FTC Goes After Broad Environmental Claims in Long-Awaited Guideline Revision

Green Seals, Biodegradable, Compostable Claims All Endangered by Tougher Stance

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BATAVIA, Ohio (AdAge.com) -- The Federal Trade Commission is issuing a long-awaited update to its green-marketing guidance today that takes aim at broad, non-specific environmental claims and environmental seals of approval and will make it tougher to claim products or packaging are biodegradable or compostable.

But the revision to the FTC Green Guides, the first in 12 years despite increasingly active green-marketing efforts in the U.S., stop short of trying to define the term "sustainable" as some people expected, largely because consumer research conducted for the commission by Harris Interactive found the term means little to consumers in the first place.

The FTC, according to a Federal Register notice to be published today, also concluded that restrictions on the term "sustainable" could run afoul of advertisers First Amendment rights in some cases.

The Green Guide revisions have been approved 5-0 by the FTC, indicating a broad consensus that gives marketers little reason to believe they'll be further modified soon.

The revised guidelines caution against claims such as "eco-friendly" or "environmentally friendly," based on data from the Harris research indicating consumers see such claims as meaning the product has "far-reaching benefits" in almost all environmental areas without having any substantial environmental drawbacks.

"Very few products, if any, have all the attributes consumers seem to perceive from such claims," the FTC said in a statement, "making these claims nearly impossible to substantiate."

"The headline issue is going to be no more unqualified green claims," said Chris Cole, attorney with Manatt Phelps & Phillips, who heard briefings from FTC officials on the revised Green Guides at the annual conference of the National Advertising Division of the Council of Better Business Bureaus yesterday. "That's the single biggest change. You're not going to be able to say 'eco-friendly' without saying ... 'based on the ability to recycle it.' ...That's going to change practices a lot. There are a lot of feel-good, eco-friendly ads out there right now, and those are all going to have to be re-thought."

The new guidelines also discourage use of "unqualified certifications" or environmental seals of approval that don't specify the specific reason for the certification. Marketers who've created such seals themselves need to disclose that, according to the FTC, and also need to disclose when the certification comes from an industry group to which they pay dues. Other seals and certifications should follow the FTC's extensive guidelines regarding endorsements.

Claiming products and packaging are "biodegradable" or "compostable" is also tougher under the new guidelines, or at least better defined. The revised Green Guide spells out that such products or packaging should actually be proven to biodegrade fully within a year, as research indicates consumers expect, in municipal landfills or other waste handling operations that serve a "substantial majority" of the U.S., defined by the FTC as 60%.

One marketer executive whose company had previously been briefed on the guideline revision said the FTC's stance could effectively prevent almost all biodegradable and compostable claims, since few consumers have access to municipal composting facilities and Environmental Protection Agency standards for landfills prevent the presence of water or oxygen sufficient to permit anything from biodegrading in a year.

The FTC also provided much broader and more specific guidance on when marketers can claim products are "free" of a particular substance or "non-toxic."

Even if true, "free" claims would be deemed deceptive if the substance in question has never ordinarily been used in the product or were replaced with another substance with similar environmental risk. But the FTC guidelines do leave room for minimal or "de minimus" levels of substances marketers claim aren't in the product, if they're present at levels unlikely to cause harm.

Products claimed to be "non-toxic" should be so both for their individual users and the broader environment, according to the guidelines.

The new rules could have far-reaching effects on marketing, particularly of packaged goods. According to Datamonitor's Product Launch Analytics, 1,110 package-goods products have launched this year through Sept. 30 with "biodegradable," "compostable," "eco-friendly" or "environmentally friendly" claims, compared to 1,126 for all of last year and 1,170 in 2008.

The FTC has set a 60-day comment period ending Dec. 10 on the Green Guides, after which it can pass a final version of the guidance.

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