Where Should the Feds Draw the Line on Green Marketing Claims?


We’re a little past the Wild West years of green marketing for sectors like carbon offsets, renewable energy, auto fuels and green building, but the sheriffs — the federal government and privately run certification programs — still have plenty of work to do. That was the gist of much of the testimony at a hearing entitled “It’s Too Easy Being Green” that was held today by the House subcommittee on commerce, trade and consumer protection. The title offers a concise summary of subcommittee leaders’ ideas about environmentally-themed marketing claims and suggests that the rules and enforcement for these claims could get significantly tougher in coming years.

Depending on how new rules are structured, the changes could also provide a boost for startups that fall on the greener end of the spectrum in these sectors, as well as those working on tools for informing consumers or monitoring and measuring the environmental impact of companies’ operations.

“In the past few years, there has been a virtual tsunami of environmental marketing,” said James Kohm, associate director of the Bureau of Consumer Protection’s enforcement division at the Federal Trade Commission, in his prepared testimony this morning. Unchecked, this marketing blurs the lines between innovations that actually do improve energy efficiency and reduce greenhouse gas emissions, for example, and those that don’t — preventing the real advances from taking off as much as they should. As he explained:

Competition based on green claims drives businesses to greater innovation, which ultimately benefits consumers by increasing the availability of the types of green products and services they desire. For the marketplace to thrive, however, companies must compete on the basis of legitimate advertising claims and consumers must be able to rely on those claims.

Kohm said the FTC tried to collect information from consumers about their perception and understanding of green claims during workshops held back in November 2007, but didn’t receive many comments. “Without this data,” Kohm said, “the Commission would face the difficult choice of either providing guidance that might inadvertently chill otherwise useful green claims or forgoing valuable guidance altogether.” So now, nearly a year and a half later, the agency is playing catch-up. It’s conducting its own study of consumer understanding of green marketing claims and expects to complete analysis of the data later this year.

UC Berkeley professor Dara O’Rourke, founder of the product rating web site GoodGuide, who also testified at today’s hearing, agreed with Kohm that confusion about green marketing claims “undercuts the market for truly greener products.” He thinks there’s a need for the federal government to take action beyond the FTC, and he called for Congress to “strengthen and expand disclosure rules that undergird product claims.” With today’s technology, he said, transparency should be a legal requirement:

[R]ecent advances in scientific measurement processes and information systems make it possible for firms and government agencies to monitor, measure, and communicate more precise information on the environmental, health, and social impacts of products and their supply chains. Put simply, there is no excuse now for not providing much higher-quality information to the public on the impacts and performance of products and companies.

Ultimately, O’Rourke wants to see the FTC and Congress teaming up to mandate full ingredient disclosure (either on product labels or on company web sites), country- and factory-of-origin information, a fully traceable supply chain and disclosure of a product’s total lifecycle impact (from the raw materials stage through manufacturing, use and disposal).

Like other companies working on systems for compiling and analyzing environmental data in global supply chains (including startups, such as RockBlocks and giants like SAP (s SAP), IBM (s IBM) and Microsoft (s MSFT)) O’Rourke’s GoodGuide has a significant stake in this debate — tougher disclosure rules could help beef up demand for this kind of service. Plus, as we noted back in September, when Good Guide first launched, and earlier this year when it raised $3.73 million to help it scale up, the site’s success at earning consumers’ trust in its product ratings will take time — and depends as much on marketing and outreach as on actual practices.

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