Product Labeling – Making Sure Green Really is Green
During the most watched Super Bowl in history, Audi ran a commercial featuring the “Green Police” touting the “clean diesel” feature of its car. The ad opens with a pleasant young man at a supermarket, who is asked if he wants his food in paper or plastic. When he replies “plastic,” a policeman shoves his head down on the counter and handcuffs him, saying, “That’s the magic word … You picked the wrong day to mess with the ecosystem, Plastic Boy.”
Cut to “Green Police” riffling through a rubbish bin outside a suburban house looking for eco-unfriendly items. When they find a battery they cry: “Let’s go. Take the house.” A police helicopter trains its lights through the kitchen window of another house where a young man is peeling an orange into his bin. “Put the rind down, sir. That’s a compost infraction,” the megaphone echoes.
A man comes to his door, chewing his dinner, to find green police inspecting his porch light. “Did you install these lightbulbs?” “Yeah,” he replies, before he is handcuffed and bundled into a police car. A TV reporter intones: “Tragedy strikes tonight where a man has just been arrested for possession of an incandescent light bulb.”
It is all done to the tune of the ’80s band Cheap Trick’s Dream Police reworked as Green Police.
The point of the ad comes in an “eco roadblock” which has stopped two lanes of traffic, as Green Police go car to car checking emissions. When they get to a young man in an Audi, they say approvingly, “Clean diesel. You’re good to go, sir.” The young man roars off, fast and smug in his throaty diesel, which the ad tells us is “green car of the year.” If you missed the ad, you can click to take a look.
While the ad satirizes the escalation of the environmental movement over the last few years, it demonstrates that “greenness” is for many consumers a key component of their buying decisions. More and more companies of all kinds are promoting the eco-friendliness of their wares. Before going down the green marketing road, however, it is imperative to make sure that your product actually reflects and contains the “green attributes” that are being represented. A whole host of watch dogs could turn a green campaign into a green drain if legal requirements are not met.
The Green Claims Regulations published by the Federal Trade Commission (“FTC”) represent one place to start this important analysis. The Green Claims Regulations are intended to define the characterization that advertisers are permitted to make about products to avoid making “unfair or deceptive” claims. To accomplish this, the Green Claims Regulations describe the basic elements needed to substantiate specific environmental claims. The FTC uses a multi-tiered approach of (1) issuing rules and guides for businesses, (2) challenging fraudulent and deceptive ads through enforcement actions, and (3) publishing materials to help consumers make informed purchasing decisions. See 15 U.S.C. §§ 41-58 and 16 C.F.R. Part 260. Claims such as “Environmentally Friendly,” “Environmentally Safe,” “Environmentally Preferable,” “Eco-Safe,” and “Earth Smart” should be used with only the greatest caution. Labels must help consumers by providing substance to the claim. But all products, packaging and services have some environmental impact, although some may have less than others. Therefore, these phrases alone do not provide the specific information you need to compare products, packaging, or services on their environmental merits. Best practices in this area also call for companies advertising the green characteristics of their products to have data supporting the substance of the claims.
In order to provide some direction to companies in implementing the Green Claims Regulations, the FTC first issued the Green Guide in 1992. 16 C.F.R. part 20. The Green Guides were revised in 1998 and are currently under review to ensure their responsiveness to today’s marketplace. The FTC has the power to enforce corrective action if it believes that an ad is false or misleading. The Green Guides offer numerous hypotheticals that explain how to quantify specific claims to avoid deception. Claims such as: “biodegradable,” “compostable,” “recyclable,” “recycled,” “refillable,” and “ozone safe” are covered in the Green Guides. Not included in the Green Guides, but currently under review by the FTC, are claims such as “eco-friendly,” “sustainable,” and “carbon neutral.”
Private enforcement of greenwashing claims is expected to rise as companies vie for the ultimate green product. California Business & Professional Code section 17200 provides an easy standing threshold for unfair competition suits, allowing actions to be brought by public prosecutors “or by any person acting for the interests of itself, its members or the general public.” Remedies include restitution, injunctive relief, and attorneys’ fees. See Consumer Union v. Alta-Dena Certified Dairy (1992) 4 Cal. 4th 963 [court issued injunction forcing dairy to make affirmative statements about wholesomeness of unpasteurized milk to undo effects of prior false statements]. Dr Bronner’s Magic Soaps filed a lawsuit under section 17200 against numerous personal-care brands using “organic” claims on their labels.
With the potential increase in greenwashing claims, companies should consider a multi-step process in developing advertising related to green claims:
- Evaluate their advertising copy and the documentation related to green claims with counsel to ensure that their approach is within the confines of the Green Claims Regulations;
- Review their insurance policies with a specialist. General liability insurance policies typically provide coverage for “bodily injury,” “property damage,” and “advertising liability.” Importantly, insurance policies provide both defense and indemnity; and
- Retain such documentation as is practical to use in support of the Green Claims they are making in case a consumer, competitor, or regulator should challenge the claim.
Companies that are leaders in their respective industries on sustainability issues will have a market advantage. These companies are pushing the envelope beyond compliance and in doing so are creating healthier places to work and limiting their regulatory risks. Careful planning, metrics, and certification will not only provide evidence to support certain green claims, it will also improve the overall dynamics of the business.