The US Federal Trade Commission (FTC) is taking aim at greenwashing by big business with an update to its “Green Guides”, which would give the agency stronger legal cases against polluters by clarifying when companies’ deceptive marketing around sustainability and environmental responsibility violates federal law.
The move follows years of formal complaints filed with the FTC about often highly questionable claims made by fossil fuel companies, big agriculture, major food producers and other polluting industries.
Environmental groups, clean energy businesses and others have long raised concerns about claims made around carbon neutrality, carbon offsets, “natural” gas, “renewable natural gas”, plastic’s recyclability, organic labeling and vague terms that imply environmental responsibility but have no definition.
These issues show industry is waging an “organized disinformation campaign”, said John Kostyack, an adviser for the Sierra Club’s Fossil-Free Finance campaign.
“Consumers have been badly misled about the impact of their purchasing on the environment,” he added.
The Green Guides were first issued about 30 years ago and are designed to provide industry with guidance on how it can make environmental marketing claims that comply with the FTC Act. The guides are non-binding, but they serve to strengthen the FTC’s cases when it takes legal action against industry, and the guides are often referenced by courts.
The last update occurred in 2012, and since then the level of fictitious or misleading marketing has proliferated, observers say. That’s probably because consumers are more interested than ever in supporting environmentally responsible companies, and industry is capitalizing on that desire, a practice which critics have labeled “insidious”.
The five largest oil companies have spent over $3.6bn on “reputation building” advertising over the last 30 years, Brown University researchers found, and Harvard research in 2022 identified some form of greenwashing in 72% of social media posts by oil and gas companies.
Consumers have been badly misled about the impact of their purchasing on the environment
Industry’s “sophisticated marketing schemes” are “clearly designed to take advantage of the large and growing number of consumers looking to purchase products that are sustainably produced”, Food and Water Watch wrote in a comment submitted to the FTC.
The new rules are expected to be in place by the year’s end and come as the EU has promised to crack down on greenwashing.
Among claims targeted by environmental groups are the oil industry’s assertions that all plastic is recyclable. Numerous investigations have found it largely is not, and the vast majority of US plastic that consumers thought would go to a recycling center to be reused is actually burned or buried. Troves of documents have shown oil and plastic industry leadership and executives have known that plastic recycling will almost never make financial sense because new plastic is so much cheaper to produce.
Plastic recycling is “an elaborate myth”, said Jan Dell, founder of the Last Beach Cleanup environmental non-profit that focuses on recycling and commented on the FTC rule. She helped research a GreenPeace report on what the FTC requires for material to be legally listed as recyclable.
It found that only plastics labeled “one” and “two” could legally be called recyclable because they are accepted by collections for at least 60% of the population and there are factories in the US to recycle them.
Recycling plants for other forms of plastic don’t exist in the US, Dell said, adding that the FTC should require companies to prove the materials “are collected, sorted and actually recycled to create a new product”.
FTC lawsuits are few and far between as observers say the commission is chronically underfunded, but in some cases it has hit companies with millions of dollars in fines. In 2021, for example, it fined companies, including Walmart and Kohl’s, a combined $5.5m for mislabeling rayon as “sustainable” bamboo.
Stronger labeling laws in California resulted in a lawsuit in which Keurig Dr Pepper was last year required to pay $10m over its false claim that its single-use coffee cups were recyclable, and the development highlights the need for similar laws at the federal level, Dell said.
A comment jointly filed by a coalition of environmental groups, including the Sierra Club, pointed to claims made around carbon offsets and neutrality. The FTC could greatly improve transparency by requiring companies to clearly show “verifiable and measurable” environmental impacts to back up their net zero or carbon neutrality claims, Kostyack said.
Many offset claims are built around avoiding deforestation and require consumers to understand “black box math” developed by a consulting company, and consumers must understand what would happen in the absence of the carbon credits, he added. Carbon removal is more credible, Kostyack said, but added that companies should clearly demonstrate how they are removing carbon.
If you’re making a claim about how natural gas is solving climate change, then you need to show how you’re backing that up
“If you’re making a claim about how natural gas is solving climate change, then you need to show how you’re backing that up,” he said. “Even just a link to a website where a project itself is identified would help because companies are claiming they are offsetting all their emissions, but you never get to see the project that is achieving that.”
The coalition also urged the FTC to stop companies from using “generic environmentally friendly terms” like “clean”, “sustainable”, “natural” or “renewable” to describe fossil fuels.
Other commenters asked the FTC to provide guidance regarding the use of the term “organic” on products other than food. They noted that some companies apply the term to products that don’t have a non-organic counterpart, like salt, or are not regulated by the nation’s organic program, including pillows, cosmetics or personal care products.
However, the National Federation of Independent Business wrote in a comment that it sees likely infringement of companies’ free speech rights, and asked: “Do the Guides chill more speech than is necessary?”
But Kostyack sees the situation quite differently.
“We’re countering a sea of misinformation and the FTC has a role to play in that,” he said.
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