers most open-ended general claims (for example, "new environmentally friendly formula") as overly vague and ambiguous without some clarification about the product's environmental benefit.
- Seek sound advice
Shakespeare was famous for his distrust of lawyers, but if he had been a copywriter, even he would have recognized the value of consulting legal counsel before making high-profile green marketing claims. A quick call to the legal department is a wise step before starting that multimillion-dollar, multimedia green marketing campaign. With the FTC and lawmakers signaling that they will draw a harder line on misleading advertising in the future, and stiff penalties for false and misleading advertising, that call to your lawyer may save more than just the face of your corporate campaign.
Green marketing remains a promising tool for companies that can identify concrete, factually supported environmental benefits associated with their products or services. As consumers' interest in green products rises, so will their expectations; and they will become more discerning about the products they purchase with decreasing or limited resources. Regulators and private watchdog groups are also likely to be more aggressive in monitoring questionable marketing practices.
Advertisers and marketers looking to connect with environmentally conscious consumers will need to take extra care to develop sound creative strategies that tune in buyers without turning off authorities.
Kenneth J. Markowitz and Charles L. Franklin are attorneys in the global climate change practice of law firm Akin Gump Strauss Hauer & Feld.
FTC adapts to a changing "green" marketplace
The FTC's Green Guides provide general guidance on the need to qualify and substantiate environmental claims, as well as examples of how the FTC will interpret specific terms. Claims discussed in the current guides include:
- General environmental claims such as "environmentally friendly," "earth smart" and "earth safe."
- Comparative claims such as "environmentally preferable" and "contains less (fill in the blank)."
- Product safety claims such as "essentially nontoxic," "ozone safe," "ozone friendly" and "environmentally safe."
- Lifecycle claims such as "degradable," "biodegradable," "compostable," "reusable," "recycled" and "recyclable."
Recently, the FTC initiated an effort to update its Green Guides in response to the growth of new marketing claims appearing in commerce, including:
- New general environmental claims such as "eco-friendly" and "green."
- Substance-free claims such as "chemical-free," "PVC-free" and "formaldehyde-free."
- Sustainability claims such as "sustainable" and "sustainability."
- Climate-related claims such as "carbon-neutral," "carbon-negative" and "climate-friendly."
- Renewable energy-related claims such as "manufactured with renewable energy," Renewable Energy Credit, Renewable Energy Certificate and RECs
- Green building claims and claims regarding environmentally friendly materials.
- Green textile claims referring to "natural" or "organic" fibers.
Information on the FTC Green Guides and pending update proceedings is available on the FTC's Web site.