Greenwashing Kloster Levitt


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The green industry has exploded into a multi-billion dollar phenomenon. No company wants to risk that their brand become associated with pollution, dangerous materials, wastefulness, or overall bad energy practices.

Businesses today are eager make themselves look more environmentally friendly than they really are by using words like “green,” “natural,” and “organic.” This practice of “greenwashing” does not always go un-noticed and could lead to claims of fraud, unfair competition, breach of contract, and customer backlash. Protect your company and your markets to ensure claims of greenwashing do not confuse or mislead your consumers. We’ll discuss the consequences of greenwashing, enforcement options, tips for developing environmentally-friendly branding programs, and strategies for creating new trademarks.

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  • The Business Week global warming issue in December gave the issue significant coverage (a couple of pieces were included in your pre-reading) An upcoming issue of Forbes will deal with climate change
  • Brief History of Greenwashing In the late 1980s and early 1990s when professional purchasers and individual consumers first became interested in buying “green” products, the following kinds of claims began appearing on products: Essentially non-toxic. Earth-friendly. Eco-safe. One-hundred percent natural. Environmentally safer. Made with non-toxic ingredients. Earth smart. Ozone safe. Manufacturers were using the terms indiscriminately and without any attempt to clarify their meaning. Consumers were rightly confused about the meaning of the claims. Following numerous consumer complaints, the U.S. Federal Trade Commission (FTC), which enforces a wide variety of consumer protection laws, began investigating what the FTC Chair at the time referred to as “advertising pollution.” As part of its investigation, the FTC identified a variety of deceptive advertising practices including manufacturers making unsubstantiated environmental claims and misleading consumers about the environmental benefits of their products. Following its investigation, the FTC issued its Guides for the Use of Environmental Marketing Claims in 1992 outlining acceptable and unacceptable environmental marketing practices. They were revised and updated in 1998. The FTC guidelines require manufacturers to provide specific details explaining any environmental claim without overstating an environmental attribute or benefit. According to the guidelines, generic claims of “environmental preferability,” “environmentally friendly,” or “Earth smart” are to be avoided because they do not provide purchasers with any specific information that can be used to compare products. Such claims are unacceptable without an accompanying explanation detailing the specific environmental requirements necessary to justify the claim. After the FTC published its guidelines, the most egregious greenwashing claims, including the use of terms such as “essentially non-toxic” and “environmentally safe,” began to decrease. Manufacturers became much more selective and accurate with many of their environmental claims.
  • The New Face of Greenwashing While greenwashing decreased following the release of the FTC guidelines, it did not completely disappear. In fact, as demand for more environmentally preferable products rises, greenwashing appears to be reemerging as an important concern for purchasers and other supply chain professionals. A forthcoming study of modern greenwashing practices identifies the following six greenwashing “sins.” Sin of Fibbing – While rare, some manufacturers do mislead customers about the actual environmental performance of their products. Some manufacturers have claimed that their products meet the environmental standards developed by EcoLogo or Green Seal when it is clear they do not. The EcoLogo program even has a fraud advisory section on its website warning purchasers about misuses of the EcoLogo certification mark. (See <>.) Sin of Unsubstantiated Claims – Also known as the sin of “just trust us,” some manufacturers are unable to provide proof of their environmental claims. Others use words like “green” or “eco” in their corporate or product names and hope no one asks for details. All environmental claims should be verified by an independent certifying body or auditor or the manufacturer should be willing and able to provide the necessary documentation to prove a claim when it is requested. Purchasers should be able to easily verify the recycled-content of a product or to learn whether it contains any ingredients of concern. Sin of Irrelevance – Some manufacturers make factually correct environmental assessments that are no longer relevant for the particular product category. As an example, many aerosol products continue to make “CFC-free” claims even though CFCs have been banned in these products since 1978. These accurate but irrelevant environmental claims can confuse even savvy purchasing professionals. Sin of the Hidden Trade-Off – Many products make bold claims about a single environmental attribute, which can lead purchasers to mistakenly believe that it is the only environmental attribute of concern for a particular product category. A cleaning product manufacturer, for example, is currently displaying an environmental certification mark documenting that its cleaning products are manufactured in a facility powered by renewable energy, which is clearly a beneficial environmental feature. The product makes no claims, however, about the potential human health or environmental hazards of the product itself. Purchasers could easily be misled by the certification mark to believe that the product is safer or uses safer ingredients than its competitors when that may not be true. Review products with single attribute claims carefully. Sin of Vagueness – Broad, poorly defined environmental claims continue to make it challenging for purchasers seeking high quality environmentally preferable products. A vague claim like “100 percent natural,” for example, can be very misleading because some naturally occurring substances such as arsenic and dioxin can be very harmful to human health. Legitimate environmental claims are not vague. Sin of Relativism – A product can be the most environmentally preferable product in its class, but still be an inappropriate choice. The most fuel-efficient sport utility vehicle (SUV), for example, is still less preferable if a mid-sized passenger car will suffice.
