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Go Green: FTC Regulations …and Beyond! By Julia Wright, MAS.

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Presentation on theme: "Go Green: FTC Regulations …and Beyond! By Julia Wright, MAS."— Presentation transcript:

1 Go Green: FTC Regulations …and Beyond! By Julia Wright, MAS

2 About Julia

3

4 What is Green? There is no clear definition. Green is in the eye of the beholder This has led to the misuse of this term...so the FTC stepped in…

5 Revised Green Guides published Oct 1, After 2 years of feedback and nearly 340 unique comments, the FTC has published the revised Green Guides (Section 240).

6 certifications and seals of approval carbon offsets free-of claims made with renewable energy claims made with renewable materials claims non-toxic claims The (Revised) Guides also: advise marketers not to make an unqualified degradable claim for a solid waste product unless they can prove that the entire product or package will completely break down and return to nature within one year after customary disposal; caution that items destined for landfills, incinerators, or recycling facilities will not degrade within a year, so marketers should not make unqualified degradable claims for these items; and clarify guidance on compostable, ozone, recyclable, recycled content, and source reduction claims. Six new sections (vs 1998 version)

7 Whats new? The Guides caution marketers not to make broad, unqualified claims that a product is environmentally friendly or eco-friendly because the FTCs consumer perception study confirms that such claims are likely to suggest that the product has specific and far-reaching environmental benefits. Very few products, if any, have all the attributes consumers seem to perceive from such claims, making these claims nearly impossible to substantiate.

8 Summary of Green Guides As proposed Oct 2011 General Environmental Benefit (e.g., green, eco-friendly) Marketers should not make unqualified general environmental benefit claims. They are difficult, if not impossible, to substantiate. Qualifications should be clear and prominent, and should limit the claim to a specific benefit. Marketers should ensure the advertisements context does not imply deceptive environmental claims.

9 Eco-Friendly Condoms? General Eco Friendly Claims. The plastic and foil wrappers condoms are packaged in are not biodegradable. Sure, Latex biodegrades, but Latex condoms are made mainly from latex with added stabilizers, preservatives and vulcanizing (hardening) agents. Latex is a natural substance made from rubber trees, but because of the added ingredients most latex condoms are not biodegradable. Population Control certainly is eco-friendly

10 Certifications and Seals of Approval This new section emphasizes that certifications/seals are endorsements covered by the Commissions Endorsement Guides and provides new examples illustrating how those Guides apply to environmental claims (e.g., marketers should disclose material connections to the certifier). Because an unqualified certification/seal (one that does not state the basis for certification) likely conveys a general environmental benefit claim, marketers should use clear and prominent language limiting the claim to particular attribute(s) for which they have substantiation. Third-party certification does not eliminate a marketers obligation to have substantiation for all conveyed claims. Think of this like a celebrity (or paid) endorsement.

11 A note about Certifications According to – there are currently 424 ecolabels in 246 countries. Only 2 Government Labels: Energy Star USDA Organic

12 Our Industry Certifications USDA Organic: Organic is a labeling term that indicates that the food or other agricultural product has been produced through approved methods that integrate cultural, biological, and mechanical practices that foster recycling of resources, promote ecological balance, and conserve biodiversity. Synthetic fertilizers, sewage sludge, irradiation, and genetic engineering may not be used. QCA: Quality Certification Alliance is an independent, accreditation organization whose mission is to elevate the standards by which industry firms that import and/or manufacture promotional products provide consistently safe, high-quality, socially compliant and environmentally conscientious merchandise. FSC: FSC certification is a voluntary, market-based tool that supports responsible forest management worldwide. FSC certified forest products are verified from the forest of origin through the supply chain. The FSC label ensures that the forest products used are from responsibly harvested and verified sources. SFI: The SFI Standard promotes sustainable forest management in North America through 14 core principles that promote sustainable forest management, including measures to protect water quality, biodiversity, wildlife habitat, species at risk, and Forests with Exceptional Conservation Value. GOTS: The Global Organic Textile Standard (GOTS) is the worldwide leading textile processing standard for organic fibers, including ecological and social criteria, backed up by independent certification of the entire textile supply chain. SEARCH THESE IN SAGE!

