The Changing Face of Environmental Marketing Claims
The circular economy. Sustainability. Single-use plastics bans. Marine litter. Microplastics. Climate change. These are only some of the issues driving the demand for more “environmentally friendly” products. In recent years, we have seen a surge in product and raw material innovations designed to result in improved environmental performance, and companies around the world are pledging to take action to reduce their environmental impact. These market innovations and commitments encourage marketers to differentiate their products and operations by making claims that highlight environmental enhancements or benefits.
For many years, common green claims seen in the marketplace have fallen into some standard categories, like “compostable,” “recyclable,” “recycled content,” “biodegradable,” “non-toxic” or “free of,” and general claims like “earth friendly” or “eco-safe.” These familiar claims have long been the topic of federal and state guidelines and laws. Now, we are seeing new claims, like “marine degradable,” “no microplastics,” “ocean safe,” and more. Additionally, organizations taking action to address climate change are reflecting those commitments with claims like “climate positive,” “carbon negative,” “net zero” and others.
It is not surprising that an uptick in environmental marketing claims is generating additional attention from class action lawyers and regulators. False advertising claims are one of the fastest-growing areas of litigation in the U.S. Plaintiffs have focused in the past few years on claims like “natural,” “GMO-free” and “non-toxic,” largely targeting food, cosmetics, and related companies. Just last year, a class action was certified in which plaintiffs claimed that Keurig Green Mountain falsely labeled its coffee “pods” as recyclable when they were allegedly too small to be handled by local recycling facilities.1
We know that most businesses do their best to develop powerful marketing claims, including green claims, that are truthful and not deceptive, substantiated by appropriate competent and reliable scientific evidence, and consistent with federal and state regulatory regimes. The task, however, is complicated by a diverging global framework, one where, even in in the U.S., federal “guidance” does not fully preempt state laws. This increasing complexity is both challenging for businesses and potentially confusing to consumers. The situation is complicated further by differences in both advertising and environmental policies around the world that affect claims, operations and products.
Thus, it appears timely to review the various federal, state, and local guidelines and requirements that affect green claims, along with other factors that are influencing the U.S. and global landscape.
FTC “Green Guides”
The Federal Trade Commission (FTC) issued the Guides for the Use of Environmental Marketing Claims, otherwise known as the “Green Guides,” in 1992, and has published periodic revisions to keep up with emerging technology and trends.2 The Green Guides, last updated in 2012, are slated for review in 2022, per the FTC’s Regulatory Calendar published in the Federal Register on July 2, 2021.3 This is consistent with the FTC’s typical ten-year review cycle for its rules and guides.
It is important to remember that the initial request that the FTC develop guidance on green claims came from industry as a direct result of adoption of state laws governing environmental claims. Specifically, a 1991 industry petition called for the FTC to “develop industrywide guides on a variety of environmental claims, such as ‘degradable,’ ‘photodegradable,’ ‘biodegradable,’ ‘safe for the environment,’ ‘recyclable,’ ‘recycled,’ ‘landfills safe,’ and ‘environmentally friendly.’”4 The FTC Green Guides provide guidance on general considerations, including cautioning marketers use care in making general environmental claims, such as “environmentally friendly,” because “it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims.”5 The Green Guides also offer guidance for certain specific claims that have been common in the marketplace for years, including “recyclable,” “recycled content,” “free-of,” “compostable” and “degradable.”6
Principles underlying the Green Guides are consistent with advertising guidance in general. In other words, environmental claims must be substantiated, meaningful, and, depending on the specific claim, the claim must reflect or relate to the consumer’s use of and experience with the product. For example, if a manufacturer makes a claim that an item is “compostable,” but the item will not break down in a home compost pile, the Guides recommend that the advertiser qualify the “compostable” claim to make sure that consumers understand that the product is compostable only in municipal or industrial composting facilities. Similarly, the Guides suggest that qualifiers be included to clarify whether such facilities are in fact available in most communities where the product is sold.7 Without such disclaimers, the FTC suggests that a claim may mislead consumers into believing the product has more significant environmental benefits than it actually does. This could render the claim false or misleading, exposing the company making the claim to regulatory enforcement or litigation risk.
