Special to TBL
Marketing is going green. More consumers than ever are willing to pay a premium for products that offer a "green" benefit.
Natural, eco-friendly, recyclable, compostable, biodegradable, non-toxic, and ozone-friendly are all examples of the green claims being made on a dizzying array of products. Companies have realized that having these claims on a product or its packaging translates directly into dollars.
And while the dollars may be tantalizing, making these claims does not come without a certain level of risk. In particular, the practice of "greenwashing," or making false or misleading green claims, is on the rise — as is the government's regulation of such claims.
Most greenwashing, however, does not seem to be intentional. Companies may face exposure for greenwashing because they failed to have programs in place to properly substantiate green marketing claims or, even more troublesome, they may have relied on representations from a supplier to support green marketing claims that later turned out to be inaccurate or improperly substantiated.
For example, the Federal Trade Commission filed administrative complaints in 2009 against three companies — Kmart Corp., Tender Corp., and Dyna-E International — for making allegedly false and unsubstantiated claims that their paper products were "biodegradable." The FTC's issue with the claims was that their "products typically are disposed in landfills, incinerators or recycling facilities, where it is impossible for waste to biodegrade within a reasonably short time after customary disposal."
While all three companies have since settled with the FTC, they also handled some damage control with their customers. Tender Corp. sold Fresh Bath™ Travel Wipes and Body Wipes and marketed them as biodegradable. The FTC's complaint alleged that Tender Corp. did not have adequate substantiation for this claim, and Tender Corp. eventually entered a consent order with the FTC. While the consent order did not include an admission that Tender Corp. violated the law, Tender Corp. did issue a press release stating that it relied on the third-party vendor who supplied the products for substantiation of the products' biodegradable claims.
After its settlement with the FTC, Kmart's spokesperson made a similar statement, stating that "Kmart relied on the vendor's documents to substantiate the claim, and these plates are biodegradable in a backyard compost."
The same day as the announcement of the "biodegradable" administrative complaints, representatives of the FTC testified before Congress on its continuing commitment to protect consumers from unfair or deceptive practices, including green marketing that is false or misleading. The title of the presentation was "It's Too Easy Being Green: Defining Fair Green Marketing Principles" and outlined the significant steps the FTC intends on taking to increase regulation of green marketing claims. The statement is available at www.ftc.gov/os/2009/06/P954501greenmarketing.pdf.
Specifically, the FTC reinforced its role in "helping to ensure that these environmental advertisements are truthful, substantiated, and not confusing to consumers." The FTC also announced that it would conduct its own research on consumer understanding of particular green marketing claims, such as "eco-friendly," "sustainable," and "carbon neutral."
The FTC plans to use this research to update its "Green Guides," which are the guides published by the FTC to assist businesses in making lawful green marketing claims. The current guides were published in 1992, and will be updated and reissued next year. The current version is available at www.ftc.gov/bcp/grnrule/guides980427.htm.
These risks do not mean companies should not make appropriate green marketing claims about their products — they just need to be careful. Failing to make legitimate green marketing claims can be even more dangerous to a company's bottom line, particularly in an economic climate where every advantage counts.
Generally, green marketing claims can be made if they are truthful, substantiated and not confusing to consumers. The best evidence of substantiation is competent and reliable scientific evidence prepared by an independent third party. In addition, according to the FTC, companies should qualify or avoid broad claims such as "environmentally safe" or "environmentally friendly" because they can convey a wide range of meanings to consumers that may be difficult to substantiate.
At the end of the day, the best advice is the classic advertising adage: the best advertising is a truth well told. In the case of green marketing claims, knowing your truth and telling it well can mean green in more ways than one. TBL
Janet Ramsey is a partner in the Grand Rapids office of Warner Norcross & Judd LLP and practices in the area of intellectual property litigation, with a focus on advertising and marketing law. She can be reached at 616.752.2367 or email@example.com. Mary Tell is an associate who also practices in the Grand Rapids office in the area of advertising and marketing law. She can be reached at 616.752.2793 or firstname.lastname@example.org. Both are members of the firm's Corporate Sustainability and Climate Group. For more information on the firm, visit www.wnj.com.
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This article appeared in the Monday, January 4, 2010 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who are employed in West and Southwest Michigan. For further information about MiBiz, visit www.mibiz.com.