Presentation slides - Bren School of Environmental Science

Report
Greenwashing
Green Marketing Goes Too Far – A
Legal Perspective
Bren School of Environmental Science & Management
November 3, 2011 Workshop
Brooks M. Beard - Morrison & Foerster LLP
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©2011 Morrison & Foerster LLP | All Rights Reserved | mofo.com
What Happens When
Presentation Overview
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What is “Greenwashing”?
Enforcement Tools in the United States
International Enforcement
What’s Coming Next?
Avoiding “Greenwashing” Allegations
Questions and Answers
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Premium Paid for “Green” Products
• Recent Mintel report revealed that more than one-third of U.S.
consumers would pay more for environmentally-friendly products
• Result
• increase in marketing campaigns using words such
as “environmentally friendly,” “sustainable,” and
“biodegradable”
• price premiums for such products
• Effect
• increased scrutiny
• increased risk of litigation or enforcement actions
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zero-impactECO-SMART
feedstock
feedstock content
Bioenergy
renewable
sustainability
cradle to grave
environmentally safe
photodegradable
sustainable
cradle to cradle
CARBON OFFSETS
CLEAN ENERGY
greenhouse gases
renewable
eco-friendly
resource
energy intensity
life cycle
alternative fuels
ozonerecycled
naturally derived
environmentally friendly
friendly
environmentally
non-toxic
renewable
compostable
preferable
energy efficient
energy credits
degradable
BIO-BASED
green
purchasing
RENEWABLE biodegradable
carbon neutral
carbon footprint
earth-friendly
environmentally safe
environmental
management
systems (EMS)
recyclable
NATURAL CONTENT
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Definition of Greenwashing
• “Greenwashing” is generally viewed as the use of marketing claims or
statements — whether words, names, seals, or other symbols — that
deceive or mislead consumers as to the environmental benefits or
attributes of a company’s product or service, or, more broadly, as to
the company’s environmental practices as a whole.
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Examples of Greenwashing
• Fluffy Language: Words or terms with no clear meaning
• Ex. “sustainable” or “eco-friendly”
• No Proof: It could be right, but where’s the evidence?
• Suggestive Pictures: Images that indicate an unjustified green impact
• Ex. Flowers blooming from smoke stacks
• Green Products vs. Dirty Company: Such as efficient light bulbs
made in a factory that pollutes rivers
• Best in Class: Declaring you are greener than the rest, even if the
rest are pretty terrible
* The Greenwash Guide, Futerra Sustainability Communications
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U.S. Enforcement Tools
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Federal Trade Commission Act
Lanham Act
State Consumer Protection Statutes
BBB’s National Advertising Division
FTC Enforcement Actions
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FTC Act
• “[U]nfair or deceptive acts or practices in or affecting commerce are
declared unlawful”
(15 U.S.C. § 45(a)(1))
• Is the claim likely to mislead a reasonable consumer?
• Viewed from the consumer’s perspective
• FTC will not attempt to interpret the claim language
• Prohibits ads that are likely to mislead a reasonable consumer
• Was the claim material to the consumer’s decision to buy or use the
product or service?
• Substantiation – competent and reliable evidence
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FTC’s Green Guides
• What are the Green Guides?
• Provide examples of how using particular environmental claims
could conform or run afoul of the FTC Act
• Discourage use of broad unqualified statements such as
environmentally friendly, eco-friendly, green, or sustainable
• Must be able to substantiate claims with “competent and reliable
evidence”
• Guidance document
• Substantial weight by courts
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Status of FTC’s Green Guides
• In the process of revising Green Guides
• draft guidelines have already issued
• Key issues in draft:
• general environmental benefit claims
• certifications and seals
• degradable and compostable claims
• recyclable claims
• renewable claims
• carbon offsets
• sustainability claims
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The Lanham Act
• Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a))
• Creates liability for misrepresenting in commercial
advertising the “nature, characteristics, qualities or
geographic origin” of goods or services
• Only competitors permitted to bring suit under Section
43(a)
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State Consumer Protection Statutes
• Many states have their own consumer protection statutes (“Little FTC
Acts”)
• California:
• Unfair Competition Law (Bus. & Prof. Code § 17200 et seq.)
• False Advertising Law (Bus. & Prof. Code § 17500)
• Consumer Legal Remedies Act (Civil Code § 1750 et seq.)
