The document summarizes a presentation given by Philip Moffat of Verdant Law on green marketing and the Federal Trade Commission's Green Guides. The presentation provided background on green marketing and "greenwashing," an overview of how green marketing is regulated in the US with a focus on the FTC's Green Guides, and a review of proposed revisions to the Guides. The presentation established principles from the Guides for making environmental marketing claims in a truthful and non-deceptive manner.
1. Green Marketing and the FTC’s “Green
Guides”: A Legal Perspective
_____________ Association
Environment Committee Meeting
January 26, 2011
Philip A. Moffat
pmoffat@verdantlaw.com
202.828.1233
www.verdantlaw.com
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2. Verdant Law
• Verdant is a Washington, DC law firm specializing
in product risk management with a particular
emphasis on sustainability and other
environmental challenges.
• Mr. Moffat is the founder of Verdant and the
author of the Green Chemistry Law Report, a blog
focusing on legal developments, news and events
in chemicals management and products
regulation.
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5. Green Marketing
• Many definitions of “green marketing” available.
– Generally refers to marketing products or services in a manner
intended to communicate their environmental benefits.
– Also called “Environmental Marketing,” “Ecological Marketing,”
and “Eco‐Marketing .”
• Number of environmental marketing claims is on the rise with an
attendant increase in the number of those that are false or
otherwise deceptive.
• According to TerraChoice, a leading environmental marketing
firm considered an expert in the field, green advertising has
increased almost tenfold in the last 20 years and has nearly
tripled since 2006.
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6. Greenwashing
• “Greenwashing” is a term of opprobrium applied
to overstated marketing claims. It’s somewhat in
the eye of the beholder. However, there are key
stakeholders whose opinions matter – customers,
competitors, and regulators.
• TerraChoice defines greenwashing as “the act of
misleading consumers regarding the
environmental practices of a company or the
environmental benefits of a product or service.
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7. “Seven Sins” of Greenwashing
According to TerraChoice, greenwashing consists of:
• The Sin of the Hidden Trade‐Off – suggesting a product is green based on
unreasonably narrow set of attributes while ignoring others
• The Sin of No Proof – lacking substantiation for claim
• The Sin of Vagueness – defining claim so broadly or vaguely that it’s likely to
be misunderstood
• The Sin of Irrelevance – making an environmental claim that may be truthful
but is unimportant or unhelpful
• The Sin of the Lesser of Two Evils – making claims that may be true within the
product category, but that risk distracting from the greater environmental
impacts of the category as a whole
• The Sin of Fibbing – making a false claim
• The Sin Worshiping False Labels – exploiting demand for third‐party
certification with “fake” labels or claims of certification 7
8. Prevalence of Greenwashing
• TerraChoice 2008/9 survey of 2,219 products with green claims
purchased from shelves of North American “big‐box” retailers found
that 98% of products committed one of the sins.
• Widespread greenwashing has come to the attention of Congress.
– June 2009 House Subcommittee on Commerce, Trade, and Consumer
Protection held oversight hearing, titled “It’s Too Easy Being Green: Defining
Fair Green Marketing Practices.”
• Not all instances of greenwashing are violations of law, but there’s
substantial overlap because they both are concerned about deception.
• Goal is compliance with the law while avoiding allegations of
greenwashing.
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10. Guidance and Resources Are Available
• Many non‐governmental resources are available such as:
– Voluntary standards such as the ISO 14000 series on
environmental labels and declarations;
– Best practice documents such as the one from the Asia‐Pacific
Economic Cooperation Committee on Trade & Investment
– Codes of practice such as the one from the Australian Association
of National Advertisers; and
– Consulting assistance from organizations such as UL
Environment’s Environmental Claims Validation service.
• More resources are listed in the back of this presentation.
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11. Guidance and Resources Are Available
• Many governmental resources are available, such as the:
– Guides for the Use of Environmental Marketing Claims ( the
“Green Guides”), 16 C.F.R. Part 260, from the FTC;
– Green Marketing and the Trade Practices Act from the
Australian Competition and Consumer Commission; and
– Guidelines for Making and Assessing Environmental Claims from
the European Commission.
