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New Guides Proposed For Green Marketing Claims Include Carbon Off-sets and Renewable Energy

November 16, 2010

Firms that are making environmental claims about their products and services should pay careful attention to the recently proposed Federal Trade Commission (FTC) guidelines regarding green marketing claims. It is important that firms with green marketing claims understand and follow these guidelines. This is because once the guidelines are finalized, failure to follow them could give rise to federal and state enforcement actions.

On October 6, 2010, the FTC proposed revisions to its "Green Guides" that provide guidance for environmental marketing claims. The FTC proposes to update the guides to address marketing claims about renewable energy, Renewable Energy Credits and carbon off-sets -- subjects the current "Green Guides" do not address. The FTC also proposes to update its guidance on environmental claims already addressed by the current guides, including recyclable, compostable and non-toxic, among others. The FTC is seeking public comments on the proposed changes until December 10, 2010, after which it will decide which changes to make final.

Firms that make environmental claims about products or their production processes should pay particular attention to the proposed and final guidelines. To learn more about the guidelines, please contact Dave Gilles at dgilles@gklaw.com or 608-284-2219.

Who will be affected?

Sellers that use environmental claims to market and promote their products and services will be subject to the guidelines. Firms that portray business operations as "carbon neutral" or using "renewable energy" should also take these guidelines into account.

What are the "Green Guides"?

The FTC enforces federal law that generally prohibits unfair marketing practices directed at consumers. The "Green Guides" were first issued in 1992 and revised in 1995 and 1998 to help marketers ensure that environmental claims were true and substantiated. Generally, the guidance includes (1) principles that apply to all environmental claims; (2) how particular claims may be interpreted and what substantiation is needed; and (3) what qualifications are required to avoid misleading consumers.

The proposal includes specific advice for marketers making claims about carbon off-sets and renewable energy.

Carbon off-set claims.

Under the proposal, carbon off-set claims would be subject to the following:

  • Carbon off-set claims must be based on competent and reliable methods that substantiate actual emission reductions and avoid double counting;
  • Carbon off-sets that are based on emission reductions already required by law are deceptive; and
  • Carbon off-sets that are based on projects that will not be completed within two years are deceptive unless the project completion date is disclosed.

Renewable energy claims.

Under the proposal, renewable energy claims would be subject to the following:

  • Renewable energy claims that misrepresent that a product or package is made with renewable energy are prohibited. General claims should be qualified to avoid misleading consumers;
  • Marketers should not make unqualified claims if any power from fossil fuels is used in the manufacturing process;
  • Renewable energy claims should include disclosure of the type of the energy used (e.g. wind power); and
  • If a marketer generates renewable energy and sells the environmental attributes regarding the electricity, it would be deceptive for the marketer to represent that its products or services are powered by renewable energy.

Renewable Energy Credits.

The FTC expressed concerns about claims that products or services are powered by renewable energy on the basis of acquiring Renewable Energy Credits corresponding to electricity usage. The FTC specifically requested comments about the following:

  • When renewable energy claims are based on Renewable Energy Credits, what disclosures must be made about the source and location of the generation source?
  • How to avoid double counting Renewable Energy Credits, which can occur as a result of inadequate accounting.

Recommendation

When issued, the "Green Guides" will provide guidance for marketers and offer insight into possible FTC enforcement initiatives. The FTC has pursued 44 enforcement actions based on deceptive environmental claims since the guides were issued almost 20 years ago. State Attorney Generals have similar authority under state consumer protection laws.

As a result, companies whose marketing efforts include environmental claims ?including claims about carbon off-sets and renewable energy? should ensure these claims are properly qualified and capable of substantiation. To learn more about the guidelines and how they may affect your company's green marketing claims, please contact Dave Gilles at dgilles@gklaw.com or 608-284-2219.

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Media Contact 

If you have a media request or need an attorney with particular knowledge for comment, please contact Susan Steberl, Director of Marketing, at 414.287.9556 or ssteberl@gklaw.com.

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