  • Greenwashing Kloster Levitt

    1. 2. Today’s Presentation:  <ul><li>Growth of Green </li></ul><ul><li>Greenwashing- what is it? </li></ul><ul><li>FTC and Green Guides </li></ul><ul><li>Enforcement Actions </li></ul><ul><li>Alternatives to Litigation </li></ul><ul><li>Trademark Issues </li></ul><ul><li>Avoiding the Seven Sins of Greenwashing </li></ul>
    2. 3. Green is Suddenly Everywhere
    3. 4. Growth of Green Advertising
    4. 5. Growth of Green <ul><li>Number of ads increasing. </li></ul><ul><li>Number of “green” products per store increasing. </li></ul>
    5. 6. Beware of Greenwashing Green∙wash (grēn'wŏsh', -wôsh') – verb: the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service WARNING: Learn to ask critical questions or you might be selling products with creative marketing rather than products with legitimate environmental benefits.
    6. 7. feedstock zero-impact feedstock content ECO-SMART eco-friendly sustainable sustainability renewable renewable resource life cycle recycled recyclable biodegradable degradable photodegradable compostable RENEWABLE BIO-BASED NATURAL CONTENT environmentally friendly earth-friendly ozone-friendly cradle to cradle cradle to grave CARBON OFFSETS renewable energy credits carbon neutral carbon footprint CLEAN ENERGY environmentally preferable environmentally safe environmentally safe naturally derived non-toxic energy intensity energy efficient Bioenergy greenhouse gases environmental management systems (EMS) alternative fuels green purchasing
    7. 9. Enforcement Tools in the United States <ul><li>Federal Trade Commission Act </li></ul><ul><li>FTC’s Green Guides </li></ul><ul><li>Lanham Act </li></ul><ul><li>State Consumer Protection Statutes </li></ul>
    8. 10. Environmental Claims are Growing <ul><li>Eco-safe </li></ul><ul><li>Environmentally friendly </li></ul><ul><li>Earth friendly </li></ul><ul><li>Earth smart </li></ul><ul><li>Environmentally safe </li></ul><ul><li>Environmentally preferable </li></ul><ul><li>Essentially non-toxic </li></ul><ul><li>Practically non-toxic </li></ul><ul><li>Made with non-toxic ingredients </li></ul><ul><li>Degradable </li></ul><ul><li>Biodegradable </li></ul><ul><li>Compostable </li></ul><ul><li>Environmentally safe </li></ul><ul><li>CFC-free </li></ul><ul><li>Ozone friendly </li></ul><ul><li>Recyclable </li></ul>Original Source: Kirsten Ritche, Gensler According to the FTC: FALSE CLAIMS
    9. 11. FTC Act <ul><li>“ [U]nfair or deceptive acts or practices in or affecting commerce are declared unlawful” (15 U.S.C. § 45(a)(1)) </li></ul><ul><li>Is the claim likely to mislead a reasonable consumer? </li></ul><ul><ul><li>Viewed from the consumer’s perspective </li></ul></ul><ul><ul><li>FTC will not attempt to interpret the claim language </li></ul></ul><ul><ul><li>No requirement that the ad was intended to deceive </li></ul></ul><ul><li>Was the claim material to the consumer’s decision to buy or use the product or service? </li></ul><ul><li>Substantiation – Do you have competent and reliable evidence to support claim? </li></ul><ul><li>Enforced by FTC only </li></ul><ul><ul><li>No private right of action for consumers or competitors </li></ul></ul>
    10. 12. FTC Green Marketing Guidelines Available at:
    11. 13. FTC’s Green Guides <ul><li>What are the Green Guides? </li></ul><ul><ul><li>Provide examples of how using particular environmental claims could conform or run afoul of the FTC Act </li></ul></ul><ul><ul><li>Guides apply to all forms of marketing goods or services </li></ul></ul><ul><ul><li>Guides apply to any claim about environmental attribute of a product of services </li></ul></ul><ul><ul><li>Guidance document </li></ul></ul><ul><ul><li>Substantial weight by courts </li></ul></ul>
    12. 14. Basics of FTC’s Green Guides <ul><li>What are the Green Guides? </li></ul><ul><ul><li>The claims must be substantiated (need to have a reasonable basis such as tests, studies, research, etc.) </li></ul></ul><ul><ul><li>Discourage use of broad unqualified statements such as environmentally friendly, eco-friendly, green, or sustainable- be specific and qualify claims to the extent necessary </li></ul></ul><ul><ul><li>The claim must not overstate an environmental benefit and should avoid making irrelevant environmental claims </li></ul></ul><ul><ul><li>Comparative environmental claims should be clear to avoid confusion about what is being compared </li></ul></ul><ul><ul><li>Eco seals, seals of approval and certifications- should be accompanied by info that explains basis for the award </li></ul></ul>