Like all FTC Guides, the FTC Green Guides reflect the FTC’s view of how it would interpret specific claims under its general legal authority to address false, misleading, and unfair advertising claims. The Green Guides are not regulations per se, and they do not purport to address every environmental claim that might appear in the marketplace. Thus, the general principles of the Green Guides can be broadly applied, and recommendations in the Green Guides, including specific examples of recommended disclaimers or qualifiers for certain claims, are suggestions, not mandates. The Commission’s enforcement actions under Section 5 of the FTC Act against false or deceptive environmental marketing claims are generally consistent with the principles and guidance in the Green Guides. For example, in 2018, the FTC approved final consent orders against four paint companies, barring the companies from making unsubstantiated “free-of” claims related to emissions and volatile organic compounds.8
Monetary penalties related to misleading environmental claims are rare but do occur in cases involving repeat offenders. An example is the $1.76 million order in 2019 against a company that made unsubstantiated “organic” claims, including “USDA certified organic,” even after it informed the USDA that it would not continue to make such claims absent proper substantiation.9 Although “organic” claims are not expressly covered by the Green Guides, the FTC’s Statement of Basis and Purpose to the Green Guides explains “that the Guides’ general principles apply to these claims.”10
State and Local Regulatory Regimes
While the Green Guides do not preempt state law, state regulators often defer to the Green Guides. Nevertheless, some states have adopted legislation aimed at certain types of claims, often in connection with specific types of products and specific claims for such products. To the extent that some of these laws purport to entirely restrict speech, they create possible constitutional questions about overly broad speech restrictions and implications for interstate commerce.
California. In 2011, California passed legislation aimed at regulating the marketing and labeling of degradable plastic products sold in the state.11 As stated in the preamble to the legislation:
It is the intent of the Legislature to ensure that environmental marketing claims, including claims of biodegradation, do not lead to an increase in environmental harm associated with plastic litter by providing consumers with a false belief that certain plastic products are less harmful to the environment if littered.12
Thus, the California law provides specific requirements for degradable and compostable claims for plastics products, generally requiring that products marketed as “compostable” meet the American Society of Testing and Materials (ASTM) D6400 (September 2004) (for products made entirely of plastic) or ASTM D6868 (August 2003) (for products with plastic coating).13 The legislation specifically recognizes the OK Compost HOME certification as acceptable substantiation for home compostable claims.14
Although prior versions of the law broadly restricted plastic degradability claims, except for marine degradability claims that met ASTM D7081 (2005 version), on September 1, 2020, California’s Governor signed AB 2287, which expanded restrictions on plastic degradability claims in the state by eliminating the option of marine degradable claims. This change was based on the withdrawal of the marine degradability standard originally referenced in the legislation, ASTM D7081, for failure to update the standard. Other changes in AB 2287 include a new requirement for the Statewide Commission on Recycling Markets and Curbside Recycling to issue policy recommendations for achieving market development and waste reduction goals, which were finalized on June 25, 2021.15
California has proven to be a strict enforcer of the legislation, specifically targeting plastics degradability claims. The state reached settled cases, negotiating penalties of $27,000 and $940,000 against Overstock.com16 and Walmart17, respectively, in 2017. In 2018, 23 California District Attorneys obtained a $1.5 million settlement against Amazon for allegedly deceptive biodegradable claims.18
Washington. Washington State passed legislation in 2019 to “authorize the state’s attorney general and local governments to pursue false or misleading environmental claims and ‘greenwashing’ for plastic products claiming to be ‘compostable’ or ‘biodegradable’ when in fact they are not.”19 Additionally the law, which became effective July 1, 2020, establishes state standards for labeling products as “compostable” or “degradable.” Specifically, the law:
- Mandates that products labeled as “compostable” be comprised only of wood or fiber-based substrate OR must meet the ASTM composting standard D6400-19 or D6868-19, as applicable.20