• Again, more resources are provided at the back of the
presentation.
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13. Regulation of Green Marketing in the United States
• Self‐regulatory bodies – e.g., Council of Better Business Bureaus,
National Advertising Division (“NAD”)
– Consumers and competitors can refer cases
– NAD has no authority to impose penalties or enjoin activities, but it can
refer cases to the FTC
• State Attorneys General or Consumer Protection Agencies
– Some laws modeled on Federal Trade Commission Act (“FTC Act”)
– Some laws modeled on Uniform Deceptive Trade Practices Act
• Private parties, including consumers and competitors, pursuing
common law claims or claims under state and federal statutes
• Federal Trade Commission (“FTC”) through the FTC Act
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14. Private Causes of Action
• Consumers and competitors might pursue various
claims:
– Common law fraud, negligent or intentional
misrepresentation;
– Violation of state consumer protection statutes (available
in some states to consumers and/or competitors); and
– Violation of Section 43(a) of the Lanham Act for “false or
misleading description[s] of fact” in commerce. (Note:
Courts are split on availability of consumer action).
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16. FTC Act and the “Green Guides”
• Section 5 of the FTC Act, 15 U.S.C. § 45, authorizes the FTC to
take legal action against “unfair or deceptive” practices in
commerce.
– Section 5 applies to more activities than advertising.
– Doesn’t give FTC the authority to set environmental policy or
standards (e.g., testing protocols.
• FTC published the Green Guides to help advertisers avoid making
unfair or deceptive claims under Section 5.
• Green Guides are non‐binding administrative interpretations of
law.
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17. FTC Act and the “Green Guides”
Because the Green Guides are non‐binding administrative interpretations:
• They don’t preempt federal, state, or local law. Compliance with those
laws will not necessarily preclude FTC enforcement of Section 5.
However, several states, such as Maine, incorporate the Guides into
their laws. (Similarly, compliance with voluntary standards won’t
guarantee compliance.)
• The Guides merely reflect the FTC’s views on how reasonable
consumers likely interpret certain claims. In other words, they are
guidance on how to avoid deceiving consumers.
– Marketers may use alternative approaches to those the FTC suggests if
they satisfy the requirements of Section 5. However, claims made
inconsistent with the Guides will receive greater scrutiny and face
increased risk of enforcement.
– In any enforcement action, the FTC must prove that the challenged act or
practice is unfair or deceptive in violation of Section 5 . 17
18. Scope of the Guides
• Guides apply to claims about the environmental
attributes of a product, package, or service in
connection with the marketing, offering for sale,
or sale of such item or service to individuals,
businesses, or other entities.
• The guides apply to environmental claims in any
marketing medium, whether asserted directly or
by implication.
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19. Principles Established in the Guides
• Guides establish principles to avoid unfair or deceptive
practices. Focus is primarily on preventing deception.
• Deception is not defined in the FTC Act, but FTC has a Policy
Statement on Deception.
• According to the Policy, “a representation, omission, or
practice is deceptive if it is likely to mislead consumers
acting reasonably under the circumstances and is material
to consumers’ decisions.”
– A consumer is acting reasonably if its understanding of a claim is
consistent with a “significant minority” of consumers.
– Link to Policy is available at the back of this presentation.
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20. Principles Established in the Guides
• Marketers must identify all express and implied claims that the
advertisement reasonably conveys, and ensure that all reasonable
interpretations of their claims are truthful, not misleading, and
supported by a reasonable basis. (Evaluate the entire context.)
• For environmental marketing claims, a “reasonable basis” often
requires “competent and reliable scientific evidence”.
– Basically, an objective evaluation process used by a qualified
professional, and generally accepted as accurate and reliable by that
person’s profession, using an amount and quality of information
normally required by standards of relevant scientific fields.
– No “cherry picking” of data, and no “willful blindness” to full body of
available data.
