Dietary Supplements Packaging: Green Light

As nutrition industry companies move forward in 2011 selling innovative products and services, marketers and advertisers will continue their search for new ways to grow their customer base. One marketing practice that continues to elicit attention from consumers, marketers, and regulators alike is the use of environmental claims to promote and sell products and services. Products or services that promote “greenness,” whether for the products themselves, the packaging, or the processes used in manufacturing the products, are increasingly attractive to and sought after by a growing segment of the consuming public.

The competition to attract such consumers has led marketers to make increasingly aggressive claims to distinguish their products from others. In turn, this rapid influx of green claims has caused the FTC to take a heightened interest in such claims and revise its guidance regulations addressing such claims, also known as the FTC’s Guides for the Use of Environmental Marketing Claims (“Green Guides”).

Final approval of the FTC’s revisions to its Green Guides is imminent. When approved, the revised guides are likely to spur increased regulatory enforcement by the agency against companies making unwarranted and deceptive environmental claims. Therefore, it is critical for companies to be familiar with the Green Guides to ensure their claims are not only effective environmental marketing claims, but also compliant with the law.

Green Guides History
It should be noted that the Green Guides are not actually legislative rules and therefore are not independently enforceable regulations. While the guides are not independently enforceable, they do give marketers a clear indication of how the FTC is likely to interpret and apply Section 5 of the FTC Act, which prohibits unfair methods of competition, to environmental claims.

The Green Guides outline general principles that apply to all environmental marketing claims and describe the basic elements necessary to substantiate claims. The guides address environmental claims made in labeling, advertising, promotional materials, and all other forms of marketing. Additionally, the guides apply to any claim about the environmental attributes of a product, package, or service in connection with their marketing or sale. For companies in the nutrition industry, most green claims are likely to be made with respect to the packaging of the products or certain manufacturing processes, and not regarding the products themselves.

The Green Guides were first issued in 1992 to give marketers guidance for making truthful and substantiated environmental claims. The guides were revised in 1996 and again in 1998, with the understanding that they would undergo review by the FTC every 10 years. However, due to the rapid increase of green claims being made by marketers and advertisers, the FTC decided to undertake the review earlier, starting the review process in November 2007.

While the initial intention of the FTC was to complete the review process and issue revisions in 2009, the agency held a series of workshops in 2008 and determined that additional research was necessary. Finally, in October of last year, it published a notice in the Federal Register consisting of a summary of the analysis undergone to draft the revised guides and a request for public comment to be submitted to the FTC by December 10, 2010.

Revised Guides
If the number of submissions in response to the request for public comment were any indication, interest in the revised Green Guides has ramped up as rapidly as the actual use of green claims. While the FTC initially received 75 submissions during the initial comment period ending February 11, 2008, after the review was first announced, the number of people and organizations submitting comments regarding the proposed revised Green Guides eventually grew more than fourfold as 332 people and organizations submitted comments between October 6, 2010, and the December 10, 2010, cutoff date.

The revisions to the guides were made in three ways: 1) Changes were made to the format of the guides to make them more user-friendly; 2) Existing sections of the guides were revised and expanded; and 3) Several new sections were added to address new types of claims. The revisions contain many changes that should be of interest to those offering products or services in the nutrition industry.

The revised Green Guides contain updated guidance on green claims using terms such as, among others, degradable, compostable, and recyclable. Additionally, there is new guidance on claims using phrases such as renewable energy, renewable materials, and carbon offsets.

In particular, two types of claims are notable for receiving expanded focus and increased scrutiny from the FTC in the revised guides and deserve particular attention-namely, those claims touting the general environmental benefit of products or services and claims made through the use of third-party certifications and seals of approval.

General Environmental-Benefit Claims
General environmental-benefit claims are claims that make an overall statement about the environmental impact or benefit bestowed by a product or service, without identifying the particular manner in which the benefit is bestowed. Statements such as “More eco-friendly than before,” “25% more environmentally friendly,” or “Green family of products” are all examples of general environmental-benefit claims. While such claims are legally permissible, the FTC has traditionally taken the position that general environmental-benefit claims, without qualification, are difficult to interpret and may convey a wide range of meanings to consumers. Historically, the Green Guides have advised that unless marketers can substantiate every express and implied claim that a general assertion may convey to reasonable consumers, marketers should avoid making unqualified claims.

In the Federal Register notice, the FTC referenced several surveys it conducted to ascertain consumer perceptions of general environmental-benefit claims such as green or eco-friendly. These surveys reaffirmed the notion that such general claims may convey differing messages and may be interpreted differently by various consumers. Accordingly, the revised Green Guides advise that marketers refrain from making any unqualified general environmental-benefit claims to avoid potential deception of consumers. In furtherance of this advice, the revised guides contain more-specific guidance on how to effectively qualify general environmental-benefit claims.

