Commentary+on+the+FTC+Green+Marketing+Guidelines+(J.+Friedman.+N.+Avlonas,+2010)

7/31/2019 Commentary+on+the+FTC+Green+Marketing+Guidelines+(J.+Friedman.+N.+Avlonas,+2010)

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Commentary on the FTCs Green Marketing Guidelines

Exceeding and Defining Industry Standards

John Friedman, co-Founder

Sustainable Business Network of Washington (SBNOW)

Nikos Avlonas, President

Centre for Sustainability and Excellence (CSE) North America

Green Marketing is the marketing of products that are presumed to be environmentally safe

or friendly. Thus green marketing must take into consideration a broad range of activities, including

product modification, changes to the production process, packaging changes, as well as modifying

advertising according to American Marketing Association.

Consumers worldwide are increasingly admitting that their behavior has changed in the last few

years to benefit the environment mainly from their purchasing decisions. Therefore, stakeholders

purchasing decisions for products worldwide are been affected by green marketing messages.

However, organizations should not get too comfortable with this trend in purchasing habits.

Statistically, a consumer will spend on average 45 sec reading a product label before making a buy-

not buy decision! They are not passive buyers, but rather information seekers and eager to align

organizational claims on products with their expectations, knowledge, and perceptions of value for

money. Their buying decisions extend beyond their encounters with green products to include

access to information regarding environmental claims of the product from trustworthy sources

apart from it producer in a timely manner. The breakdown of traditional media channels to all-

inclusive, rapid, real-time, divergent commentaries and news releases also plays a key role in

forming opinions on the credibility of these claims.

Materiality and Sustainability

Organizations need to ensure the materiality of their claims. Materiality refers to constituents that

are of high concern to stakeholders and of high strategic relevance to organizations.

Materiality is a very important part of a comprehensive Sustainability Strategy including Green

Marketing. Overstatement of environmental attributes is a very common Marketing behavior

leading to green washing. An environmental marketing claim should not be presented in a manner

that overstates an environmental attribute or benefit, expressively or by implication. Marketers

should avoid implications of significant environmental benefits if the benefits are in fact negligible.For example, if a package is labeled "50% more recycled content than before" based on the

increase in recycled content of its packaging from 2 percent recycled material to 3 percent recycled

material; the claim, while technically accurate, it likely conveys the false impression that the

advertiser has significantly increased the use of recycled material.


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A Comprehensive Sustainability Strategy is the very first step organizations should take in order to design

and communicate that that they Walk the Talk.

There are many organizations marketing their Green Products without having applied fundamental

Sustainability Practices in their operations, which increases the risk of being accused as green washers.

How Sustainability is embedded within an organization influences the degree to which it is perceived as a

good corporate citizen or green business.

Materiality should be based on international frameworks, such as the GRIs G3 guidelines, and it could be

implemented successfully through corporate Sustainability Assessments by Sustainability Experts

In the United States, the Federal Trade Commission (FTC), the government body that regulates and

oversees marketing and advertising, has established general principles that contain specific guidance

applicable to certain environmental marketing claims.

One of the questions that are frequently raised about green products and services is whether or not there

is a receptive public that justifies companies modifying their processes and procedures to capture what

may be a small niche or transitional market. The very fact that the United States Federal Trade Commission

developed and released (for public comment) a set of new proposed green marketing guidelines providesan important affirmation that the government of the largest economy in the world believes in the long-

term interest and importance of environmental claims in promoting goods and services. The fact that green

marketing was seen as important enough to merit increased attention indicates that the environmental

impacts associated with goods and services are a long term prospect.

That the FTC has asked for public comment also indicates that they are serious about making sure that the

guidelines help consumers to make informed choices and that they want to make sure that stakeholders

have an opportunity to have input into the process. An open, public process is critical to have a program

with both real and perceived value.

Purpose and Scope of the Guidelines

It would be difficult to summarize the guidelines in their entirety, but it is important to note some clear

themes that permeate throughout. In general the guidelines focus on the importance not only for accuracy

but also the need for clarity.

Accuracy

A recurring phrase that appears repeatedly and throughout the document is the need for claims to be

based on competent and reliable scientific evidence. This is defined as to include tests, analyses,

research, or studies that have been conducted and evaluated in an objective manner by qualified persona

and are generally accepted in the profession to yield accurate and reliable results. Such evidence should be

sufficient in quality and quantity based on standards generally accepted in the relevant scientific fields,

when consider in light of the entire body of relevant and reliable scientific evidence, to substantiate that

each of the marketing claims is true.


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This should provide a great deal of comfort for those who worry about the possibility of wasting time and

effort focusing on overblown or exaggerated environmental concerns. Clearly the FTC is putting its weight

behind the need for scientific consensus about what is being addressed. Hand in hand with this is the

natural extension of this requirement; the need for robust and accurate measurement of environmental

impacts of the products themselves, all along the supply chain from their sourcing, manufacturing,

packaging, distribution through to their use and ultimate disposal.