• May be enforced by both government and private citizens
• Remedies can include damages, restitution, attorneys’ fees,
injunctions, and civil penalties
• Beware of class actions
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• National Advertising Division of the Better Business
Bureau
• Alternative to litigation
• NAD routinely refers cases to FTC
• Self-regulation by advertising industry
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NAD Proceedings — Continued
• Can be used only for review of national advertisements
• Compliance with ruling is voluntary (there is no formal
enforcement mechanism)
• 95% compliance rate
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Seventh Generation Household Cleaning
Products
• Advertiser’s Seventh Generation
claims that its products were “as
gentle on the planet as they are on
people” was puffery
• NAD noted the efficacy and benefit of
the advertiser’s product
• NAD recommended advertiser
discontinue claims linking household
bleach to
• environmental risks; and
• posing potential environmental or
health hazards
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Church & Dwight
(Arm & Hammer Essentials)
• “Harnessing the
Power of Nature”
• More Sensible for the
Environment
• 100% Naturally Derived
Surfactants
• NAD found “natural” claims
unsupported
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Clorox claimed its
“Green Works”
product “cleans
with the power of
Clorox”
NAD recommended discontinuing
this claim to avoid conveying
message that product has
disinfectant capability
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Mythic Paint
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Mythic Paint - Continued
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Involves claims that product is non-toxic, free of carcinogens and volatile
compounds (VOCs), and slogan “Safe for People, Safe for Pets and Safe
for Earth”
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NAD determined that manufacturer had substantiation for claim that
contains no VOCs, toxins, or known carcinogens and for its slogan
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NAD concerned about claims that traditional paints are dangerous and
recommended manufacturer
• discontinue comparative safety claim; and
• modify advertising to avoid message of exaggerated risks of
competitive paint products
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Elanco Animal Health Division
Elanco Animal
Health Division
> award does not support
general claim that product is
environmentally friendly
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Dispoz-O “Enviroware”
“Enviroware” tableware products
“Enviroware cutlery, straws,
hinged containers, plates, bowls
and trays are 100%
biodegradable and come with a
certificate of biodegradability.”
biodegradability claim
unsupported
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Your Examples Of Green Marketing
• Discuss examples of green marketing you brought
• Do they seem overbroad?
• Do they constitute greenwashing?
• Or are they sufficiently focused?
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International Enforcement
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United Kingdom
France
Scandinavian Countries
Canada
Australia
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United Kingdom
• Advertising Standards Authority
• Independent body used by the advertising industry to resolve private disputes
• The number of complaints to the ASA about green claims was four times higher in
2007 than 2006
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United Kingdom —
Continued
• Advertising Standards Authority (cont.)
• ASA’s 2007 Annual Report found:
• “[C]onsumers were most confused about ads for carbon emission claims and
green tariffs as well as green terms like sustainable and food miles”
• “Consumers said they typically did not read the fine print or explanatory text in
ads”
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United Kingdom — Continued
Claim that Shell “use[s its]
waste CO2 to grow flowers”
and its “waste sulphur to
make super-strong concrete”
MISLEADING because only
small amount of waste CO2
used to grow flowers and only
small amount of sulphur used
to make concrete.
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United Kingdom — Continued
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United Kingdom — Continued
ASA found that there was not yet
an accepted definition for
“sustainable” and disagreement
exists regarding what constitutes
“sustainable”
ASA evaluated data relating to
cotton production in the US
ASA concluded that:
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“the meaning of the term
‘sustainable’ in the CCI ad was
likely to be ambiguous and
unclear to consumers[;]” and
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“CCI had not justified the claim”
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France
• Charter of Commitment and Objectives for
Eco-Responsible Advertising
• led by advertising professionals
• can impose fines and call for the withdrawal of offending material
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France — Continued
• Advertisers should not make claims that are unsubstantiated, use
exaggerated language, overstate the environmental benefit, or give
the impression that the product has qualities other than is actually the
case.
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Scandinavian Countries
• Joint guidelines for ethical and environmental marketing
claims
• Claims must be clear, indicate whether they apply to the
product or the packaging, verifiable, and substantiated by
scientific data
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Scandinavian Countries — Continued
• Claims must also be accurate and balanced, and may not
exaggerate a product’s positive impact on the
environment
• Enforced against car manufacturers to prohibit claims that
cars are “green,” “clean,” or “environmentally friendly”
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Scandinavian Countries—Continued
• Norwegian senior government official has stated:
• “If someone says their car is more ‘green’ or
‘environmentally friendly’ than others then they would
have to be able to document it in every aspect from
production, to emissions, to energy use, to recycling.”
