Consumers are demanding more sustainable products, and businesses that make environmentally friendly products want to advertise their good works to their customers. But today’s regulatory environment is not making this easy.
Even companies with the best intentions are finding out the hard way that there are many moving parts when it comes to marketing their products. Greenwashing lawsuits are skyrocketing, and if caught in the crosshairs, it can be both costly and damaging to your reputation. Fortunately, there are safeguards you can take to protect your business.
Understanding New Green Marketing Regulations
Green marketing involves promoting products or services as environmentally friendly or sustainable. However, with the growing concern for greenwashing and misleading claims, regulatory governance is tightening, and new rules are being introduced.
It can be daunting to keep up with the array of new rules on the international, federal, state, and local levels. According to an EU Commission study, “over 50% of environmental claims are vague, misleading or unfounded.”
It’s best to start with a basic understanding of the green marketing rules in the area(s) in which you market. Here are a few of the critical ones you need to know:
- US FTC Green Guides offer guidance to prevent deceptive or misleading environmental marketing practices. These guides are currently under review and are expected to be updated in the coming months. The Green Guides are oftentimes used as a benchmark during litigation.
- The EU Green Claim Directives aim to regulate and provide clarity on the use of environmental claims in marketing communications. These new directives mandate businesses to substantiate any environmental claims with scientific evidence, third-party certification, or data, with hefty fines for non-compliance.
Beyond federal regulations, many states and jurisdictions have their own rules regarding misleading advertising claims. For example, California’s Climate Bill AB-1305 focuses on carbon-neutral claims, necessitating valid carbon offset verification. Potential penalties for failing to comply with AB 1305 could be up to $2,500 per day.
Examples of Green Claims Gone Wrong
Certain green claims, if not substantiated correctly, can have serious consequences, such as financial penalties, lawsuits, and damage to a company’s reputation. So, what exactly constitutes a misleading green claim? Essentially, any statement suggesting environmental benefits without sufficient evidence or failure to meet certain regulatory criteria.
Terms like recyclable, natural, and net zero are examples of terms that can be risky if the nuances of the regulations are not understood. Let’s explore these three examples.
“Recyclable”
While the term recyclable can be positive, it must meet specific criteria according to FTC Green Guides § 260.12.
For example, companies have been sued for not meeting criteria regarding the availability of recycling programs. The guidelines state that to claim a product is recyclable, the availability of recycling programs and collection sites for consumers to recycle the product must be at least 60%.
Keurig Green Mountain found themselves challenged by this when they advertised and marketed their coffee pod cups as recyclable even though they were too small to be processed by most municipal recycling facilities (ie: not recyclable by 60% of their customers). Keurig settled the lawsuit, for 10 million dollars and settled a similar case in Canada for 3 million dollars.
“All-Natural”
If you’re a business that uses only natural ingredients, marketing your product as “all-natural” can be a risky move and it may be safer to take a more nuanced approach to labeling.
Recent class action lawsuits have highlighted the need to refine terms like “all-natural” to better inform consumers about a product’s environmental friendliness. Consequently, it is important to consider what happens when manufacturing processes alter natural ingredients into those not found in nature or when synthetic and harmful chemicals end up in a product despite using natural ingredients and processes.
Case in point, Burt’s Bees is defending itself against a class action lawsuit that claims its “100% natural” labeling is false. The heart of the suit is that hydrogenation transformed natural oils into synthetic ingredients. Burt’s Bees argued for dismissal, maintaining that hydrogenation does not make the natural oils in its lip products unnatural. The judge dismissed this argument, and the case moved forward; it is still pending.
“Net Zero”
Companies use the net zero claim to show they are committed to cutting and removing carbon emissions to curb future global warming. However, if you want to make a claim such as “Net Zero” by a certain date, you must have evidence that you are taking steps to reach this aspirational goal before you make your claim.
JBS US, the American subsidiary of the world’s largest meat producer, has been under investigation for its “Net Zero by 2040” claim. In June 2023, the NAD recommended that JBS discontinue its net zero claims because it lacked a concrete and reasonable plan to achieve this goal. But according to the New York State lawsuit, JBS continued making net zero claims even after agreeing to NAD’s recommendation.
The New York State lawsuit seeks JBS USA to stop its false and misleading marketing practices and pay penalties of at least $5,000 per violation as determined at the trial.
Stay on Top of Regulations and Risky Claims
If all of this is making your head spin, we get it! It’s a lot to keep up with, and you’ve got a lot to lose. Not understanding green marketing nuances can significantly damage a company’s reputation, erode consumer trust, and put your company at risk of litigation. Here are some tips to mitigate that risk.
- Stay Informed: Be sure to fully understand and keep up with the most recent green marketing regulations and updates. Softly Solutions helps businesses navigate ESG and climate laws with confidence. They focus heavily on green marketing regulations, alerting businesses of non-compliant marketing claims as well as new regulations that are critical to businesses.
- Utilize Certifications: Obtain credible third-party certifications and demand proper documentation and verification from all suppliers.
Proactively Monitor Your Green Claims: Your business can be held liable for claims made about your product, even if it is not on your website. Use a platform, such as Softly, to monitor what is being said about your product across all retail sites to quickly identify and address potential non-compliance.
When you are transparent about your green practices, and are proactive in monitoring claims, it not only establishes credibility as a trustworthy brand, but will also help safeguard against litigation and a tarnished reputation.
The Bottom Line
When making green marketing claims, the most important question to ask is whether the overall impression created could be misleading to the ordinary and reasonable consumer.
By understanding these risks and using proven tools to navigate regulations and legal precedent, you will be armed with the resources needed to make informed marketing decisions. Sound green marketing practices will safeguard your reputation and establish your business as a responsible player in today’s eco-conscious market.