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21. Principles Established in the Guides
• Qualifications and disclosures should be clear, prominent, and
understandable.
• Claim should specify whether it refers to the product, the product’s
packaging, a service, or just to a portion thereof.
• Don’t overstate, directly or by implication, an environmental
attribute or benefit – don’t emphasize negligible benefits either.
• Comparisons should be clear about what’s being compared and
substantiated.
• Bottom line: Tell the truth, don’t overstate your case, substantiate
your claims, be transparent in your choices, and strive for clarity and
specificity in your claims.
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22. History of the Green Guides
• Green Guides initially issued in 1992, and were revised in 1996 and
again in 1998.
• In 2007 and 2008, the FTC requested comments on the Guides and
held a series of public meetings to explore possible revisions in light
of current “green” claims, such as “carbon neutral” & “sustainable.”
• Public meetings addressed:
– carbon offsets and renewable energy certificates;
– green packaging claims; and
– green building and textiles.
• FTC also conducted a “consumer perception” study in 2009 to better
understand how consumers interpret some of the current “green”
claims.
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23. Latest Proposed Revisions
• In October 2010, the FTC released its long‐
awaited proposed revisions for public
comment. 75 Fed. Reg. 63552.
• The public comment period closed on
December 10, 2010.
• FTC received over 300 submissions in
response. ____________ Association filed
comments.
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24. Overview of the Proposal
Revisions to guidance on New guidance on claims
claims already addressed: not currently addressed:
− General environmental benefit − Carbon offsets;
claims; − Made with renewable
− Certifications and seals of materials; and
approval; − Made with renewable
− Degradable; energy.
− Compostable;
− Ozone‐Safe/Ozone‐Friendly;
− Recyclable
− Recycled Content; and
− Free‐of/Non‐Toxic.
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25. Overview of the Proposal
• FTC made no changes, although it kept, the
existing guidance on:
– Source reduction claims; and
– Refillable claims.
• FTC declined to adopt specific guidance on:
– Organic and natural claims;
– Sustainable claims; and
– Life Cycle Assessments (LCAs) as claims or
substantiation of claims.
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27. General Environmental Benefit Claims
• Includes claims such as “environmentally‐friendly,” “green,” etc.
• Marketers should not make unqualified general environmental benefit
claims. It is difficult, if not impossible, to substantiate all express and
implied claims. Current Guides merely discourage their use.
• Qualifications should be clear and prominent, and should limit the
claim to a specific benefit. For example, “Green – Made with Recycled
Materials.”
– Substantiation required for specific benefit used to qualify claim.
– Marketers should ensure the advertisement’s context does not imply
deceptive environmental claims.
– Also, be careful that attribute used for qualification doesn’t imply product
provides a net environmental benefit.
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28. Seals of Approval and Certifications
• Certifications and seals of approval are “endorsements” covered by
the FTC’s Endorsement Guides, 16 CFR Part 255.
– Endorsements must reflect honest opinion of endorser; marketer
remains liable for deception occurring through endorsements.
– Marketer or endorser must have substantiation for all conveyed claims.
– Marketer must disclose “material connection” with endorser (e.g.,
member of association giving the certification). Connection affects
independence of endorsement.
– Environmental endorsements require expertise ‐ qualified experts must
be used and their evaluation must be based on actual exercise of that
expertise.
– Endorsements of an organization must reflect collective judgment of
organization.
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30. Degradable
• For solid waste products other than those destined for landfills,
incinerators, or recycling facilities, the proposal clarifies that the
“reasonably short period of time” for complete decomposition is
no more than one year after customary disposal. If otherwise,
must qualify claim.
• Marketers should not make unqualified degradable claims for
items destined for landfills, incinerators, or recycling facilities
because decomposition will not occur within one year.
• Qualify claims with:
– Product’s ability to decompose in environment of customary
disposal; and
– Rate and extent of degradation.
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31. Compostable
• Product or package must break down (i.e., become mulch) safely and
timely in an appropriate home device or pile, facility or program.
