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FTC Making \"Green\" on a Label Mean Something

Right now, manufacturers slap all kinds of environmentally friendly labels on products ranging from glass cleaners to shoes, but there may not be much to back up the claims.

Look for the Federal Trade Commission to raise the bar on what it takes to be green. In the next few weeks, the FTC will release updated guidelines on using environmental marketing claims, instilling some order in environmental merchandising.

Retailers and consumers alike are clamoring for help in determining what’s OK to say. It’s been “a little bit of a Wild West mentality” in green merchandising over the last decade or so, says Jeff Greenbaum, a partner in the Advertising, Marketing and Public Relations group at the law firm Frankfurt Kurnit Klein & Selz. The flood of products labeled “sustainable,” “renewable” or just plain “green” prompted the FTC to push up its revisions of the guides, which it last updated in 1998. The agency has taken four actions on environmental claims this past summer alone – all based on its old guidelines.

Under the new guides, firms will have to substantiate product claims, indicating what it is that makes one type of product more environmentally friendly than another. It won’t be enough to simply prove a product is made from recycled material or that the raw materials used are renewable, for example. The guides will toughen requirements for general claims, such as what qualifies a product as “sustainable” or “renewable” -- terms that weren’t in broad use when the guides were first written. The agency has taken action this year on claims that products are “biodegradable” and “environmentally friendly,” both of which were terms defined in the original guides. What’s more, the new, expanded provisions will likely bring increased scrutiny on the hundreds of third-party environmental seals on products that make general claims, says John Villafranco, a partner in advertising law and consumer protection for the law firm Kelley Drye & Warren.

Meanwhile, specific claims, like those saying products are “made of 100% recycled material,” will also require more backup from marketers. Chances are manufacturers will have to clarify how that feature saves water, reduces carbon footprints or the like.

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Businesses do have some worries about tighter oversight, including the costs of the increased testing that will likely be essential to prove their labeling claims. Other firms may balk at revealing too much information about proprietary formulas or processes. But most companies are eager for the guides, says Amy Mudge, a consumer protection and antitrust lawyer with the firm Arnold & Porter. Businesses want to be able to market their products’ green benefits to consumers while being secure in the knowledge that they’re in compliance with what regulators want.

Retailers will also appreciate the extra detail required of manufacturers, says Michelle Harvey, who coleads the Environmental Defense Fund's on-site corporate sustainability partnership with Wal-Mart. “Buyers for retailers are no more knowledgeable than educated consumers standing in the aisle trying to decide between products,” she says. If they can’t figure out whether the product they’re putting on the shelf is better for the environment, it puts retailers in a very uncertain position. Harvey also points out that the guidelines will make it easier for organizations and companies that are trying to be greener – from schools to venues such as stadiums and performing arts centers.

The new guides will complete a two-year process that began with roundtables on various environmental subjects and included consumer surveys to learn how shoppers interpret green claims. The guides are not laws or even regulations, and a comment period will occur before they are made final. But the guidelines will give marketers a clue as to what factors the FTC will use to decide if a company is violating Section 5 of the FTC Act – which is a law, and prohibits unfair or deceptive practices by businesses.