Qualifications should be clear and prominent and should identify a specific benefit in order to be effective. A claim such as “More eco-friendly than before,” without accompanying qualifying language, is likely to be considered deceptive by the FTC because reasonable consumers may attribute other environmental benefits to the product or services than those intended by the advertiser.

However, if the claim is accompanied by clear and prominent language indicating how the product is more eco-friendly, such as the use of more natural ingredients or the incorporation of 50% more recyclable materials in packaging, the claim is not likely to be considered deceptive-as long as the advertisement’s context does not imply other deceptive claims.

In qualifying such claims, marketers must also be careful that such explanations of specific benefits do not imply an overall net environmental benefit if, in fact, there is not a net environmental benefit. If a particular attribute represents an environmental improvement in one area but causes a negative impact elsewhere, the overall message may be deceptive to consumers. Such a claim implicates one of marketing consultant TerraChoice’s Seven Sins of Greenwashing, the Sin of the Hidden Trade-Off.(1)

Third-Party Certifications and Seals of Approval
An emerging significant green-marketing tactic is the use of third-party certifications and seals of approval. Certifications from widely recognized green-labeling programs, as well as seals of approval-which, in some manner, depict the “greenness” of a product-are simple and effective methods to identify a product as green. However, these eye-catching methods also allow for frequent misuse.

While the previous Green Guides contained only one example addressing seals of approval, the rising trend of such claims caused a substantial increase in attention from the FTC in the revised guides. An entire section of the revised guides now provides guidance on third-party certifications and seals of approval.

Third-party certifications and seals of approval constitute endorsements, which are also covered by the FTC’s guidance document on endorsements titled Guides Concerning the Use of Endorsements and Testimonials in Advertising (“the Endorsement Guides”), which were recently revised by the agency in 2009. Any certifications or seals of approval should comply with the guidance for endorsements as set forth in the Endorsement Guides. To avoid repetition, the section on third-party certifications and seals of approval in the Green Guides refers readers to the Endorsement Guides and then provides a series of illustrative examples to provide instructive guidance specific to environmental endorsements. Essentially, the message conveyed is that certifications and seals of approval may be considered misleading and deceptive unless proper disclosures accompany them.

There are some well-known environmental certification programs, such as Green Seal and Energy Star, which give their stamp of approval to green products or services. Seals of approval from such certification programs inform a consumer that the product has been vetted by the program prior to purchase.

The effectiveness of such marketing has led some companies to create their own seals to tout their products as green. In the revised guides’ section pertaining to certifications and seals, Proposed Example 1 addresses the use of a seal of approval created by a marketer itself, rather than one bestowed by a third party. Use of such a claim, without clear and prominent qualifying language alerting consumers that the seal was self-created, is likely to be considered deceptive by the FTC. Use of self-certifications and seals implicates another of TerraChoice’s greenwashing sins, the Sin of Worshipping False Labels.(1)

Companies must also take care to ensure that the inclusion of certain logos or symbols do not imply endorsement by the particular organization if no such endorsement has taken place. For example, a product label may display the logo of the Sierra Club or some other recognized pro-environment organization because the company supports the Sierra Club and donates money to its cause. To avoid deception, a disclosure should be made that clarifies that the logo is displayed because the company supports such an organization and not because the organization has evaluated and endorsed the product. Additionally, disclosures should be made if a company displays a seal to indicate membership in an environmental trade organization, if the trade organization did not evaluate the product.

This area of green marketing has proved to be one of the more fertile areas for private litigants suing companies for alleged misuse of green claims. Most notably, consumers in California and Wisconsin have sued S.C. Johnson, the makers of Windex, for placing “Greenlist” logos on its bottle labels. The plaintiffs claim that the seals imply the products underwent some sort of third-party certification, when in fact the “Greenlist” is S.C. Johnson’s own internal program of rating green products.

With the expanded focus and attention on such claims in the revised Green Guides, action from both the FTC and private litigants will only increase against companies making deceptive claims.

Future Claims
In the last several years, the FTC, like FDA, has tightened its regulatory oversight of advertising in the food and beverage, supplement, and other nutrition industries, focusing on claims promoting weight-loss and disease prevention. As the use of green claims continues to pervade the marketing and advertising of nutritional products and services, the FTC’s attention in this area will likewise continue to increase.

The impending approval of the revised Green Guides will only provide further impetus for the FTC to ramp up enforcement activity of environmental marketing claims. Companies must have qualified personnel review all claims trumpeting the environmental benefit of products or services to avoid unwanted attention from the FTC or private litigants for false or deceptive advertising.

References:
1. Greenwashing indicates the use of false or deceptive green claims to promote products or services. In 2007, TerraChoice, a Canadian environmental marketing consulting company, issued a report entitled The Six Sins of Greenwashing. In 2009, the report was updated to include a seventh sin and renamed The Seven Sins of Greenwashing.