• Proposal clarifies that “timely” means approximately the same time
as the material with which product or package is composted.
• Unqualified claims are deceptive if break down will not occur “timely”
or if appropriate facilities are not available to a substantial majority
of consumers or communities (i.e., 60%)
• Qualifications potentially needed:
– Type of composting device, facility or program;
– Availability of appropriate composting facility or program; and
– Safety, rate, and extent of break down.
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32. Ozone‐Safe/Ozone‐Friendly
• Proposal contains minor updates to examples to reflect
changes in Clean Air Act regulations concerning ozone‐
depleting chemicals.
• No claim if product contains any ozone‐depleting chemical.
• Deceptive to make claim if product contains volatile organic
compounds (VOCs) that may cause smog by contributing to
ground‐level ozone formation.
– Consumer perception evidence suggest this claim likely conveys
that the product is safe for the atmosphere as a whole.
– Query whether appropriate qualification could be made.
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33. Recyclable
• Proposal highlights the three‐tiered analysis, previously contained
only in examples, for disclosing the limited availability of recycling
programs.
– Tier 1 ‐ “Substantial majority” (i.e., 60%) of consumers/communities
have access to recycling facilities — Marketer can make an unqualified
recyclable claim.
– Tier 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). No “positive” qualifications
– i.e., “Check to see if...” is not adequate qualification.
– Tier 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 or provide specific percentages).
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34. Recyclable
• Inconspicuous use of Society of the Plastics
Industry mobius (i.e., chasing arrows with
number in center) on bottom of product or
package is not a recyclable marketing claim and
does not require substantiation.
• Conspicuous use of symbol would be such a claim
that would require appropriate qualification and
substantiation.
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35. Recycled Content
• FTC defines recycled content to include recycled raw material, as well
as used, reconditioned, and re‐manufactured components that have
been recovered or otherwise diverted from the solid waste stream.
• Unqualified claims of recycled content are appropriate if the entire
product or package, excluding minor, incidental components, is made
from recycled material.
• For items that are partially made of recycled material, the marketer
should clearly and prominently qualify the claim to avoid deception
about the amount or percentage, by weight, of recycled content.
• For used, reconditioned, or re‐manufactured components, the
marketer should clearly and prominently qualify the recycled content
claim to avoid deception about the nature of such components.
Consumers frequently do not considered these to be “recycled.”
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36. Recycled Content
• Recycled content claims may distinguish between pre‐consumer
and post‐consumer materials.
• For pre‐consumer claims, marketer must have adequate
substantiation that material was diverted from waste stream.
Consider:
– amount of reprocessing required;
– whether subsequently used in original or different manufacturing process; and
– whether subsequent use in different process is established standard practice,
potentially defeating diversion argument.
• Percentage of recycled content may be based on the annual
weighted average of the recycled content in a product, unless
obvious deception would occur.
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37. Free‐of/Non‐Toxic
Free‐of:
– Proposal expands current guidance advising that even if true,
claims that an item is free‐of a substance may be deceptive if:
• the item has substances that pose the same or similar environmental
risk as the substance not present; or
• the substance has never been associated with the product category.
– Also free‐of claims may be appropriate when item contains a de
minimis amount of a substance. Depends on whether a reasonable
consumer would consider the amount material to purchasing
decision.
– Potential for consumer deception. Some “free‐of” claims may
convey additional environmental claims, including general benefit
or comparative superiority claims. Qualify if so.
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38. Free‐of/Non‐Toxic
Non‐toxic:
– Such claims likely convey that an item is non‐toxic
both for humans and for the environment
generally.
– Cannot rely on compliance with regulation as
substantiation if regulation does not support all
such express and implied claims.
– Qualify claim if substantiation would not
otherwise support all conveyed claims.
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40. Carbon Offsets
• Marketers should have competent and reliable scientific
evidence to support their carbon offset claims, including using
appropriate accounting methods to ensure they are properly
quantifying emission reductions and are not selling those
reductions more than once.
• Marketers should disclose if the offset purchase funds emission
reductions that will not occur for two years or longer.