13 Caution – not verified! QCA Dropdown box listing 50 different standards – TSA, CPSIA, ISO, etc.

14 Degradable advise marketers not to make an unqualified degradable claim for a solid waste product unless they can prove that the entire product or package will completely break down and return to nature within one year after customary disposal; caution that items destined for landfills, incinerators, or recycling facilities will not degrade within a year, so marketers should not make unqualified degradable claims for these items; and clarify guidance on compostable, ozone, recyclable, recycled content, and source reduction claims. Industry Example: Made using revolutionary material. Reusable, 100% Recyclable, degradable, and uses 50% less non-renewable resources. 1 – City of Phoenix does not offer recycling of non-rigid plastics 2 – Does it meet the FTC definition of degradable? 3 – 50% less non-renewable resources compared to what?

15 Compostable A marketer claiming that an item is compostable should have competent and reliable scientific evidence that all the materials in the item will break down into, or otherwise become part of, usable compost (e.g., soil-conditioning material, mulch) in a safe and timely manner (i.e., in approximately the same time as the materials with which it is composted) in an appropriate composting facility, or in a home compost pile or device. One industry supplier described this favorite style this way: Support the green Movement without breaking the bank with this earth-friendly Biodegradable pen! made of recycled cardboard, this click-action ballpoint pen also features a stylish wood clip and a compostable corn plastic resin tip and plunger sure to please every crowd. Black ink cartridge.

16 Ozone-Safe/Ozone-Friendly It is deceptive to misrepresent, directly or by implication, that a product, package, or service is safe for, or friendly to, the ozone layer or the atmosphere. Not many products in this category for our industry. Found a few Car Air Purifiers that claim to Ionize air purifier for auto car, producing ozone and anion. How measured? Cost of energy?

17 Recyclable The proposal highlights the three-tiered analysis for disclosing the limited availability of recycling programs. (This guidance currently appears in examples only.) 1.Substantial majority of consumers/communities have access to recycling facilities Marketer can make an unqualified recyclable claim. 2.Significant percentage of consumers/communities have access to recycling facilities Marketer should qualify recyclable claim (e.g., package may not be recyclable in your area). 3.Less than a significant percentage of consumers/communities have access to recycling facilities Marketer should qualify recyclable claim (e.g., product is recyclable only in the few communities that have recycling programs). Really??? Made with 50% recycled plastic. Durable plastic barrel, splinter free. Synthetic resin and wood-free. Supplier indicates that this is a Recyclable product on SAGE. FSC Certified round pencil: The FSC promotes responsible management of the world's forests. This is accomplished through development of voluntary, internationally recognized forest management standards. FSC is the most widely recognized global certification program. The FSC certification program supports biodiversity, protection and conservation of forests, ensures long term timber supplies, protects stream sizes, while assuring consideration of long term human benefits.

18 Recyclable FTC Example: A package is labeled Includes some recyclable material. The package is composed of four layers of different materials, bonded together. One of the layers is made from recyclable material, but the others are not. While programs for recycling the 25 percent of the package that consists of recyclable material are available to a substantial majority of consumers, only a few of those programs have the capability to separate the recyclable layer from the non-recyclable layers. The claim is deceptive for two reasons. First, it does not specify the portion of the product that is recyclable. Second, it does not disclose the limited availability of facilities that can process multilayer products or materials. An appropriately qualified claim would be 25 percent of the material in this package is recyclable in the few communities that can process multi-layer products. Industry Example Made with 50% recycled plastic. Durable plastic barrel, splinter free. Synthetic resin and wood-free. Supplier indicates that this is a Recyclable product on SAGE.

