In October 2012, the Federal Trade Commission (FTC) issued its revised “Green Guides,” which are designed to help marketers ensure that the claims they make about environmental attributes of their products are truthful. The guidelines set forth specific requirements for a wide variety of environmental claims, Significantly, however, the FTC did not address “sustainability” claims.
National Public Radio (NPR) recently ran a series on “sustainable” seafood claims. The series raised a host of issues regarding what these terms mean, whether the claims are verifiable, what “sustainable” certifications mean, and what they convey to the public. The series highlights issues that should be of concern to all marketers who claim that their products are “sustainable.”
Section 5 of the FTC Act prohibits “unfair or deceptive ads or practices.” As a general rule, marketers must ensure that “all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims.” That is, the marketer must ensure that the statement is (a) true, (b) conveys an accurate message and (c) is verifiable. The Green Guides are based on these basic principals, but provide specific guidance regarding marketing claims about the environmental attributes of products.
In drafting the Green Guides, the FTC was particularly concerned that environmental claims be supported by scientific evidence. While the FTC has always required that claims be substantiated by “competent and reliable scientific evidence,” the Green Guides caution that the evidence must not only be objective but generally accepted fact. The FTC cautioned that such evidence “should be sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields, when considered in light of the entire body of relevant and reliable scientific evidence, to substantiate that representation is true.” This is potentially significant because the FTC takes the position that simply having some evidence to support a claim may not be sufficient. Rather, the sufficiency of the evidence must “be considered in light of the entire body of relevant and reliable scientific evidence.”
The FTC was particularly concerned about general environmental benefit claims such as “green” or “eco-friendly.” The Green Guides caution against making unqualified environmental benefit claims because they are often not capable of being substantiated. Those making general claims are cautioned to also make clear and prominent disclosures that communicate the specific environmental benefits of the product.
The Green Guides also address certifications and seals of approval. The Guides allow the use of such endorsements but set forth various requirements. Among other things, marketers must disclose information that could incorrectly imply that the product has been endorsed by an independent third party. Thus, one must disclose whether there is any material connection between the marketer and the certifying body and whether that connection affects the weight and credibility of the certification. Second, the Guides specify that “third-party certification does not eliminate the marketer’s obligation to ensure that it has substantiation for all claims reasonably communicated by the certification.” Third, because certifications may convey a general environmental benefit, where appropriate, the certification should be qualified with prominent qualifying language that clearly conveys that the certification or seal refers only to specific and limited benefits.
Although the FTC promulgated guidelines for a wide variety of specific claims, it decided not to do so for “sustainable” claims, as there was no accepted definition of “sustainable.” Nevertheless, the FTC noted that “this lack of guidance . . . does not mean unscrupulous marketers are free to deceive consumers. Marketers are still responsible for substantiating consumer’s reasonable understanding of these claims.” The FTC further noted that this was an area that it would continue to research and monitor and that “marketers who use ‘sustainable’ claims should test those claims in the context of their advertisements to ensure they can substantiate them.”
NPR’s Sustainable Fisheries Series
This month, NPR broadcast a series that raised questions about a certifying body that labels seafood items “certified sustainable.” NPR reported that under the certifying body’s guidelines, a fishery that wants to be certified hires an auditing company to evaluate whether its practices comply with the body’s definition of “sustainable.” If the fishery passes, it is permitted to use the body’s sustainable seafood label. However, according to the report, some environmental groups have questioned the use of the term “sustainable” because they claimed that some of the target fish are in trouble, the fishing is harming the environment, or there is inadequate evidence as to how the fishery and environment are being impacted.
Implications for Marketers
As noted above, the FTC decided not to issue guidelines for the term “sustainable.” While this creates difficulties for retailers who, as a result, have no specific guidelines to determine whether the term “sustainable seafood” is appropriate to use, the Green Guides, as well as longstanding FTC principles, do provide marketers with viable approaches for evaluating these issues.
a. What are the reasonable interpretations of the claim?
The FTC specifically refused to address “sustainability” claims because there was insufficient research to determine how the public understood the term “sustainable.” To the extent that consumer understanding of sustainability is continuing to develop, marketers have an ongoing obligation to assess how consumers understand the term. The Guides suggest that marketers qualify general sustainability claims with specific environmental benefits and require that such qualifications be clear, prominent and specific. For example, in the NPR series, some environmental groups suggested that rather than just saying a fishery is “sustainable,” marketers should consider using such terms as “well-managed” or “best practices.”
b. Does the marketer have a reasonable basis for the claim and can it substantiate the claim?
An independent, third-party audit, such as one provided by the fishery organization in the NPR series, is normally sufficient. However, the Green Guides provide that “third-party certification does not eliminate the marketer’s obligation to ensure that it has substantiation for the claims communicated by the certification.” It is not as clear, however, how far a marketer must go when the basis for the certification has been questioned. Certainly, a marketer cannot willfully disregard or ignore information establishing that the certification is not reliable. Still, to the extent that a marketer has knowledge that a certification has been called into question, it may be wise to ask for more specific information regarding the certification process and the particular product — a failure to do so could subject the marketer to a challenge that there is no adequate basis for the claim.
The NPR story on sustainable fisheries, in the context of the newest version of the FTC’s Green Guides, highlights the issues that marketers face when using broad terms such as “sustainable” and relying upon third-party certifications. They remind us that whenever making such claims, marketers must take into account all relevant information and circumstances to ensure they are true, convey an accurate message and are verifiable.