    13. 15. Basics of FTC’s Green Guides (cont’d) <ul><ul><li>Green guides also give guidance on use of terms such as </li></ul></ul><ul><ul><ul><li>Biodegradable </li></ul></ul></ul><ul><ul><ul><li>Compostable </li></ul></ul></ul><ul><ul><ul><li>Recyclable </li></ul></ul></ul><ul><ul><ul><li>Recycled content </li></ul></ul></ul><ul><ul><ul><li>Source reduction </li></ul></ul></ul><ul><ul><ul><li>Refillable </li></ul></ul></ul><ul><ul><ul><li>Ozone safe and ozone friendly </li></ul></ul></ul><ul><ul><ul><li>Universal recycling symbol </li></ul></ul></ul>
    14. 16. Status of FTC’s Green Guides <ul><li>Evaluating whether to revise Green Guides </li></ul><ul><ul><li>Most key players want revisions </li></ul></ul><ul><ul><li>Key areas of concern: </li></ul></ul><ul><ul><ul><li>Need to define “renewable” and “sustainable” </li></ul></ul></ul><ul><ul><ul><li>Update “recycling” definitions </li></ul></ul></ul><ul><ul><ul><li>Seals and labels </li></ul></ul></ul><ul><ul><ul><li>Life-cycle assessments </li></ul></ul></ul><ul><ul><ul><li>Use of “environmentally friendly,” “green,” etc. </li></ul></ul></ul><ul><ul><ul><li>biodegradability </li></ul></ul></ul>
    15. 17. Status of FTC’s Green Guides (cont’d) <ul><li>FTC conducting Green Marketing Consumer Perception Study of environmental marketing claims </li></ul><ul><ul><li>Purpose is to determine what revisions, if any, to make to Guides to reflect changes in consumer perceptions of environmental claims </li></ul></ul><ul><li>Anticipate revisions towards the end of this year </li></ul><ul><ul><li>but may take longer </li></ul></ul><ul><ul><li>FTC has been quiet regarding status and time frame </li></ul></ul>
    16. 19. FTC Enforcement History <ul><li>The FTC brought 37 enforcement actions involving environmental marketing claims between 1990 and 2000 </li></ul><ul><li>Most of the environmental claims were challenged on the basis that the company did not have sufficient substantiation for the claim it made </li></ul><ul><li>No enforcement actions from 2000 until 2009 </li></ul>
    17. 20. FTC’s Recent Enforcement Actions <ul><li>FTC filed two enforcement actions last year </li></ul><ul><li>Degrading the Consumer? </li></ul><ul><ul><li>Kmart, Tender Corp., and Dyna-E International </li></ul></ul><ul><ul><li>Complaint filed in June 2009 </li></ul></ul><ul><ul><li>Disposable plates, moist wipes, and compressed dry towels claimed to be biodegradable </li></ul></ul><ul><li>Bamboozling shoppers? </li></ul><ul><ul><li>Sami Designs, LLC; CSE, Inc.; and Pure Bamboo, LLC; M Group, Inc. </li></ul></ul><ul><ul><li>Complaint filed in August 2009 </li></ul></ul><ul><ul><li>Claimed rayon clothing was from “100% bamboo fibers” </li></ul></ul>
    18. 21. The Lanham Act <ul><li>Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) </li></ul><ul><li>Creates liability for misrepresenting in commercial advertising the “nature, characteristics, qualities or geographic origin” of goods or services </li></ul><ul><li>Only competitors permitted to bring suit under Section 43(a) </li></ul><ul><li>Need to show five things </li></ul><ul><ul><li>Defendant made false statements of fact about its own product </li></ul></ul><ul><ul><li>ads actually deceived or have tendency </li></ul></ul><ul><ul><li>the deception is material in influencing the purchasing decision </li></ul></ul><ul><ul><li>defendant caused falsely advertised goods to enter interstate commerce </li></ul></ul><ul><ul><li>plaintiff is or is likely to be injured from diversion of sales </li></ul></ul><ul><li>Possible remedies include: Injunctive relief; Defendant’s profits; Plaintiff’s damages; Costs; Attorneys’ fees in “exceptional cases” </li></ul><ul><li>Up to treble damages if the court finds such an award would be “just” </li></ul>