- Prohibits labeling of most plastic products with the terms “biodegradable,” “degradable,” “decomposable”, or “oxo-degradable.”21
- Requires that food service products—along with certain film products—that meet ASTM composting standards must be “readily and easily identifiable.” This includes the use of a logo indicating the product has met ASTM standards and the inclusion of the word “compostable,” where possible.22
- Mandates that plastic bags marketed as “compostable” must include the words “compostable” on the bag itself.23
Maryland. Maryland passed its own law aimed at regulating the labeling of plastic products as “biodegradable,” “degradable,” “decomposable,” or “decompostable.”24 Specifically, the law:
- Mandates that plastic products cannot be labeled as “compostable” unless they meet standards in effect as of January 1, 2019, meaning either ASTM D6400-12 or ASTM D6868-17, as applicable.25
- Mandates that plastic products labeled as “home compostable” meet the OK Compost HOME Standard adopted by Vincotte.26
- Prohibits labeling of most plastic products with the terms “biodegradable,” “degradable,” “decomposable,” or any other term to imply that the product will break down in a landfill or any other environment.27
- Prohibits plastics bags labeled “compostable” from being simultaneously marketed as “recyclable.”28
- Requires plastic bags being marketed as “compostable” to be green in color and include the word “compostable” on the bag itself.29
Santa Monica, California. In addition to the previously discussed California state law, the city of Santa Monica adopted its own ordinance aimed at disposable food service ware.30 The ordinance, among other things:
- Defines “marine degradable” as products recognized as “marine degradable” under California state law, Public Resources Code Section 42357, or designed to biodegrade under the marine environmental conditions of aerobic marine waters or anaerobic marine sediments in less than 120 days.
- Prohibits the distribution of non-marine degradable disposable service ware including straws, utensils, stirrers, lid plugs, plates, trays, bowls, containers, cups, and cup lids.
- States that products predominantly made with plastics, including bio-based plastics, shall not be considered marine degradable.
Other States. In addition to the states mentioned above, the following states passed their own green claims laws: Alabama31, Florida32, Indiana33, Michigan34, Minnesota35, Rhode Island36, and Wisconsin37. The laws are grounded in each state’s truth in advertising laws and govern claims applicable to the labeling of products marketed with claims such as “biodegradable,” “compostable,” and “recyclable.”
While the Green Guides provide guidance to U.S. marketers, consulting global self-regulatory frameworks, such as the International Chamber of Commerce (ICC) Framework for Responsible Environmental Marketing Communications (ICC Environmental Framework)38, may help international marketers develop thoughtful environmental marketing campaigns.
The ICC Environmental Framework, developed by the world’s largest business organization, provides practical guidance on environmental marketing claims to advertising industry stakeholders, including advertisers and advertising agencies, as well as to self-regulatory advertising organizations and national governments. The Framework advises that claims should be consistent with applicable laws in the relevant region in which they are made and supported by reliable scientific evidence. An updated version of the Framework is expected to be adopted later this year and will address both existing and some newer claims, including climate-related claims, circularity claims, “free-of” claims, recyclability and recycled content claims, and degradable claims. The ICC Code of Marketing and Advertising Practice, the “parent” guidelines for advertising in general, is widely followed around the world, and many advertising self-regulatory organizations rely on it in evaluating complaints about advertising.
Practical Business Considerations
With growing interest in the environment, environmental claims are on the rise, and new claims are quickly entering the marketplace. At the same time, the landscape for green claims has become increasingly complex, with a more U.S. states mandating use of specific standards to substantiate certain claims, or even attempting to ban claims entirely.
Marketers do have useful tools to consider when developing environmental marketing claims and campaigns, such as the Green Guides and ICC Environmental Framework. However, it is important to remember that different jurisdictions may apply different rules, and some environmental performance attributes, like energy performance, may be regulated by specific regulatory bodies. As with all marketing claims, those developing environmental marketing claims should confirm that their claims are compliant with the laws and regulations of the jurisdiction in which they are made.