The guidelines take issue with, and offer very little tolerance for deliberate green washing including not

only misrepresentation but also the omission of salient facts. Stating that doing so is deceptive if it is likelyto mislead consumers acting reasonably the guidelines clearly are looking at ensuring disclosure as well as

offering guidance for claims.

Clarity

Using words like reasonableness, the guidelines seek to establish the basis for a reasonable consumer

standard. They make a credible attempt to cover all the bases by which consumers can be influenced

and/or make decisions. The guidance covers any environmental claims in labeling, advertising,

promotional materials, and all other forms of marketing in any medium, whether asserted directly or by

implication, through words, symbols, logos, depictions, product names or any other means.

Marketers will be held to a powerful standard; they must ensure that all reasonable interpretations of

their claims are truthful, not misleading and support by a reasonable basis before they make the claims.

In some cases the guidance is very specific; for a product to be defined as recyclable, for example, the

product not only must be recyclable, the infrastructure and means to recycle the product or packaging

must be in place for 60 percent or more of the consumers within the markets where the products are sold.

Another area the guidelines cover is production. If the capture and re-introduction of excess materials is

part of the standard production process (I.e. when scraps are routinely re-introduced into the production

process) the product cannot take credit for being made with, or including, recycled materials.

The idea here is for those that distinguish themselves by going beyond the industry standard to be the only

products that are able to gain the benefit from making the appropriate environmental claims.

The guidelines also seek to define the rules of the game when it comes to packaging, marketing and

advertising. Just as the government put an end to the practice of hiding clear glass balls in a bowl to give

the illusion that a soup contained more meat and vegetables (by keeping them near the surface) in

photographs and television commercials, the new guidelines set a framework for where and how products

are positioned and even the use of the familiar triangle three-arrow recycle symbol regulating that it be

placed on the bottom on containers rather than near the name of the product when the container is what

can be recycled rather than the product.

Redefining Leadership

What is clear is that the new FTC draft guidelines raise the bar in terms of expectations. As a result,

companies may find that their current practices even those that are industry leading only go as far as to

conform to the new guidelines, thereby setting a new standard. Leading companies may find that they


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must either extend their efforts or be willing to accept ceding their leadership position. Consumers may not

look favorably on companies that were once seen as leaders when those same enterprises now find

themselves engaging in behavior that meets the guidelines and suddenly their exemplary efforts now are

commonplace and common practice.

A recent study showed that physical measurements of carbon in the atmosphere are higher than they

should be if all the environmental claims from all companies were added together. Clearly there is some

inaccuracy in counting. The FTC guidelines seek to prevent double counting, by prohibiting companies from

claiming and sharing environmental results. For example, having solar panels on your roof allows you toclaim theportion of your power generated, but not if you sell the certificates. In that case, you have also

sold the rights to characterize your power use as renewable. And if you have solar panels visible on your

facility, unless 100 percent of the power consumed is generated thus, the company cannot claim made

with solar power as this, while true, also implies 100 percent of the power used is from this source. Instead

the company must determine the proportion and is limited to making that assertion.

Truly leading companies will develop their own reporting that is more robust than the standards, perhaps

using their framework and intent to guide their own actions and messages. A terrific example is the

company that decided to apply safety standards not only to its own employees as was required but to

all contractor and subcontractors working on its job sites. The immediate result was an accident rate thatseemed to spike upwards as they began counting all accidents and injuries, not just those from full time

employees who earned a paycheck with their company name on it. In response to the immediate

questioning of what had suddenly gone wrong, senior management was in the enviable position of pointing

out that the accident rate was still the same for full time employees but that what was wrong was, in fact,

an industry standard that did not value all people equally. This set a new standard and bar, above

regulatory requirements but, by using the same measurement and metrics, the company was faithful to the

regulations.

Conclusion

Exceeding and defining industry standards or even business standards in general is one way that

forward thinking companies will leverage their efforts from the existing guidelines and do more. Doing so

will establish that they are not toeing the line but rather raising the bar. This can also help serve as a

preventive (there is no point regulating a problem that does not exist) and help reduce costs. It also can

serve as a marker for the company culture, facilitating human resources efforts to recruit and retain top

talent. By reducing risks associated not only with potential environmental damage but also associated with

defending against complaints due to false marketing claims, companies that engage in proactive efforts

also reduce costs due to potential fines for either.

John Friedman, co-Founder

Sustainable Business Network of Washington (SBNOW)

[email protected] www.sbnow.org

Nikos Avlonas, President

Centre for Sustainability and Excellence (CSE) North America

[email protected] www.cse-net.org
mailto:[email protected]://www.sbnow.org/mailto:[email protected]://www.cse-net.org/http://www.cse-net.org/mailto:[email protected]://www.sbnow.org/mailto:[email protected]

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Commentary+on+the+FTC+Green+Marketing+Guidelines+(J.+Friedman.+N.+Avlonas,+2010)