WASHINGTON The Federal Trade Commission has a message for marketers seeking to turn green advertising claims into gold: self-regulate or else.
Consumers have become enamored of the idea that they can buy products that harm the environment and still do something good for Mother Earth.
Marketers tout carbon offsets, but what exactly are consumers getting for their money when they purchase them? Do corporations follow through when they say they will plant trees or invest in a wind farm? These questions were at the heart of an FTC workshop Jan. 9, the first in a series that will address green marketing claims.
Last year, consumers and corporations spent more than $54 million on carbon offset credits that were used for tree planting, solar plants, wind farms and other efforts designed to mitigate carbon emissions, according to data presented at the workshop.
The FTC intends to update its environmental advertising guidelines known as the "Green Guides," and not a moment too soon. The last time it did this was in 1998 when terms like "carbon offsets," "sustainability" and "renewable energy" were not in vogue.
Last year, Volkswagen told consumers it would offset the effects of one year's driving by planting trees in a "VW forest" located in the lower Mississippi Valley. Users of Dell printers and computer monitors can buy their own carbon offsets at the company's online store. When consumers purchase plane tickets through Expedia.com, they can also buy carbon offsets to counter the emissions from their flight. And in September, SunChips, Frito-Lay's brand of multigrain snacks, added a designation from the Center for Resource Solutions called a Green-e logo. The label tells consumers that the product offsets its carbon emissions across the full line of SunChips snacks. One of Frito-Lay's goals is to buy renewable energy certificates to match 100 percent of the electricity needed to produce the snacks in the U.S.
What the FTC is worried about is the "heightened potential for deception," as FTC chairwoman Deborah Platt Majoras put it at the workshop. It's in everyone's best interest, consumers and marketers alike, to understand what kinds of marketing claims advertisers can make about the environment that would not be considered false or deceptive.
Despite heightened consumer interest in the environment and global warming, this is not the time for marketers to play in the green marketing arena if they don't understand the game. Since the FTC has not yet defined what marketing claims advertisers can make when it comes to carbon offsets and renewable energy certificates, nobody really knows what the government will consider acceptable.
Consider the advice John Feldman, an advertising lawyer and partner with Reed Smith, gives to marketers: "Marketers who feel that the ability to tout one's greenness is becoming a necessity should definitely take a step back and think about advertising law basics: What does the claim mean from the point of view of the consumer? Does the consumer need to know more in order to avoid a misimpression? Do I have in my file a reasonable basis for making this claim? If marketers forget these basic tenets, they will be vulnerable to an active and interested FTC."
Feldman predicts the following scenario. The FTC will absorb what it heard at the workshop and solicit further comments. Then it will likely issue a report and take some possible enforcement action. "Given the rapid expansion of environmental marketing, I would think the FTC staff will find a worthy target for enforcement before long," he says.
Every marketer rushing to go green should become a target if they fail to explain to consumers what their environmental advertising claims mean. This is not simple stuff. Try answering some of the following questions posed by Arnold & Porter attorneys Randal Shaheen and Amy Mudge in their article on the subject before making your next green claim.
"What do consumers understand is included in a calculation of a company's carbon footprint? Does it include only emissions by a manufacturer in making a particular product? What about the carbon emissions of third-party suppliers ...What are the criteria for a legitimate carbon offset? Does it matter if the offset would have happened anyway or if it may not be permanent? Can an offset include funding research into possible ways to reduce carbon, and, if so, must the tentative nature of the offset be disclosed? Further, what obligations does a company have to investigate the legitimacy of carbon offsets if purchased from a third party?"
The most honest marketer alive seeking to make legitimate environmental claims would be hard-pressed to answer some of these questions. And we haven't even addressed the concept of "water neutrality," whatever that is. Coca-Cola pledged in June to become water neutral.
Congress is also watching. After holding a hearing on the issue in July, Rep. Edward Markey, D-Mass., sent a letter to the FTC urging it "to undertake a public process designed to update the Commission's Guides ... so that consumer confidence in the offset market can be assured."
If marketers can't answer the questions raised in this article, or if they are unable to explain to consumers in simple language how the reduction in greenhouse gases somewhere in the world is achieved when they purchase a carbon offset certificate, then it's time to pipe down.
And if consumers can't distinguish between companies who claim they are green after slapping some recycled packaging on their products, and marketers who are serious about making their entire product lines greener, then it's time to close their wallets and walk away.
Wendy Melillo is an Adweek contributing writer and an assistant professor in the School of Communication at American University. She can be reached at firstname.lastname@example.org.