Submitted: The Two Sides Team March 1, 2013

In October 2012, the Federal Trade Commission (FTC) issued its revised “Green Guides,” which are designed to help marketers ensure that the claims they make about environmental attributes of their products are truthful.
February 21, 2013

by Albert Cohen, via Sustainable Brands

In October 2012, the Federal Trade Commission (FTC) issued its revised “Green Guides,”
which are designed to help marketers ensure that the claims they make
about environmental attributes of their products are truthful. The
guidelines set forth specific requirements for a wide variety of
environmental claims, Significantly, however, the FTC did not address
“sustainability” claims.

National Public Radio (NPR) recently ran a series on “sustainable” seafood claims.
The series raised a host of issues regarding what these terms mean,
whether the claims are verifiable, what “sustainable” certifications
mean, and what they convey to the public. The series highlights issues
that should be of concern to all marketers who claim that their products
are “sustainable.”    

Background

Section 5 of the FTC Act prohibits “unfair or
deceptive ads or practices.” As a general rule, marketers must ensure
that “all reasonable interpretations of their claims are truthful, not
misleading, and supported by a reasonable basis before they make the
claims.” That is, the marketer must ensure that the statement is (a)
true, (b) conveys an accurate message and (c) is verifiable. The Green
Guides are based on these basic principals, but provide specific
guidance regarding marketing claims about the environmental attributes
of products. 

In drafting the Green Guides, the FTC was
particularly concerned that environmental claims be supported by
scientific evidence. While the FTC has always required that claims be
substantiated by “competent and reliable scientific evidence,” the Green
Guides caution that the evidence must not only be objective but
generally accepted fact. The FTC cautioned that such evidence “should be
sufficient in quality and quantity based on standards generally
accepted in the relevant scientific fields, when considered in light of
the entire body of relevant and reliable scientific evidence, to
substantiate that representation is true.” This is potentially
significant because the FTC takes the position that simply having some
evidence to support a claim may not be sufficient. Rather, the
sufficiency of the evidence must “be considered in light of the entire
body of relevant and reliable scientific evidence.” 

The FTC was particularly concerned about general
environmental benefit claims such as “green” or  “eco-friendly.” The
Green Guides caution against making unqualified environmental benefit
claims because they are often not capable of being substantiated. Those
making general claims are cautioned to also make clear and prominent
disclosures that communicate the specific environmental benefits of the
product.

The Green Guides also address certifications and
seals of approval. The Guides allow the use of such endorsements but set
forth various requirements. Among other things, marketers must disclose
information that could incorrectly imply that the product has been
endorsed by an independent third party. Thus, one must disclose whether
there is any material connection between the marketer and the certifying
body and whether that connection affects the weight and credibility of
the certification. Second, the Guides specify that “third-party
certification does not eliminate the marketer’s obligation to ensure
that it has substantiation for all claims reasonably communicated by the
certification.” Third, because certifications may convey a general
environmental benefit, where appropriate, the certification should be
qualified with prominent qualifying language that clearly conveys that
the certification or seal refers only to specific and limited benefits.

Although the FTC promulgated guidelines for a wide
variety of specific claims, it decided not to do so for “sustainable”
claims, as there was no accepted definition of “sustainable.”
Nevertheless, the FTC noted that “this lack of guidance . . . does not
mean unscrupulous marketers are free to deceive consumers. Marketers are
still responsible for substantiating consumer’s reasonable
understanding of these claims.” The FTC further noted that this was an
area that it would continue to research and monitor and that “marketers
who use ‘sustainable’ claims should test those claims in the context of
their advertisements to ensure they can substantiate them.”

NPR’s Sustainable Fisheries Series

This month, NPR broadcast a series that raised
questions about a certifying body that labels seafood items “certified
sustainable.” NPR reported that under the certifying body’s guidelines, a
fishery that wants to be certified hires an auditing company to
evaluate whether its practices comply with the body’s definition of
“sustainable.” If the fishery passes, it is permitted to use the body’s
sustainable seafood label. However, according to the report, some
environmental groups have questioned the use of the term “sustainable”
because they claimed that some of the target fish are in trouble, the
fishing is harming the environment, or there is inadequate evidence as
to how the fishery and environment are being impacted.

Implications for Marketers

As noted above, the FTC decided not to issue
guidelines for the term “sustainable.” While this creates difficulties
for retailers who, as a result, have no specific guidelines to determine
whether the term “sustainable seafood” is appropriate to use, the Green
Guides, as well as longstanding FTC principles, do provide marketers
with viable approaches for evaluating these issues. 

a. What are the reasonable interpretations of the claim?

The FTC specifically refused to address
“sustainability” claims because there was insufficient research to
determine how the public understood the term “sustainable.” To
the extent that consumer understanding of sustainability is continuing
to develop, marketers have an ongoing obligation to assess how consumers
understand the term. The Guides suggest that marketers qualify general
sustainability claims with specific environmental benefits and require
that such qualifications be clear, prominent and specific. For example,
in the NPR series, some environmental groups suggested that rather than
just saying a fishery is “sustainable,” marketers should consider using
such terms as “well-managed” or “best practices.” 

b. Does the marketer have a reasonable basis for the claim and can it substantiate the claim?

An independent, third-party audit, such as one
provided by the fishery organization in the NPR series, is normally
sufficient. However, the Green Guides provide that “third-party
certification does not eliminate the marketer’s obligation to ensure
that it has substantiation for the claims communicated by the
certification.” It is not as clear, however, how far a marketer must go
when the basis for the certification has been questioned. Certainly, a
marketer cannot willfully disregard or ignore information establishing
that the certification is not reliable. Still, to the extent that a
marketer has knowledge that a certification has been called into
question, it may be wise to ask for more specific information regarding
the certification process and the particular product — a failure to do
so could subject the marketer to a challenge that there is no adequate
basis for the claim.

Conclusion

The NPR story on sustainable fisheries, in the
context of the newest version of the FTC’s Green Guides, highlights the
issues that marketers face when using broad terms such as “sustainable”
and relying upon third-party certifications. They remind us that
whenever making such claims, marketers must take into account all
relevant information and circumstances to ensure they are true, convey
an accurate message and are verifiable.

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