19 City of Phoenix Recycling Phoenix is the 6 th largest City in the United States. If we cant recycle it…

20 Free-of/Non-Toxic One Example from the FTC: A package of t-shirts is labeled Shirts made with a chlorine-free bleaching process. The shirts, however, are bleached with a process that releases a reduced, but still significant, amount of the same harmful byproducts associated with chlorine bleaching. The claim overstates the products benefits because reasonable consumers likely would interpret it to mean that the products manufacture does not cause any of the environmental risks posed by chlorine bleaching. A substantiated claim, however, that the shirts were bleached with a process that releases 50% less of the harmful byproducts associated with chlorine bleaching would not be deceptive. The Pacific Cooler is filled with a super absorbent polymer which is non-toxic, biodegradable, and environmentally safe! Price includes one color imprint and individual polybag with instruction card. 16 oz double wall insulated acrylic tumbler with straw. The double wall insulation in this tumbler is perfect for keeping your beverages hot or cold without impacting your grip. Includes a 9" straw with stopper so it won't fall out of the cup. Hand wash only, do not microwave. BPA and lead free, Prop 65 compliant. Measures: 4" x 6". They look disposable, but they are in fact reusable and incredibly stylish. 4" W x 6" H What is replacing BPA? Non-toxic needs to mean non- toxic to people as well as to the environment.

21 Made with Renewable Materials Research suggests that reasonable consumers may interpret renewable materials claims differently than marketers may intend. Unless marketers have substantiation for all their express and reasonably implied claims, they should clearly and prominently qualify their renewable materials claims. For example, marketers may minimize the risk of unintended implied claims by identifying the material used and explaining why the material is renewable. Marketers should also qualify any made with renewable materials claim unless the product or package (excluding minor, incidental components) is made entirely with renewable materials.

22 Made with Renewable Energy A marketer should not make unqualified renewable energy claims, directly or by implication, if fossil fuel, or electricity derived from fossil fuel, is used to manufacture any part of the advertised item or is used to power any part of the advertised service, unless the marketer has matched such non-renewable energy use with renewable energy certificates. Company X retractable ballpoint pen with shiny surface, available in transparent or opaque plastics. Equipped with Company X refill 774. Green certified through EMAS (EU ecological audit regulation) and ISO Produced with 100% renewable energies and PVC free. Promote renewable energy and empower people's hearts and minds with positive messages that show you're doing your part to help our planet's future. Company Xs exclusive scale model Hybrid e.Turbine Fans generate a cool breeze and draw attention to get noticed. Solar model requires sunshine or equivalent to power a small motor that spins the turbine's blades. Popular Hybrid e.Turbines perfectly connect energy conservation with your promotions in the coolest way!

23 Carbon Offsets Given the complexities of carbon offsets, sellers should employ competent and reliable scientific and accounting methods to properly quantify claimed emission reductions and to ensure that they do not sell the same reduction more than one time. It is deceptive to misrepresent, directly or by implication, that a carbon offset represents emission reductions that have already occurred or will occur in the immediate future. To avoid deception, marketers should clearly and prominently disclose if the carbon offset represents emission reductions that will not occur for two years or longer. It is deceptive to claim, directly or by implication, that a carbon offset represents an emission reduction if the reduction, or the activity that caused the reduction, was required by law.

24 Enforceable?

25 Class Actions (related to Green in 2011) Class action attorneys have been busy in the area of green marketing as well. For example, the makers of Fiji Water successfully fended off a putative class action regarding their use of a green drop logo on packages. The plaintiffs had contended that the logo conveyed the impression that the product had been certified by a third-party environmental organization, when in reality, the logo was self-administered by the Fiji marketing department. Although this kind of conduct would likely be banned under the new FTC Guides, the court found that it was not misleading to any reasonable consumer and dismissed the case. SC Johnson settled a class action earlier this year regarding its use of a self-certification on Windex and other cleaning products it sells, called Greenlist. In that case, the plaintiffs had contended that the self-certification was misleading, both because it was self-administered and because it permitted the inclusion of glycol ethers in the Windex formulation. SC Johnson folded its cards rather than fight the case, dropping the Greenlist logo program. Numerous cases are now pending throughout the country on the labeling of food products containing high-fructose corn syrup (HFCS) as all-natural or natural. Surprisingly, the FDA has no enforceable regulations on its books about the term and the FTC has also stayed out of the area, thus creating the kind of ambiguity on which consumer class action plaintiffs lawyers depend. In a related area, the Corn Refiner industry is defending a Lanham Act false action by a group of sugar growing cooperatives over similar HFCS labeling claims. The terms sustainable, natural, and organic. are under the US Department of Agriculture The regulation of green marketing is dynamic and largely unsettled. As the rules begin to emerge, marketers will have to proceed carefully.

