Loyola University Chicago School of Law, JD 2023
“Soft on You, Softer on the Planet” declares an advertisement for the Icon-Impact Collection from UGG® which debuted this fall in a store near you. Touted as an innovative product with a positive impact on the environment, the newly introduced collection uses reclaimed wool, a sole made of sugarcane, and repurposed plastic from at least two recycled plastic bottles. It’s all part of the brand’s Feel Good initiative, and in partnership with One Tree Planted, UGG® promises to plant one tree for every pair of shoes bought at select UGG® stores and online. It’s also an example of “green marketing,” the practice of appealing to consumers’ preferences for sustainable and eco-friendly products, especially Millennial and Gen Z consumers who are willing to pay a little bit extra for their purchases.
As greater numbers of consumers and investors focus on the impact that their purchasing and investment decisions have on the environment, companies are responding by increasing the amount of information they communicate about their products’ environmental and sustainability benefits. But along with such additional information come some questionable and oftentimes misleading and hard-to-verify claims as well – what is known in the industry as “greenwashing.” The U.S. Federal Trade Commission (FTC) will be taking a look at these potentially deceptive marketing practices when it conducts its scheduled ten-year regulatory review of the Guides for the Use of Environmental Marketing Claims (Green Guides) next year. The Green Guides haven’t been updated since 2012, but with increasing concerns over climate change, carbon footprints and pollution, the time is ripe for the federal government to significantly overhaul its green regulations to keep pace with a changing marketplace.
The history of the Green Guides
Under Section 5 of the Federal Trade Commission Act, enacted in 1914, the FTC is charged with prohibiting “unfair or deceptive acts or practices in or affecting commerce” and promoting truth in advertising. After the FTC brought a series of enforcement actions in the 1970s and 1980s which challenged unsubstantiated claims about products being “biodegradable” and “ozone friendly,” it was decided that a comprehensive regulatory framework was needed. But in an effort to move quickly, the agency settled on issuing interpretive guidelines rather than legislative rules, and as a consequence, the Green Guides are “general statements of policy” and not binding regulations. The Green Guides do give companies valuable guidance regarding appropriate qualifications and disclaimers and the need for environmental claims to be supported by a reasonable basis, i.e. scientific evidence. Nevertheless, the regulatory review that will take place next year is an opportunity to put some teeth into the regulations by formalizing them as binding rules with the force of law. The FTC can accomplish this through a somewhat lengthy and cumbersome rulemaking process that would require advance notice and possibly extensive oral and written testimony. The FTC can also bypass some of the procedural rulemaking requirements if Congress passes a statute that expressly directs the agency to promulgate regulations.
Carbon offsets is a category suitable for clarification or change.
One area that would certainly benefit from increased regulatory standards and oversight is that of carbon offsets. Currently, the system that exists is a patchwork of informal markets and projects differing in quality and effectiveness. Private companies and nonprofits develop various programs, such as planting trees or restoring peatlands, which are designed to reduce carbon in the atmosphere, then calculate the amount of carbon allegedly reduced and issue credits. Third parties certify the credits and the programs themselves, and the credits are purchased by companies to reduce their carbon footprint or help meet their net-zero carbon emissions pledge. Unlike Europe, however, where the markets are regulated and mandatory, in the U.S. the marketplace is a morass of differing approaches and prices, making it difficult for consumers and investors to properly gauge just how effective the projects are in offsetting carbon emissions. Moreover, although the Green Guides recognize that companies will use third-party certifications, companies are still obligated to substantiate all claims by competent and reliable evidence, a difficult task given the largely unregulated nature of the carbon offset markets. In its press release, UGG® also claims that its newly designed Icon-Impact shoe is carbon-neutral, since it uses “low-impact materials with offsets for the small amount of emission they create.” A more robust regulatory framework under a revised set Green Guides would provide more certainty to consumers and companies alike in their efforts to evaluate and substantiate the truth of these types of environmental marketing claims.