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Commentary: Greenwashing puts businesses in danger

Matt Wilmot
Dolan Media Newswires

Portland, OR — As public awareness of green and sustainable business practices has risen, so too have efforts by businesses to market and brand themselves as environmentally friendly. However, in many cases, a company’s public representation regarding sustainable business practices and products is more oriented toward bringing in customers than protecting the environment.

Now that the Federal Trade Commission is beginning to take increased notice of what has been termed “greenwashing,” businesses in all industries seeking should make sure that such green claims are valid and substantiated.

Greenwashing comes in many forms and is engaged in by companies in a variety of industries. For example, a carpet company offers for sale a single type of carpet that contains 70 percent recycled content, with all other carpets being of a much lower percentage. The company then markets its carpets as containing up to 70 percent recycled content. This statement is arguably a form of greenwashing because, while technically true, it tends to deceive consumers.

Similarly, a product that claims to contain 50 percent more recycled content than ever before is unfairly deceptive because the statement could technically be true even if the manufacturer only increased the product’s recycled content from 2 percent to 3 percent.

Companies in the building industry are increasingly claiming that buildings or homes are green though there is little consensus as to what constitutes a green home or building. Does putting in a bamboo floor constitute green building? Likely not, but that does not prevent some builders from claiming environmentally friendly practices.

The Federal Trade Commission is beginning to pay more attention to deceptive advertising claiming environmentally friendly or sustainable products or services.

Under Section 5 of the Federal Trade Commission Act, the FTC is authorized to police deceptive advertising and marketing claims, including bringing law enforcement action against companies the FTC finds to have engaged in unfair or deceptive practices. Companies found guilty of deceptive and unfair advertising and marketing practices are subject to potentially significant fines.

The FTC has issued the Guides for the Use of Environmental Marketing Claims, or the Green Guides. First issued in 1992, the current version of the Green Guides sets forth a variety of rules and restrictions on green marketing.

The Green Guides require all marketers making express or implied claims regarding the sustainability of their products have a reasonable basis for their claims. When it comes to environmental claims, a “reasonable basis” might require competent and reliable scientific evidence, including, without limitation, tests, research, analyses or studies. Thus, a company that overstates the environmentally friendly nature of its products or services may run afoul of the FTC’s rules on deceptive environmental marketing.

The Green Guides also require businesses making green-marketing claims avoid general statements of their products being eco-friendly or environmentally friendly in favor of more specific claims as to the actual green features of the product. A business making such generalized statements must include specific additional language informing consumers as to why the product is eco-friendly or environmentally friendly.

Likewise, a product that has both sustainable and nonsustainable features should not generally be labeled as green or environmentally friendly. As an example, a product labeled as recyclable should specify whether the recyclable claim applies to the product, its packaging or both.

The FTC has commenced review of the current Green Guides and has conducted workshops designed to seek input from business and industry leaders on regulating deceptive environmental marketing.

Most industry observers believe the FTC will issue new versions of its Green Guides in 2009. With the likely issuance of new or revised rules on environmental marketing, many people agree the FTC will place renewed emphasis on enforcing and prosecuting businesses engaged in deceptive greenwashing.

So, while prior enforcement by the FTC has been relatively sporadic, businesses may want to be particularly cautious when making environmental marketing claims. From a general perspective, having substantiation for green marketing claims and making specific claims as to the sustainable features of a particular product should help protect businesses from running afoul of the FTC, at least until new or revised Green Guides are issued.

However, businesses seeking a more informed opinion as to what is and is not permissible in terms of environmental marketing should consult an attorney experienced in this area.

After all, as the public continues to jump on the sustainable and environmentally friendly bandwagon, businesses seeking to legitimately advertise green products and services should not be left behind.

Matthew R. Wilmot is an intellectual property attorney with the Portland office of the Pacific Northwest regional law firm Schwabe, Williamson & Wyatt PC.

One comment

  1. G overnment
    R uining
    E verything;
    E nvironmental
    N onsense

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