--Alister Doyle, “Norway Says Cars Neither Green Nor Clean”
(Sept. 6, 2007), available at
www.reuters.com/article/email/idUSL0671323420070906
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Canada
• Recent guidelines issued jointly by the Canadian Competition Bureau
and Canadian Standards Authority
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Canada — Continued
• The core principle of the Guide is that businesses should only make
claims that are substantiated and verified.
• Substantiation means the existence and availability of supporting information for
environmental claims
• Verification means the accuracy or reliability of such information
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Canada — Continued
• Terms such as “green”, “environmentally friendly”, “all natural”,
“environmentally safe” and “eco” are discouraged because they do
not convey a precise or specific meaning to consumers and are
difficult to effectively substantiate.
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Canada — Continued
• No claim of “sustainability” should be made because the concepts
involved in sustainability are complex and under study.
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Canada — Continued
• Substance “free” claims need to be literally true and cannot convey a
general impression that is false or misleading (e.g., a product
claiming that it is free of a certain chemical and is safe for the
environment but fails to disclose that it contains a different harmful
chemical could be considered false or misleading).
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Canada — Continued
• Claims should take into consideration all relevant aspects of the
product life cycle.
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Australia
• Australian Competition and Consumer Commission recently
released: “Green Marketing and the Trade Practices Act”
• Guidelines for compliance with Trade Practices Act
• Penalties under the Act:
• Fines up to $1.1 million for companies and $220,000 for individuals
• Injunctive relief
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Australia — Continued
• Claims must be specific
and qualified (e.g., “safe
for the environment” is
not specific)
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• Claims must only be
made for a real benefit
(e.g., “CFC free” has no
real benefit because use
of CFCs is prohibited in
almost all aerosols)
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Australia — Continued
• Claims must not overstate a benefit (e.g., “now 50% more
recycled content” is overstated if previously contained
only 1% recycled content)
• Claims should consider whole product
• Claims should make clear whether claimed benefit refers to
packaging or content
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European Union’s Eco-Label
• Voluntary labeling
program
• The label is awarded
to goods and services
that are “genuinely a
better choice for the
environment,” based
on criteria established
by the EU
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Group Exercise
• Select a product or service for which you want to tout environmental
attributes through advertising
• existing product or service
• fictional product or service
• Consider what environmental attributes you can tout
• Create ad or label copy that includes the environmental claim
• 20 minutes, then we will discuss
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WHAT’S COMING NEXT?
• ... more enforcement!
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FTC Enforcement History
• The FTC brought 37 enforcement actions involving environmental
marketing claims between 1990 and 2000
• Most of the environmental claims were challenged on the basis
that the company did not have sufficient substantiation for the
claim it made
• No enforcement actions from 2000 until 2009
• In June 2008, FTC Commissioner Rosch stated there have been
no recent enforcement actions because:
• The industry has been abiding by the Green Guides; and
• Private enforcement under the Lanham Act and self-regulation have
developed into effective alternative enforcement mechanisms
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Recent FTC Enforcement Actions
• Under the Federal Trade Commission Act, “unfair or
deceptive acts or practices in or affecting commerce are
declared unlawful” (15 U.S.C. § 45(a)(1))
• 2009 saw first series of FTC enforcement actions for
green claims in a decade
• biodegradability claims
• bamboo fiber claims
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Biodegradability Actions
• FTC viewed biodegradability claims as false or
misleading because products did not biodegrade under
normal disposal circumstances
• Can only make such claims if:
• supported by competent and reliable
scientific evidence
• tested under normal disposal
circumstances for product
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Bamboo Fiber Actions
• Labels and advertisements claimed products were made
of bamboo fibers, but they were really made of rayon
• FTC also took issue with claims that products were
• manufactured using an environmentally
friendly process
• contained the natural antimicrobial properties
of bamboo
• biodegradable
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Increased Enforcement Action at State Level
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State Attorneys General
District Attorneys
Regulatory Agencies
New Legislation
Consumer Class Actions
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State of California Action
• California Attorney General going after “biodegradability”
claims on plastic water bottles
• lawsuit filed October 26, 2011
• referred to as “first-of-its-kind ‘greenwashing’ lawsuit”
• claim: bottles are “100 percent biodegradable and
recyclable”
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California Restricts Claims On Plastic Bags
• AB1972 prohibits the sale of plastic bags and food and beverage
containers that are labeled “biodegradable” or “degradable” until the
legislature defines the terms
• Prohibits labeling a product as “compostable” or “marine degradable”
unless the manufacturer can substantiate their product meets a
specific ASTM standard
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California Environmental Representations Law
• California Business and Professions Code §17580-17581
• Under this law, marketers utilizing terms such as "environmental
choice," "ecologically friendly," "earth friendly,“ "environmentally
friendly," "ecologically sound," "environmentally sound,"
"environmentally safe,“ "ecologically safe," "environmentally lite,"
"green product," or any other like term, shall maintain documentation
supporting the validity of the representation
• Provide to requesting public
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Consumer Class Actions
• Plaintiff’s bar has referred to this as the next “big ticket” issue
• Several recent class actions filed challenging greenmarketing claims
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S.C. Johnson “Greenlist” Litigation
• Two nearly identical class actions regarding S.C.