• Marketers should not advertise a carbon offset if the activity
that forms the basis of the offset is already required by law.
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41. Renewable Materials
• FTC study found large potential for consumer
confusion with this type of claim.
• Proposal would require qualification of all
claims with specific information about the
renewable material (what it is; how it is
sourced; why it is renewable).
• Qualify if the item is not made entirely with
renewable materials (excluding minor,
incidental components).
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42. Renewable Energy
• FTC study found large potential for consumer confusion with
this type of claim.
• Proposal would prohibit unqualified claims if the power used to
manufacture any part of the product was derived from fossil fuels.
• Qualify claim if less than all, or virtually all, of the significant
manufacturing processes were powered with renewable energy or
conventional energy offset by renewable energy certificates
(“RECs”).
• Qualify all renewable energy claims by specifying the source (e.g.,
wind or solar).
• Marketers that generate renewable energy (e.g., by using solar
panels), but sell RECs for all of the renewable energy they generate,
should not represent that they use renewable energy. 42
44. Refillable
• Cannot make an unqualified “refillable” claim,
unless the marketer provides the means for
refilling the package.
• Either provide:
– a system for the collection and refill of the
package, or
– offer for sale a product that consumers can
purchase to refill the original package.
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45. Source Reduction
• Qualify source reduction claims (e.g., reduced
weight, volume, or toxicity) to the extent
necessary to avoid deception about the
amount of the reduction and the basis for any
comparison.
• Be specific about what’s being compared (e.g.,
new product to prior version of product or to
competitor’s product).
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47. Sustainability
• Consumer perception evidence shows no
consensus that term conveys an
environmental meaning – may mean
environmentally beneficial, but may mean
durable, long‐lasting, etc.
• Accordingly, FTC declined to adopt specific
guidance, but noted that if context of
sustainability claim implies environmental
benefits, then those benefits need to be
substantiated.
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48. Life Cycle Analysis
• FTC declined to require Life Cycle Analysis (LCA) as substantiation for
general environmental benefit or other type of claim.
– Too many different methodologies and field is still evolving. If LCA used to
substantiate, would need to meet “competent and reliable” scientific
evidence standard.
– Note, however, that a general benefit claim could imply benefits across
the life cycle, so evaluate, substantiate, and qualify as needed.
• FTC also declined to adopt specific guidance on use of LCA as a general
environmental benefit claim (e.g., “Cradle‐to‐cradle). Too little
information is available about consumer perception of claim.
– However, FTC noted that context of LCA claim could convey a general
benefit claim for which all express and implied attributes would need to
be substantiated.
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50. FTC Enforcement
• In 2009, FTC launched seven enforcement cases after nearly a ten‐
year hiatus, challenging claims of “biodegradability” or use of an
“environmentally‐friendly” manufacturing process. These claims are
addressed in the 1998 (current) version of Guides.
• Once FTC finalizes latest proposal, enforcement should continue at
comparable rate, but large‐scale enforcement initiative not
anticipated in near‐term.
• Overview of typical enforcement process:
– FTC serves complaint with date for administrative hearing;
– After hearing, FTC issues report and order enjoining practices found
deceptive or unfair;
– Defendant can seek modification or withdrawal of the order or appeal
to one of the federal Circuit Courts of Appeal; and
– Violation of order can lead to civil penalties.
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52. Observations and Predictions
• FTC’s considerable efforts to revise Guides indicate Commission is
serious about combating greenwashing.
• However, a large‐scale enforcement initiative seems unlikely in the
near‐term because of the Administration’s concern about the
economy. That said, continued enforcement will occur to appease
Democratic base, especially since little progress is expected on
climate change before next election.
• Private party enforcement and competitor challenges through
organizations such as NAD may rise, however.
• Larger companies are likely to fare better given in‐house expertise,
access to other resources, and greater motivation to protect brand.
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53. Reminders
• Green Guides provide a limited number of examples.
