Federal Trade Commission Votes to Revamp Green Guides

The Federal Trade Commission (FTC or Commission) voted on December 14 (4-0, with Chair Khan issuing a separate statement) to commence a long-awaited regulatory review of the Guides for the Use of Environmental Marketing Claims (Green Guides or Guides). As part of its review, the Commission will seek public comment on a number of “hot” topics, including climate change and energy-related claims, recyclability and recycled content claims, and the use of now-ubiquitous buzzwords like “sustainable” and “organic.”

BACKGROUND

The Green Guides are widely regarded as the principal source of guidance on environmental marketing in the United States. Originally issued in 1992 and last revised in 2012, the Guides outline principles that apply to environmental marketing claims and set out guidance regarding specific categories of claims.

In the decade that has passed since the Commission last updated the Guides, environmental, social, and governance (ESG) and sustainability-related issues have risen to the forefront of public discourse. This emergence has sparked nearly universal demand for specific and tangible guidance on topics ranging from ESG and climate-related financial disclosures to the use of terms like “sustainable,” “natural,” and “organic” in advertising.

During the December 14 open Commission meeting, several Commissioners vocalized their support for an update of the Guides. In casting her vote in favor of the review, Commissioner Slaughter commented on the importance of regularly reviewing guidance to keep “pace” with “market realities.” Similarly, Commissioner Bedoya characterized the review as “timely” given recent developments in environmental science and technology. Chair Khan underscored these points in a separate statement released after the open Commission meeting:

The “Green Guides,” as we call them, are administrative interpretations of the FTC Act as applied to environmental claims. They help companies avoid running afoul of the law’s ban on deceptive advertising. And they clarify the boundaries for fair, legal competition. To be effective, the Green Guides have to keep up with developments in both science and consumer perception. That’s why the Commission is commencing a regulatory review of the guides.

WHAT’S NEXT

The notice commencing regulatory review of the Green Guides is expected to be published in the Federal Register in mid-January 2023. A draft of the notice, which seeks public comment on 19 general issues and 12 categories of specific claims, was published on the FTC’s website following the open Commission meeting. Of note, the Commission has explicitly expressed its interest in receiving comments on the following topics:

• Carbon offset and climate change/renewable energy claims
• Claims about recyclability and “recycled content”—including claims related to “pre-consumer” and “post-industrial” content
• Claims such as “compostable,” “degradable,” “ozone-friendly,” “organic,” and “sustainable”
• Claims regarding energy use and energy efficiency

Following formal publication of the Federal Register notice, the Commission has announced that it will accept comments from the public for 60 days. During the last review and update of the Guides in 2012, hundreds of stakeholders across industries submitted comments. Given the exponential growth of the sustainability movement and the call for greater guardrails—which has come from consumers, companies, and investors alike—the upcoming review is likely to draw substantial interest once again from stakeholders far and wide.

In light of the forthcoming developments, companies and marketers should consider how potential changes to the Guides may impact their business practices and strategies while continuing to heed the key principles established under the Guides. As always, ESG or sustainability-related representations or statements must be capable of substantiation. Prior to making such representations or statements, it is imperative to (1) identify all claims (express and implied) that a representation or statement reasonably conveys and (2) confirm that each claim is truthful, not misleading or deceptive, and supported by a reasonable basis.