    19. 22. State Consumer Protection Statutes <ul><li>Many states have their own consumer protection statutes (“Little FTC Acts”) </li></ul><ul><ul><li>California: </li></ul></ul><ul><ul><ul><li>Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.) </li></ul></ul></ul><ul><ul><ul><li>False Advertising Law (Bus. & Prof. Code § 17500) </li></ul></ul></ul><ul><ul><ul><li>Consumer Legal Remedies Act (Civil Code § 1750 et seq.) </li></ul></ul></ul><ul><ul><li>Missouri: Deceptive Trade Practice Act </li></ul></ul><ul><li>May be enforced by both government and private citizens </li></ul><ul><li>Remedies can include damages, restitution, attorneys’ fees, injunctions, and civil penalties </li></ul><ul><li>Beware of class actions </li></ul><ul><li>Paduano v. American Honda Motor Company, Inc. , 169 Cal. App. 4th 1453 . </li></ul>
    20. 23. Consumer Class Actions <ul><li>Plaintiff’s bar has referred to this as the next “big ticket” issue </li></ul><ul><li>Several recent class actions filed challenging greenmarketing claims </li></ul>
    21. 24. Consumer Class Actions <ul><ul><li>Hill v. Roll Int’l Corp., Case No. 09-48754 (San Francisco Superior Court 2009) (challenges use of “Green Drop” seal of approval label on Fiji Water and statements that “Every Drop is Green”) </li></ul></ul><ul><ul><li>Koh v. SC Johnson & Son, Inc., Case No. 09-00927 (N.D. Cal. 2009) (challenges SC Johnson’s “Greenlist” seal on bottles of Windex and statement that “Greenlist is a rating system that promotes the use of environmentally responsible ingredients.”) </li></ul></ul>
    22. 25. Alternatives to Litigation <ul><li>National Advertising Division of the Council of Better Business Bureaus </li></ul><ul><li>Protects the integrity and credibility of advertising by ensuring that claims are truthful and accurate. </li></ul><ul><li>Cost-effective means of resolving disputes. </li></ul><ul><li>Success Rate: 95% </li></ul>
    23. 27. Apple (Macbooks) NAD Claim #5013 (2009)
    24. 28. Dispoz-O “Enviroware” Products NAD Claim #4990 (2009) “ Enviroware cutlery, straws, hinged containers, plates, bowls and trays are 100% biodegradable and come with a certificate of biodegradability.”
    25. 29. Trademark Issues <ul><li>Trademark = distinctive sign or indicator to the origin of goods (also a brand, mark or logo) </li></ul><ul><li>Trademark owner may commence legal proceedings for trademark infringement to prevent unauthorized use </li></ul><ul><li>Recent cases: </li></ul>
    26. 30. Trademark Issues <ul><li>Trademark application down ~20% in the last 2 years </li></ul><ul><li>However, a continuing boom in eco-oriented marks has created a green-branding gridlock. </li></ul><ul><li>As green and other terms relating to the environment are included in more trademarks, infringement litigation is more likely </li></ul>
    27. 31. Trademark Issues <ul><li>Lessons: </li></ul><ul><ul><li>Conduct searches to validate freedom to operate </li></ul></ul><ul><ul><li>Register distinctive trademarks </li></ul></ul>
    28. 32. Seven “Sins” of Greenwashing <ul><li>Sin of Fibbing – Misleading customers about the actual environmental performance of their products. </li></ul><ul><li>Sin of No Proof – Also known as the sin of “just trust us,” some manufacturers are unable to provide proof of their environmental claims. </li></ul><ul><li>Sin of Irrelevance – Factually correct, but irrelevant, environmental assessments (e.g., “CFC-free”) </li></ul><ul><li>Sin of the Hidden Trade-Off – Focusing on one or two environmental facts, but ignoring other significantly more important environmental concerns. </li></ul>
    29. 33. <ul><li>Worshipping false labels – a product that through words or images gives the impression of third-party endorsement where no such endorsement actually exists; fake labels, in other words. </li></ul>Seven “Sins” of Greenwashing The Seven Sins of Greenwashing report, released 4/15/09, is available at < > <ul><li>Sin of Vagueness – Broad, poorly defined environmental claims (e.g., “100 percent natural”) </li></ul><ul><li>Sin of Lesser of Two Evils – A product can be the most environmentally preferable product in its class, but still be an inappropriate choice (e.g., “organic cigarettes”) </li></ul>
    30. 34. Resources <ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul><ul><li> </li></ul>
    31. 35. <ul><li>Questions? </li></ul>