Green marketing standards — overhaul on the horizon

• Morgan, Lewis & Bockius LLP

Market demand for environmentally sustainable offerings has steadily increased in recent years, prompting companies to ramp up marketing efforts focused on showcasing the environmental benefits of their products, services, and processes.

There are rewards associated with green marketing. Increased brand loyalty, improved financial performance, and enhanced brand equity are some of the benefits that companies that establish themselves as eco-responsible stand to benefit from. Great risk is associated with great reward. Failure to execute green marketing strategies in compliance with legal guidelines can result in regulatory enforcement actions at both the state and federal level.

There is a need for guidance on how to engage in green marketing. The Federal Trade Commission's guides for the use of environmental claims are a reference manual for companies looking to engage in this space.

Register for free to Reuters and know the full story

The Green Guides set out standards for environmental marketing and guidelines for how marketers can prove green marketing claims to avoid deceiving consumers.

The Guides are not binding on federal law, but the FTC and private-party litigants rely on them to bring enforcement actions. Several states have incorporated the Green Guides into their laws. Compliance with the Green Guides is often seen as a defense for these types of claims. The Green Guides are used by courts to consider false or misleading advertising claims.

The Green Guides were last updated in 2012 and have been around for 22 years. Some of the more recent green marketing trends such as "natural," "organic," and "sustainable" are not included in the Green Guides. Businesses looking to engage in responsible marketing efforts are uncertain because of this lack of specific guidance.

The public comment period on the effectiveness of the Guides was opened by the FTC after it announced its intention to update the Guides in 2023.

The Commission is looking to fill in the gaps for businesses seeking guidance on environmental marketing claims while enhancing consumer understanding of such claims The Guides will be updated in a way that reflects current market realities, including recent developments in environmental science and technology, as well as increasing demand for eco-friendly products from conscientious consumers.

There are 19 general issues and 12 categories of specific claims that the FTC is interested in hearing from the public.

The Commission is interested in receiving comments on certain topics by the end of February.

Climate change and renewable energy claims are included.

There are claims about recyclability and recycled content.

"Compostable," "degradable," "Ozone-friendly," and "organic" are some of the claims.

There are claims related to energy use and energy efficiency.

Hundreds of stakeholders submitted comments during the last review of the guides. Stakeholders are likely to be interested in the upcoming review given the rapid growth of the movement.

Companies can prepare.

If companies have opinions on any of the areas addressed in the Green Guides, they should consider giving feedback to the Commission before the deadline. It can be done directly by the company, or through trade associations and industry groups that are likely to submit comments on behalf of their stakeholders.

Companies should be aware of potential regulatory changes as a result of the Green Guides. The best indicators of areas in which the FTC is likely to implement guidance are the 19 general issues and 12 categories of specific claims. Modifications to current business practices are possible. The costs and time associated with implementing any anticipated changes should be anticipated by companies.

The Green Guides have some important principles that companies should follow. Any company engaged in green marketing should strive for advertising that is clear and substantiated. Any reasonable interpretations of the claims should be taken into account before they are disseminated. It is important for companies to take appropriate steps to confirm that claims are supported by a reasonable basis. Companies should not exaggerate their environmental benefits. Broad, unqualified claims are more risky than specific, qualified claims. The legality of environmental benefit claims in all contexts should be considered by companies. The risk of environmental marketing claims featured in user-generated content is the same as the risk of traditional marketing channels.

There is always a baseline level of inherent risk that comes with environmental benefit claims and the updated Green Guides are not expected to provide any additional clarity. If companies want to make claims of this nature, they should consult experienced marketing and advertising counsel. Adherence to fundamental advertising principles and prudent input from counsel will allow responsible and helpful marketing of the attributes of valuable products and services. Environmental marketing can be useful to businesses and consumers.

Elizabeth Goldberg is a regular contributor to Westlaw Today.

Register for free to Reuters and know the full story

The author's opinions are not always right. They don't reflect the views of the news organization, which is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by the same company that publishes the news.