February 7, 2023 Market demand for sustainable offerings has grown steadily in recent years, prompting companies in a variety of industries to increase marketing efforts to demonstrate the environmental benefits of their products, services and processes, often referred to as sustainability marketing or "sustainability". marketing." "" Green Marketing.
The potential benefits associated with green marketing are significant. Companies that successfully position themselves as environmentally responsible will benefit from increased brand loyalty, improved financial performance and increased brand equity. However, with great rewards come great risks. Failure to properly implement environmental marketing strategies in accordance with laws and regulations can lead to regulatory actions (both state and federal), individual and class action consumer lawsuits, and serious reputational damage.
With the stakes so high, the need for effective and responsible environmental marketing leadership is paramount. The Federal Trade Commission's (FTC or Commission) Guidelines for the Use of Environmental Claims (referred to as the "Green Guidance" or "Guidelines") effectively serve as a guide or guide for companies seeking to participate in this space.
Widely regarded as the leading criteria for evaluating environmental marketing claims, the Green Guides set standards for environmental marketing and guidance on how marketers can justify such claims so that consumers are not misled.
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While the guidelines themselves are not binding under federal law, the FTC and individuals often rely on the guidelines to initiate enforcement actions or lawsuits related to environmental claims. Several states, including California, Maine and Rhode Island, have adopted Green Driving into their laws to varying degrees. Similarly, organizations often see compliance with environmental guidelines as a defense against such demands. Courts rely on and cite the Green Guide when assessing false or misleading advertising claims.
The Green Guides, first published in 1992 and last updated in 2012, need updating. While the core principles outlined in the Green Guidelines remain guiding, the guidelines are notably silent on some recent (and important) trends in green marketing, including the increased use of descriptors such as "natural," "organic," and "sustainable". . " "This lack of specific guidance creates uncertainty for companies that want to engage in responsible sustainability marketing efforts.
Last month, the FTC announced plans to update the guidance in 2023 and formally launched a public comment period, inviting industry stakeholders to provide their comments and feedback on the guidance's effectiveness.
At a higher level, the Commission has indicated that it intends to fill the gap for businesses seeking claims for environmental marketing claims, while improving consumer understanding of such claims. The FTC intends to update the guidelines to reflect current market realities, including the latest advances in environmental science and technology, as well as the growing demand from conscious consumers for green products.
The FTC is currently seeking public comment on 19 general issues and 12 specific claims.
It should be noted that the Commission has expressly expressed interest in receiving comments on the following topics by February 21:
• Carbon offsets and climate change/renewable energy needs;
• Claims, including claims about recyclability and "recyclable content" - "post-consumer" and "post-industrial" content;
• Claims such as 'compostable', 'degradable', 'ozone safe', 'organic' and 'sustainable';
• Complaints about energy consumption and energy efficiency.
During the last revision and update of the guidelines in 2012, hundreds of stakeholders from different sectors sent their comments. Given the exponential growth of the sustainability movement, driven by consumers, businesses and investors, the upcoming review is likely to once again generate significant interest from stakeholders around the world.
What can companies do to prepare?
• If companies have views on any of the areas covered by the Green Guide, they should consider providing comments and feedback to the Commission by 21 February 2023. This can be done directly (by the company itself) or through industry associations and groups of industry who may submit comments on behalf of their respective stakeholders.
• Looking to the future, companies should be aware of potential regulatory changes that may result from environmental directives. Companies should pay attention to the 19 general questions and 12 specific requests on which the FTC is seeking comment because they are the best indication of areas where the FTC can apply advice. This may require changes in business practices and advertising strategies. Companies should assess the cost and time required to implement anticipated changes and plan accordingly.
• Businesses must follow the basic principles set out in the Green Guidelines Whatever happens, any green marketing business must ensure that their advertising is true, clear and fair. In particular, companies should be careful to substantiate claims about environmental benefits - and any reasonable explanations for these claims - before disclosing them. To this end, companies must take appropriate steps to ensure that the claims are based on a reasonable basis, which requires adequate and reliable evidence, usually judgment, analysis or research. Furthermore, companies must be careful not to exaggerate the environmental benefits. General unqualified claims have a higher inherent risk than certain qualified claims. It should be noted that companies should consider the validity of environmental benefit claims in all contexts, not just traditional TV and print advertising or public statements and press releases. Green marketing claims placed on user-generated content or promoted by social media influencers like TikTok, Instagram, and Snapchat carry the same risk (if not more) than traditional marketing channels.
While the updated green guidelines should bring further clarity to environmental marketing, there is and will remain a fundamental level of inherent risk associated with claims of environmental benefits. Companies would do well to consult with an experienced marketing and advertising consultant before making any such claims, regardless of context. In light of the upcoming changes in environmental marketing standards, adherence to basic advertising principles and intelligent input from consultants will promote valuable product and service features responsibly and effectively. When used carefully, environmental marketing can be informative and beneficial to businesses, consumers and other stakeholders.
Elizabeth Goldberg is a regular columnist on ESG and governance for Reuters Legal News and Westall Today.
Opinions expressed by the author. They do not reflect the views of Reuters News, which adheres to the principles of integrity, independence and freedom from bias in accordance with its principles of trust. Westall Today is owned by Thomson Reuters and operates independently of Reuters News.