Victims of 'greenwashing' take aim at perpetrators
Companies looking to stake out a piece of the green frontier with advertising claims like environmentally friendly, sustainable, organic and earth-friendly, had better be prepared to defend the terms of the turf.
"Greenwashing," the practice of co-opting the trappings of the green movement without the business practices to back it up, can ultimately weaken a company's brand, experts caution. It can also be illegal.
At the root, greenwashing was a truth-in-advertising issue before it became an environmental issue, says Craig Bachman, an attorney at Lane Powell PC who co-chairs the firm's intellectual property practice group.
He cites the case of LePage's cellophane tape, marketed in the 1990s as biodegradable transparent tape. While the claim was true for the tape itself, in 1994 the Federal Trade Commission found that collectively the packaging was neither biodegradable nor easily recyclable for most consumers. That signaled a need for businesses to adopt higher standards of substantiation and verification.
The temptation to go green is understandable – it has marketplace value, Bachman says.
And while litigation will likely increase, class action suits have yet to catch on as they have in securities and antitrust litigation resulting in multimillion-dollar damages. In unstubstantiated claims of environmental goodness, the difficulty is in proving significant financial harm.
"Where are the big damages – and therefore the injunctive relief?" says Bachman.
The difficulty is twofold.
With the green area still developing so rapidly, terms in popular usage often lack well-defined meaning or ways to prove it.
Furthermore, companies are held responsible not just for the explicit claims made in advertising and collateral, but the implicit claims as well. And, guidelines may vary not just at the federal level, but from state to state.
Sorting these out falls to entities like the Federal Trade Commission, state attorneys general investigating unfair trade practices, the National Advertising Division of the Better Business Bureau (which can refer cases to the FTC), and other agencies with oversight of particular product categories, such as the U.S. Department of Agriculture.
In 1992, the FTC put forth its environmental guide, known as the Green Guide, to help businesses navigate the terminology of environmental marketing of offering guidelines of what might constitute "unfair or deceptive acts or practices," prohibited by Section 5 of the FTC Act.
Updated in 1998, the Green Guide is now being revised again, ahead of schedule, due to industry demand and the rapid growth in environmental marketing. But even the 1998 version provides a good starting point for companies, says Schwabe Williamson & Wyatt PC attorney Michael Cohen, who co-chairs the firm's intellectual property practice and references the guide frequently.
The Green Guide calls for specificity and verification, rather than generalities and puffery, and provides suggestions on how to employ and qualify certain terms.
"In over 20 years of advertising law, I have never seen such a rapid shift to get on a bandwagon," says Jere Webb, attorney with Stoel Rives LLP.
That can lead to unclear or unsubstantiated assertions by copywriters with a green mandate.
Have ad copy reviewed by someone familiar with the legal requirements and guidelines, says Stoel's Webb. And the buzzwords will be some of the first to draw scrutiny.
"The FTC has historically been hard-nosed on these claims," defining recyclable as 100-percent recyclable, and holding "Made in the U.S.A." to a standard that includes both components and product assembly, says Webb.
"It's an incredible challenge – you have creative, aggressive folks who want to make a big splash in the collateral materials," says Schwabe's Cohen.
The problem may not be what's explicitly stated in an ad or brochure, but rather what's implied.
Implied statements require just as much substantiation, Cohen says, including interpretations of what consumers might infer from those statements. Penalties vary by agency and jurisdiction, but can include cease-and-desist orders, hefty financial penalties and public clarification.
When it comes to helping clients go green, "I stress two things: transparency of operation and authenticity of the claim," says Leslie Carlson of Portland's Carlson Communications and co-chair of the City of Portland/Multnomah County Sustainable Development Commission.
To consumers for whom such elements are important, "it's a choice based on values, Carlson says. Green labeling may still be marketing's Wild West, but get caught greenwashing, and those customers may never come back.
In most cases, it's competitors, consumers or watchdog groups that blow the whistle. A Jan, 6, 2008, New York Times article on Burt's Bees personal care products notes that the company regularly tests competitors' wares for making false claims about being natural. (Burt's Bees has also taken the lead on forming an industry standard with the National Product Association.)
Oversight would be easier if there were more uniform standards, says Michael Ratoza, an attorney with Bullivant Houser Bailey PC. Instead, much of the green movement touts third-party validation that is at the same time self-policing.
Case in point: the U.S. Green Building Council's touted Leadership in Energy and Environmental Design Green Building Rating System.
Companies falsely claiming LEED certification are violating federal trademark law. But until LEED standards are adopted as code, building inspectors have limited jurisdiction to make sure that a building qualifies as such.
It is possible for a private nonprofit like the U.S. Green Building Council to have its standards uniformly adopted by industry, says Ratoza. He gives the example of Underwriters Laboratories Inc.'s standards, which have been incorporated into electrical code, requiring (and testing) that components actually meet those guidelines.
"At a minimum, understand that the representations made are accurate, and that you can defend them," Ratoza advises companies. Someone in our litigious society will test you on your representation."
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