– If your situation is not addressed, carefully review claim
before making it to ensure you have substantiation for all
claims a reasonable consumer might see.
– Consider focus groups if necessary.
• Guides are merely guidance, so deviations are allowed, but
they will be scrutinized. If planning to deviate, may want to
consider focus groups to document claims and document lack
of deception in the event of an FTC enforcement action.
• Bottom line advice: Tell the truth, don’t overstate your case,
substantiate your claims, be transparent in your choices, and
strive for clarity and specificity in your claims.
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55. Statutes and Other Laws
• Section 5 of the FTC Act (unfair competition)
• Lanham Trademark Act
• EU Directive 84/450/EEC (misleading advertising), as amended by
Directive 97/55/EC
• Cal. Bus. & Prof. Code § 17580‐17581 (California Business and
Professions Code, Environmental Representations)
• R.I. Gen. Laws 6‐13.3 (Rhode Island Environmental Marketing Act)
• Mich. Comp. Laws 445.903 (Michigan Consumer Protection Act)
• Ind. Code 24‐5‐17‐1 (Indiana Code, Environmental Marketing Claims)
• Maine Rev. Stat. Tit. 38, s2142 (Maine Revised Statues, Advertising and
Marketing Claims)
(See, ABA Pesticides Committee, Chemical Regulation, and Right‐to‐Know Committee E‐Reference Website Page.)
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56. FTC Resources
• FTC, Guides for the Use of Environmental Marketing Claims
• FTC, Proposed Revisions to Guides for the Use of Environmental Marketing Claims (Federal Register
Notice, October 15, 2010)
• FTC, Summary of Proposed Revisions to Guides for the Use of Environmental Marketing Claims
• FTC, Environmental Marketing Consumer Perception Study, Background Information
• FTC, Complying with the Environmental Marketing Guides
• FTC, Sorting Out Green Advertising Claims
• FTC Workshop, Green Packaging Claims
• FTC, "It's Too Easy Being Green"
• FTC, Environmental Enforcement Cases (1990‐2009)
• FTC Charges Companies with Bambooz‐ling Consumers with False Product Claims (August 11, 2009)
• FTC, Guides Concerning the Use of Endorsements and Testimonials in Advertising
• FTC, Statement on Deception
• FTC, Policy Statement Regarding Advertising Substantiation
(See, ABA Pesticides Committee, Chemical Regulation, and Right‐to‐Know Committee E‐Reference Website Page.)
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57. International (General)
• ISO 14021:1999 Type II Environmental Labels and
Declarations
• ISO 14025:2006 Type III Environmental Declarations
• Asia‐Pacific Economic Cooperation Committee on Trade
& Investment, Best Practices of ISO 14021 (2003)
• The Eco Declaration, Standard ECMA‐370
• UL Environment, Environmental Claims Validation (ECV)
(See, ABA Pesticides Committee, Chemical Regulation, and Right‐to‐Know Committee E‐Reference Website
Page.)
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58. International (Country‐Specific)
• Australian Competition and Consumer Commission, Green Marketing and the Trade Practices Act
• AANA: Environmental Claims In Advertising And Marketing Code
• Australian Competition and Consumer Commission, ACCC Raises Concerns with Woolworths Select
tissue products (March 18, 2008)
• Canadian Standards Authority, Environmental Claims: A Guide for Industry and Advertisers
• Canadian Competition Bureau News
• European Commission, Guidelines for Making and Assessing Environmental Claims
• New Zealand, Code for Environmental Claims
• Ethical and Environmental Marketing Claims: a Guideline from the Nordic Consumer Ombudsmen
• Norwegian Office of Consumer Ombudsman, Use of Environmental Claims in Marketing of Vehicles
• UK Department for Environment Food and Rural Affairs, Green Claims Code for Products
• UK Department for Environmental Food and Rural Affairs, Green Claims Practical Guidance
• The British Code of Advertising, Sales Promotion and Direct Marketing
(See, ABA Pesticides Committee, Chemical Regulation, and Right‐to‐Know Committee E‐Reference Website Page.)
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