Overview
On December 20, 2022, the Federal Trade Commission (FTC or the Commission) published in the federal register a Request for Comment seeking public input on potential updates to its Guides for the Use of Environmental Marketing Claims (Green Guides). The request marks the first step of the widely anticipated review of the Green Guides, and its timing was foreshadowed by the FTC at least twice in prior Federal Register notices, wherein the Commission stated it intended to initiate the update process sometime in 2022.
The request addresses a number of hot-button issues, such as: 1) updating specific definitions and guidance for popular environmental advertising and/or labeling claims like "recyclable," "compostable," and those relating to carbon offsets and climate change; 2) better understanding the landscape of green marketing, including changes in consumer perceptions and business realities; and 3) examining the need for enforceable federal regulations focused on green claims.
Businesses should strongly consider submitting comments (due February 21, 2023) and participating in this opportunity to shape the next edition of these influential guidelines. If history is any predictor of the future, businesses should also expect this process to be relatively involved (likely with additional comment periods and/or workshops) and lengthy—it took the FTC five years to finalize the last update to the Green Guides (the process commenced in 2007, but was not finalized until 2012).
The Green Guides
First published in 1992 and last updated in 2012, the Green Guides are, in large part, dedicated to discussing the lawfulness of specific types of environmental marketing claims under Section 5 of the FTC Act, which prohibits unfair and deceptive practices in interstate commerce. The Guides also include illustrative examples of prohibited and permissible claims, which can assist companies’ compliance efforts and may also be construed as safe harbors for defending a green marketing claim.
However, the Green Guides are not independently enforceable. While the FTC can take formal action under the FTC Act against a marketer that makes an environmental claim inconsistent with the Green Guides, the Commission must prove that the challenged claim is also an unfair or deceptive practice under Section 5 of the FTC Act to prevail. And, because the Green Guides do not preempt state law, states are free to deviate from the standards articulated therein—risking confusion and adding challenges for national businesses trying to comply with a patchwork of inconsistent laws.
That said, the Green Guides are nonetheless influential—some states have explicitly incorporated the Green Guides into their law, while others provide that compliance with the Green Guides shall be a valid defense against an allegation that an advertising claim is deceptive or misleading. Other states, like California, have crafted their own environmental marketing laws that potentially conflict with the standards articulated in the Green Guides. The Green Guides also have a significant influence on litigation and enforcement actions, as courts and litigants often rely upon the FTC's positions when bringing and adjudicating the ever-growing wave of "green-washing" actions nationwide.
Current Request for Comments to Shape Future Revisions
As a first step in the Green Guides update process, the FTC has asked for public comments responding to a series of questions to understand the current state of green marketing, identify areas where updated and/or new guidance may be beneficial, and obtain both consumer and industry perspectives that will likely shape the next step of publishing a proposed revision. The first subset of 19 questions explores "general issues," while the second subset focuses on "specific claims" commonly used by marketers.
A. The Commission's "General" Questions
Many of the FTC's "general" questions are similar or identical to ones that the Commission posed during prior Green Guides reviews. That said, businesses engaged in green marketing, entities along their supply chains, and advertising firms should take note of several topics that evidence the Commission's interest in:
- Updating its consumer perception data. Questions 7-8 of the request ask for evidence—published or gathered after the last Green Guides update in 2012—demonstrating consumer perception of green claims and how these claims factor into consumer behavior and purchase decisions. Consumer perception data forms a critically important component to the law around green marketing: because consumer perception is considered the touchstone for deception under Section 5 of the FTC Act, understanding how a reasonable consumer would interpret and be affected by the claim often (if not always) drives the types and quality of evidence needed to substantiate it.
- Understanding business realities. In Questions 9-13, the Commission asks for feedback on the costs of compliance, how marketers are currently attempting to comply, and whether the Green Guides have adequately helped clarify the law.
- Examining how the Green Guides interact with other existing laws. The Commission’s Questions 17 and 18 focus on the interaction between the Green Guides (and implicitly, the FTC's actions to enforce them) and other applicable domestic and international environmental marketing laws, including how updates to the Guides might impact or reconcile conflicts amongst them, such as through referencing relevant international standards or, alternatively, by creating unnecessary and/or impractical differences or market access issues. These two questions—while probing critical considerations on their own, especially given the rapid increase of (often stringent) state and foreign green advertising and labeling laws—gain additional significance when viewed alongside Question 19, as discussed below.
- Examining the need for enforceable regulations. Question 19, which asks whether the FTC should promulgate enforceable environmental marketing regulations, is particularly important. The rise of state laws that might conflict with the standards imposed under the Green Guides, like California’s S.B. 343, begs the question as to whether the FTC should promulgate enforceable regulations that preempt these laws. But other factors may also be motivating Question 19. For example, similar to the Commission's recent and ongoing efforts to codify other longstanding policies and guides (like its 2021 Made in the USA Rule and the recent Advance Notice of Proposed Rulemaking regarding endorsements and reviews), Question 19 may be motivated by the FTC's desire to seek hefty monetary penalties for violations—a power that was severely restricted by the Supreme Court’s ruling in AMG Capital Management LLC v. FTC, stripping the Commission of its ability to seek direct restitution under Section 13(b) of the FTC Act.
- Identifying areas for additional or reduced guidance. In addition to soliciting more targeted feedback on 9 specific green claims discussed further below, Questions 14 and 15 ask for comments identifying new, potentially concerning, claims that should be addressed in the revised edition of the Green Guides, as well as evidence showing their existence and potential to mislead consumers and/or unfairly affect competition.
B. Claims Specific Questions
The Commission requested feedback on updates to claims already addressed in the current iteration of the Green Guides. Specifically, the Commission is interested in exploring updates to existing guidance regarding claims for:
- Carbon Offsets (16 CFR 260.5);
- Compostable (16 CFR 260.7);
- Degradable (16 CFR 260.8);
- Ozone Safe/Friendly (16 CFR 260.11);
- Recyclable (16 CFR 260.12); and
- Recycled Content (16 CFR 260.13).
Some of the potential claims-specific updates are controversial and implicate important policy issues. For example, the current iteration of the Green Guides provides that unqualified recyclable claims are permissible only if recycling facilities are available to a substantial majority of consumers. The FTC historically interprets a substantial majority to mean 60% or more of consumers or communities in the markets where the item is sold. But the new request for comments asks whether this 60% threshold should be revisited, and if so, what the new threshold should be. The request also asks whether additional guidance related to materials collected but not actually recycled might be necessary and what form such guidance might take. Chairwoman Kahn's statement, released in conjunction with the Green Guides update, also touched on the point of actual recyclability—further underscoring the Commission’s interest in the issue.
Furthermore, the request also asks for evidence regarding the need for guidance regarding the following terms, which are not currently addressed in the Green Guides:
- Climate change;
- Organic;
- Sustainable; and
- Energy usage and/or energy efficiency.
It is not surprising that the FTC expressed interest in "organic" and "sustainable" claims. In fact, the Commission explored developing guidance around the use of these terms in the 2012 update to the Green Guides, but ultimately declined to do so then—though the existing Green Guides generally caution against the unqualified use of broad green claims, including terms like "sustainable," as there is a high potential to confuse consumers unless such claims are accompanied by clear and conspicuous definitions and explanations.
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The public comment period is open until February 21, 2023, and presents businesses with an important opportunity to express their views on these questions and provide information on market dynamics and best practices in green marketing, in order to shape the next iteration of the Green Guides. The Steptoe team can assist with participation in this public comment period and the anticipated rulemaking process. Please do not hesitate to contact the authors of this alert for help with any issues concerning environmental marketing.