26 The 7 Sins of GreenWashing 1.Sin of the Hidden Trade-off: committed by suggesting a product is green based on an unreasonably narrow set of attributes without attention to other important environmental issues. Paper, for example, is not necessarily environmentally-preferable just because it comes from a sustainably-harvested forest. Other important environmental issues in the paper-making process, including energy, greenhouse gas emissions, and water and air pollution, may be equally or more significant. 2.Sin of No Proof: committed by an environmental claim that cannot be substantiated by easily accessible supporting information or by a reliable third-party certification. Common examples are tissue products that claim various percentages of post-consumer recycled content without providing any evidence. 3.Sin of Vagueness : committed by every claim that is so poorly defined or broad that its real meaning is likely to be misunderstood by the consumer. All-natural is an example. Arsenic, uranium, mercury, and formaldehyde are all naturally occurring, and poisonous. All natural isnt necessarily green.

27 4. Sin of Irrelevance: committed by making an environmental claim that may be truthful but is unimportant or unhelpful for consumers seeking environmentally preferable products. CFC-free is a common example, since it is a frequent claim despite the fact that CFCs are banned by law. 5. Sin of Lesser of Two Evils: committed by claims that may be true within the product category, but that risk distracting the consumer from the greater environmental impacts of the category as a whole. Organic cigarettes might be an example of this category, as might be fuel-efficient sport-utility vehicles. 6. Sin of Fibbing: the least frequent Sin, is committed by making environmental claims that are simply false. The most common examples were products falsely claiming to be Energy Star certified or registered. 7. Sin of Worshiping False Labels: The Sin of Worshiping False Labels is committed by a product that, through either words or images, gives the impression of third-party endorsement where no such endorsement actually exists; fake labels, in other words.

28 The Suppliers role is pretty clear, right? Give clear and accurate product descriptions. Keep adding more green products to your lines! Certification is key. Compliance needs to communicate with Marketing and Sales Reps What can a Distributor do? - TARGET!! What is the client trying to accomplish? What is the best way to solve their problem/need? What demographic info do you have access to? What are the clients values? (ie- water conservation) Look at the options: What is the product made of? Where did it come from (import or domestic) Durability! Disposal – recycle, compost, landfill? Is there an alternative? How is it packaged?

29 Who is buying green products? Quick look at the Psychographic Segmentation: True Blues – 31% They are 4 xs more likely to avoid products marketed by companies that are not eco-conscious. They are often politically active as well. Greenback Greens - 10% - Not politically active, but they are more likely than the average consumer to purchase green products. Sprouts – 26% - Unlikely to spend more on green products, but can be persuaded with appropriate appeal. Grousers – 15% - relatively uneducated about ecological concerns. Believe green products to be too expensive and not as good. Apathetics – 18% Not concerned about buying green.

30 LOHAS – Lifestyles of Health & Sustainability. 17% of the US population are LOHAS. The Environment is central. They way food is grown and workers are treated is important. 71% of them buy recycled paper and organic food. Within LOHAS, there is a focus on either health, energy and/or food.

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32 Sources: business-consumer-products/news+and+events/regulatory+bulletins/ftc_green_guides_revisions business-consumer-products/news+and+events/regulatory+bulletins/ftc_green_guides_revisions summer-2011/ summer-2011/


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