1 Smith v. Keurig Green Mountain, Inc., Case No 18-cv-06690-HSG (N.D. Cal. Sept. 21, 2020).
2 See 16 C.F.R. Part 260.
3 86 Fed. Reg. 35239 (July 2, 2021).
4 56 Fed Reg. 24968, 24969–70 (May 31, 1991).
5 16 C.F.R. § 260.4(b).
6 See 16 C.F.R. Part 260.
7 16 C.F.R. § 260.7(c)–(d).
8 See Fed. Trade Comm’n, FTC Approves Final Consent Orders Settling Charges that Four Paint Companies Misled Consumers through Claims Their Products are Emission- and VOC-Free (Apr. 27, 2018), available at https://www.ftc.gov/news-events/press-releases/2018/04/ftc-approves-final-consent-orders-settling-charges-four-paint.
9 Stipulated Order for Permanent Injunction and Monetary Judgment, Federal Trade Commission v. Truly Organic Inc., Case No. 1:19-cv-23832 (S.D. Fl. Sept. 18, 2019).
10 Fed. Trade Comm’n, The Green Guides Statement of Basis and Purpose, p. 259, available at https://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-issues-revised-green-guides/greenguidesstatement.pdf.
11 Cal. Pub. Res. Code § 42355 et seq.
12 Cal. Pub. Res. Code § 42355(b).
13 See Cal. Pub. Res. Code § 42357(a)(1).
15 See Cal. Dep’t of Res. Recycling and Recovery, California’s Statewide Commission on Recycling Markets and Curbside Recycling, available at https://www.calrecycle.ca.gov/markets/commission.
16 See Cnty. of Sonoma, Overstock Agrees to Resolve Unlawful Environmental Claims (Sept. 20, 2017), available at https://sonomacounty.ca.gov/DA/Press-Releases/Overstock-Agrees-to-Resolve-Unlawful-Environmental-Claims/.
17 See Off. of the Alameda Cnty. Dist. Attorney, DA Announces Settlement with Walmart Over “Greenwashing” Claims (Feb. 1, 2017), available at https://www.alcoda.org/newsroom/2017/feb/walmart_settlement.
18 See Sacramento Cnty. District Attorney’s Off., DA Anne Marie Schubert Announces Consumer Protection Settlement with Amazon (Aug. 1, 2018), available at https://www.sacda.org/2018/08/01/da-anne-marie-schubert-announces-consumer-protection-settlement-with-amazon/.
19 Wash. Rev. Code § 70A.455.010(2).
20 Wash. Rev. Code § 70A.455.040(1)(a).
21 Wash. Rev. Code § 70A.455.030(1).
22 See Wash. Rev. Code § 70A.455.050.
24 Md. Code, Env’t § 9-2101 et seq.
25 See Md. Code, Env’t § 9-2102(b)(1).
26 See Md. Code, Env’t § 9-2102(b)(2).
27 Md. Code, Env’t § 9-2102(a).
28 See Md. Code, Env’t § 9-2103(c).
29 See Md. Code, Env’t § 9-2103(a).
30 Santa Monica, Cal., Ordinance No. 2586 (Aug. 28, 2018), available at https://www.smgov.net/uploadedFiles/Departments/OSE/Business/O-2586_signed.pdf
31Ala. Code 1975, § 22-27A-1.
32 Fla. Stat. Ann. § 403.7193.
33 Ind. Code § 24-5-17-1 et seq.
34 Mich. Comp. Laws § 445.903.
35 Minn. Stat. Ann. § 325E.41.
36 6 R.I. Gen. Laws § 6-13.3-1 et seq.
37 Wis. Stat. Ann. § 100.295.
38 Int’l Chamber of Com., Framework for Responsible Environmental Marketing Communications (2019), available at https://iccwbo.org/content/uploads/sites/3/2019/08/icc-framework-for-responsible-environmental-marketing-communications-2019.pdf.