Environmental Marketing Guideline Challenges

July 3, 2008

Recently, the Canadian Standards Association updated its guide for making environmental claims.  While not legally binding, such standards provide guidelines for industry and advertisers when it comes to making environmental claims.  The intent is to protect consumers from false advertising claims regarding the environment.

 

In many ways, this document foreshadows likely changes from a similar review of US guidelines underway by the Federal Trade Commission (FTC).  Arguably, the current FTC guidelines are long overdue for a refresh given the dramatic evolution in the green space that has occurred since they were last reviewed a decade ago.  As such, it is widely expected that the FTC will expand its jurisdiction to include terms that have only recently been added to the vernacular including “renewable energy”, “sustainable” and “carbon offset”.   While such clarity will be welcome in marketing circles, it may fall short given the complexity of today’s environmental issues.

 

First established in 1992 by the FTC, the Guides for the use of Environmental Marketing Claims provide an “administrative interpretation” of what constitutes a fair environmental claim: transparent and accurate disclosures that clearly delineate benefits between a product and its packaging as well as across different products.

 

It is hard to overstate the importance of such guidelines.  For consumers, guidelines ensure that they have the necessary information to make informed purchase decisions.  For advertisers, guidelines enable companies to feel confident that the environmental claims they are making will not open them up to scrutiny, or worst, accusations of greenwashing. 

 

In clarifying these guidelines, however, the FTC faces three major challenges today:

 

First, regardless of what guidelines the FTC puts into place, it is increasingly difficult for consumers to substantiate corporate environmental claims.  This is especially true for carbon offsets or renewable energy certificates (RECs) that consumers (as well as corporations) rely on to reduce their carbon footprint.  Indeed, for such financial instruments to have substantive impact, they must abide by the “additionality” principle: they must lead to environmental improvements that would not have occurred but for the consumer’s investment in an offset or REC.  Assessing true adherence to this principle is out of reach for consumers as it requires sophisticated financial understanding and time.

 

Second, it is difficult for consumers to discern from current guidelines what the likely secondary environmental impacts are from a particular product.  Take biofuels, for example.  Crops themselves can be grown sustainably and disclosures can be made accordingly.  Yet, arguably, diverting cropland for fuel production reduces the amount of food produced, contributing to (though not necessarily the primary cause of) rising prices for food staples globally.  Moreover, land used to raise biocrops may create added pressure to deforest lands elsewhere in order to grow food crops or raise cattle for human consumption.  In either instance, it is difficult to claim that the fuel was grown in a truly sustainable manner.

 

Third, as the FTC’s guide is only an administrative ruling, the FTC does not have the legal authority to enforce them.  Instead, the FTC can take only “corrective action” against those who violate them which limits their punch in market.  Jay Kilby explores this issue more in-depth on his blog, WeBuyItGreen.

  

Nonetheless, Marketing Green welcomes upcoming revisions of the FTC guidelines for making environmental claims.  Despite their limitations, FTC guidelines provide an essential guide for green marketers as well as empower consumers with information to make informed purchase decisions.  While gaps remain, consumer advocacy groups will likely step in to police environmental claims.  Given the strong interest in green, it is likely that advocacy groups will hold advertisers accountable for their claims in court or in the court of public opinion.


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