How to Avoid Running Afoul of FTC With Sustainability Claims

Chris Cole After about five years of review, the FTC finally published its final Guides for the Use of Environmental Marketing Claims last month. Commonly known as the "Green Guides," this lengthy set of rules is intended to be official "advice" to marketers about how best to support and communicate the most common environmental marketing claims without deceiving consumers. While the FTC maintains that the Guides are not binding law, history shows that the FTC is quite willing to sue companies that ignore such guides. Those cases can be painful and costly to marketers, who therefore should pay close attention. The new Guides provide specific recommendations for how to make all sorts of common environmental marketing claims, exhaustively highlighting the kinds of proof that marketers must have before the claims can be made. Despite more than 300 pages of rules, guidance and commentary, however, the FTC did not specify rules for what may be the most common environmental marketing claim of all: "sustainable." Environmental "sustainability" claims are everywhere in the media, touting both existing environmental accomplishments and future aspirations. This is because they are proven to create positive feelings for marketers and their products. For example, a 2009 study by the University of Leeds demonstrated how BP's "Beyond Petroleum" campaign increased positive consumer associations with the brand. This was, ironically, shortly before the Deepwater Horizon disaster summarily wiped out those gains. Business case True sustainability improvements are not just window-dressing, however. Reductions in raw-materials usage, reduced waste and emissions, and reduced energy consumption can have a major positive effect on the corporate bottom line. Many sustainability improvements are also being driven by increasingly stringent laws as well as by purchasing requirements that favor products produced with a smaller environmental footprint. This is why many companies have entire departments devoted to sustainability, employ chief sustainability officers, and publish annual sustainability reports. Yet, in the final Green Guides commentary, the FTC somewhat sheepishly admits that it could not define what sustainability really means in concrete terms for marketers. It says that its consumer research into the term was largely unhelpful, revealing mainly that consumers tend to equate sustainability with tangential concepts such as "durability." To be fair, the FTC was not totally silent on the subject. Its report exhaustively summarized comments it had received both for and against adopting a specific definition. For example, at one end of the spectrum, one commenter had advised the FTC that defining sustainability is "possibly unachievable" because "sustainability is anything that fosters the general welfare of the entire planet ... encompass[ing] not just the environment, but the economy, public health and every other facet of life." The EPA itself advised against permitting any claim of sustainability for products because there is no such thing as a "sustainable product, although some products will have greater effects than others on the sustainability of natural systems." Others argued that the term could be used, provided it be properly qualified and specific. The next step So what should marketers do in this swirl of uncertainty and in the absence of FTC guidance? I have a few concrete recommendations. First, it is essential that the marketer trying to claim "sustainability" decide whether it is using the term as a vague synonym for environmental improvement or whether the term reflects measurable accomplishments. In either case, the claim will need to be carefully qualified. Is the claim based on existing improvements or measures being taken to achieve future gains? The advertising should explain and limit the claim to make clear what it means. Second, marketers should also be clear on whether the claim applies to the production process, the product or the distribution chain. Consumers may interpret a sustainability claim as meaning effectively "more environmental benefit than harm." This is considered by the FTC to be a claim of "general environmental benefit" and must be qualified by referring to the particular attributes that make the product or process sustainable. In some cases, the FTC advises, a tradeoff analysis, or even a full-blow life cycle analysis, may be required before the claim can be made. Third, pundits and regulators are nearly unanimous that one should not claim that a product itself has achieved sustainability. Every consumer product has an environmental cost. Fourth, there is no reason to invent standards of proof from whole cloth. There are dozens of potentially applicable third-party standards and certifications out there. Find the relevant standards and experts and work with them. The safest course for any sustainability claim is to ground it in one or more established sustainability standards and to obtain independent certification. Finally, as with any marketing claim, if the sustainability improvement is not material to consumers, one should consider whether to use it in advertising. However, if the claim is meaningful, the marketer should consider educating consumers on why that is so. Despite the FTC's failure to define sustainability, or perhaps because of this failure, marketers will continue to find sustainability claims attractive. Sustainability claims are a powerful way to influence consumer perception regarding companies and products. The marketing industry should demand of itself high standards of proof and communication. Without this, these kinds of claims will increasingly become meaningless and consumers increasingly cynical. That would be bad outcome for consumers, marketers -- and the environment. ABOUT THE AUTHOR Chris Cole is a partner in Manatt Phelps & Phillips' Washington office.

How to Avoid Running Afoul of FTC With Sustainability Claims

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