Changes to the FTC’s Green Guides on the Horizon
In 2012, the Federal Trade Commission (FTC) last updated its “Green Guides,” which provide guardrails for marketers to avoid making unfair or deceptive environmental marketing claims. As part of a 10-year review, the Commission reiterated on Friday that it is once again taking up review and will be soliciting comment on the Green Guides. See 87 Fed. Reg. 47,947 (Aug. 5, 2022). Hundreds of stakeholders weighed in on the last iteration of the Guides, and this revision will likely draw significant interest from industry and the environmental NGO community alike, particularly given the current focus on Environmental Social Governance (ESG) issues and green marketing claims brought against a variety of parties in recent years.
Although the Green Guides themselves are not binding, several states, including California, incorporate the Green Guides into their laws. The Green Guides apply broadly to “claims about the environmental attributes of a product, package, or service in connection with the marketing, offering for sale, or sale of such item or service to individuals.” 16 C.F.R. § 260.1(c). In addition, the Green Guides “apply to environmental claims in labeling, advertising, promotional materials, and all other forms of marketing in any medium, whether asserted directly or by implication, through words, symbols, logos, depictions, product brand names, or any other means.” 16 C.F.R. § 260.1(d). Compliance with the Green Guides may provide a safe harbor from prosecution by the FTC or by public prosecutors who enforce the Green Guides under state law. In California, for example, public prosecutors actively enforce the Green Guides under the state’s Unfair Competition Law, but California law generally maintains that compliance with the Green Guides is a defense to a charge of deceptive environmental marketing. CAL. BUS. & PROF. CODE § 17580.
Recent FTC enforcement also shows the importance of companies ensuring their environmental marketing claims are not false or misleading. In April 2022, the FTC filed complaints against two retailers for making deceptive claims about their bamboo textile products. The retailers made environmental benefit claims about these products, including that they were “eco-friendly,” “environmentally friendly,” and safe for the environment. According to the FTC, these claims were false because the products are made with rayon, which is produced using hazardous chemicals and in a way that contributes to air pollution. The proposed settlements require the companies to pay civil penalties of $3,000,000 and $2,500,000. Both retailers are prohibited from making environmental benefit claims about bamboo products in the future, unless the statements are not misleading and supported by competent and reliable scientific evidence. While the majority of the complaints focused on the companies’ alleged violations of the Textile Fiber Products Identification Act for labeling rayon products as bamboo, the focus on the companies’ environmental claims and resulting proposed settlements prohibiting false and misleading environmental benefit claims from the companies in the future reflect the potentially high costs of a company making environmental benefit claims the FTC views as false and misleading.
Given the current focus on ESG and climate-related disclosures, with a reboot of the Green Guides we may see the FTC propose guidance concerning climate-related claims. We also may see FTC further regulate claims related to carbon offsets, which could be important to net zero plans. Given the forthcoming regulatory activity, it is prudent for companies to start thinking now about how potential changes to the Green Guides may impact their practices and what types of revisions and enhancements may be helpful or challenging in relation to their climate strategies.
Stay tuned for more information on this developing area of law.
© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.