The increase in “green” marketing claims has continued in recent years across a range of products, from office supplies to household goods and even food. The heightened concern of consumers about the environment and sustainability has brought these issues to the front of companies’ minds as they seek to advertise and differentiate their products and services. To put this in context, a May 2008 CHOICE survey of 185 non-grocery items found that a total of 637 green claims were made (an average of three per product), many of which were found to be unsubstantiated or inaccurate.
Given the growth in such claims, it is no surprise that the Federal Trade Commission (FTC) in the US and the Australian Competition and Consumer Commission (ACCC) at home are paying close attention to the issue of green marketing.
On 6 October 2010, the FTC proposed changes to its Guides for the Use of Environmental Marketing Claims; the proposed changes:
update the current guidance surrounding claims that products are “recyclable”, “degradable/biodegradable/photodegradable”, “compostable”, “recycled content”, “source reduction”, “refillable” and “ozone safe and ozone friendly”,
provide more complete advice on environmental certifications and seals and “free-of and non-toxic” claims: and
add new categories of guidance for claims of “renewable materials,” “renewable energy” and “carbon offsets.”
The FTC has so far declined to provide specific advice on claims that a product is “sustainable” and “organic and/or natural.”
Similarly, in Australia, the ACCC has continued to be active in its enforcement of green and environmental claims. The ACCC’s guide to Green marketing and the Trade Practices Act was issued in 2008, and covers similar ground to its US equivalent, providing guidance on the use of terms such as “green”, “environmentally friendly” or “environmentally safe”, “energy efficient”, “recyclable”, “carbon neutral” and “renewable” or “green” energy. It also provides general guidance for ensuring “green” marketing claims comply with the Act.
The ACCC has also released specific guidance on organic claims and carbon offset claims.
ACCC Chairman Graeme Samuel recently stated that the ACCC intends to use its new substantiation notice powers in relation to environmental claims. These new powers enable the ACCC to request information and documents to substantiate or support claims or representations made in advertising and marketing materials across all media. Read more about these in our September alert.
In addition to this, the Australian Association of National Advertisers’ (AANA) Environmental Claims in Advertising and Marketing Code came into effect in January 2010. This is intended to establish a benchmark for acceptable marketing techniques in relation to green claims, requiring that all "environmental claims" about a product must be:
truthful and factual;
relevant to the product or service and its actual environmental impacts; and
able to be substantiated and verified.
The Code is voluntary, with complaints adjudicated by the Advertising Standards Board, resulting in a request to remove or amend the advertisement if upheld. In some respects, the Code sets different standards to the ACCC’s Guide, which could result in breaches of the Code where the Trade Practices Act is still complied with. Read more in our February alert.
Recent action by the ACCC in this area includes:
obtaining court enforceable undertakings from Bronze Swan in October 2010 following concerns that representations made by the company to the effect that the Enersonic Power Saver device would reduce electrical consumption and electricity bills were misleading and deceptive;
obtaining court enforceable undertakings from LG Electronics in September 2010 following concerns that the company may have misrepresented the comparative energy consumption of various refrigerator models;
commencing Court proceedings against CI & Co in September 2010 for allegedly labelling and marketing eggs as “free range” when they were not free range. The ACCC is seeking civil pecuniary penalties and corrective notices as well as declarations, injunctions and orders for costs; and
commencing Court proceedings against Prime Carbon in December 2009 alleging that it had made false or misleading representations concerning the supply of its services in relation to the sale of carbon credits. Orders were made in March 2010 restraining similar conduct in the future as well as requiring trade practices compliance training and correspondence with customers to notify them of the Court’s decision.