Johnson’s “Greenlist” label on its Windex® and Shout®
products
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S.C. Johnson “Greenlist” Litigation Cont.
• Petlack v. S.C. Johnson & Son, Inc.
(E.D. Wis., filed Sept. 29, 2008)
• Plaintiff alleged Windex®
“Greenlist” label is deceptive
because it conveys that:
• Windex® is “environmentally friendly”
• Windex® has “been subjected to a neutral,
third-party’s testing regime”
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S.C. Johnson “Greenlist” Litigation Cont.
• Koh v. S.C. Johnson & Son, Inc.
(N.D. Cal., filed March 2, 2009)
• Plaintiff alleged Windex®
and Shout® “Greenlist” labels
are deceptive
• Plaintiff would not have bought
Greenlist-labeled products at
premium price if he had known that
Greenlist was a label applied by S.C.
Johnson and not a third party
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Fiji Water Litigation
• Hill v. Roll Int’l Corp.
(S.F. Superior Court, filed April 20, 2009)
• Plaintiff alleged Fiji Water’s label was false
and misleading because:
• “misrepresented . . . to
consumers that Fiji Water is an
environmentally sound product.”
• contained a Green Drop
“seal of approval”
• included the word “FijiGreen”
• used the phrase
“Every Drop is Green”
• Plaintiff alleged that the labels trick consumers
into paying more for a product that is not
actually environmentally superior
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How to Avoid
Greenwashing Accusations?
• Pick the products or services you promote on green grounds with
care
• Be specific with word choices
• Be specific about what part of your product or packaging is green
• Substantiate, substantiate, substantiate
• Do not overstate the benefit
• Don’t forget that images can give misleading impressions
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Can You Make a Green Claim?
• Conduct a Life Cycle Examination
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Natural resources
Manufacturing process
Packaging
Transportation
Distribution chain
Consumer Use
Recycling and waste stream
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Can You Make a Green Claim? - Continued
• Determine Your Marketing Objective
• Product Claim?
• Packaging Claim?
• Company Claim?
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Effective Messaging
• Establish Credibility
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Have the facts and figures ready to back-up your green claim
Message your green claim credibly
Make certain your green claim is relevant to what your customers value
Differentiation: Can you market yourself so that your customers can identify what
you do as green that is unique to you or your products?
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Dealing with Competitors
• Are they making misleading green claims?
• “Cease and desist” letter
• File a complaint with the appropriate agency
• Lawsuit (only if necessary)
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Dealing with Competitors - Continued
• Are you doing better than they are?
• Comparative advertising
• “Our product is 25% more energy efficient than our leading competitors”
• “ Unlike our competitors, we use 100% recyclable packaging”
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...
“Sorry, Harold, but I’m reducing our carbon footprint.”
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What Are Companies Doing?
• Patagonia
• The Footprint Chronicles
• http://www.patagonia.com/web/us/footprint/index.jsp
• Timberland
• Green Index Rating
• http://responsibility.timberland.com/?lang=en
• Walmart
• Sustainability Index
• http://walmartstores.com/Sustainability/9292.aspx
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Questions?
• Have more questions?
• Brooks Beard, Morrison & Foerster LLP
• [email protected]
• (415) 268-7339
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• SF-3062945
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