Understanding Green Claims in Advertising: Trends, Legal Challenges and Best Practices

Advanced Media & Technology partner Libby O’Neill provides an insider’s perspective on green claims in advertising. With the anticipated release of the Federal Trade Commission’s (FTC’s) new Green Guides, shifting court opinions and increasing consumer pressure, many companies are facing more questions about the regulatory landscape for green and environmental claims in their advertising. Below, Libby offers an overview of the factors driving the discourse on green claims, common mistakes and legal challenges, and an outlook on the FTC’s Green Guides. She also discusses how businesses can assess risk tolerance and adopt best practices for making claims in the current regulatory environment.

Tell us about your practice and the types of advertising matters you typically handle. 

In my practice, I focus on advertising, marketing and intellectual property matters. I work closely with brands across industries to analyze claims and to address substantiation issues, advise on influencer marketing issues, help advertisers understand and comply with regulatory guidance, and defend and challenge claims before the BBB National Programs, National Advertising Division. 

Given the growing prevalence of green and environmental claims in advertising, what emerging trends have you observed?

The most common green and environmental claims we see are driven by consumer demand. This is often due to customers’ increased education in this space and the resources available among the general public about issues like per- and polyfluoroalkyl substances—more commonly known as PFAS—and chemical compostability. For this reason, consumers are demanding more responsible manufacturing and packaging—and promises related to these practices—which is prompting brands to adopt more sustainability claims and, hopefully the infrastructure and substantiation to back those claims up. Gone are the days when vague claims lacking substantiation might fly under the radar; consumers, the plaintiffs’ bar and regulators all are keeping a keen eye out.

It’s important to remember that we—companies and those they sell to—all are consumers. This means two things: one, more demand for sustainable manufacturing and supply chain processes, but also two, proactive action on brands’ parts, setting goals to align with shareholders’ and employees’ environmental values. 

What are the most common mistakes and associated legal challenges environmental and green claims in advertising present for businesses?

When businesses make environmental and green claims in advertising, there is a range of regulatory and legal criteria that need to be met and that can impact the business’ credibility and compliance. A few of the most common areas we see mistakes and the associated legal issues they can present include:

Broad unsupported claims: Brands sometimes make broad, unsupported claims that sound appealing but lack objective substantiation. Claims should always be clearly defined to limit room for interpretation; what does “clean” really mean? And instead of saying packaging is “green,” a brand might identify specific reduction of water use or carbon dioxide emissions in the packaging-manufacturing process. As always, distinguishing between puffery and substantiated claims is essential.

Supply chain substantiation: Companies must ensure they support their claims throughout the entire supply chain process. For instance, if a brand makes a water-savings claim, it must demonstrate steps that support that claim throughout its supply chain. In complaints, we’ve seen consumer and advocacy groups going deep in the supply chain to scrutinize these claims, so it’s important for brands to be specific about where in the supply chain these claims stem from.

Legislative developments: Brands must stay aware of existing and pending legislation that affects their claims. What was once acceptable may no longer be, and claims must be updated to comply with changing legal standards and practices. 

Third-party endorsements: Using third-party endorsements requires careful vetting. Brands should ensure that the third parties have industry credibility and adhere to meaningful guidelines, and further, the brand should make certain that it can substantiate any implied claims associated with a third-party seal or endorsement.

How have governing bodies such as the FTC responded to green claims in advertising?

The FTC has not yet released new Green Guides, and while FTC representatives have been quick to point out that all the regular standards of requiring robust and narrowly tailored substantiation for any advertising claim remain intact, companies making claims in this space may feel they exist in a place of regulatory uncertainty. The last significant revision to the guides was in 2012—a lifetime ago in the legal life cycle— and current cases illustrate that courts remain divided on the ways to interpret sustainability claims and substantiation for those claims. Without updated guidance, companies must navigate these issues without a clear benchmark.

The new guidelines from the FTC are expected to provide more explicit guidance on ”recyclable” claims, the term “organic,” and use of claims surrounding carbon neutrality or negativity. We also hope the FTC will expand on third-party seals and disclosure practices, including how to disclose partnerships, when to use seals and the vetting process for third parties. 

How is Loeb counseling clients on matters related to environmental and green claims?

We ask questions first: What is a client’s risk tolerance in this space? Are they public or private, mature, or a startup? The kinds of claims they want to make and the way they want to distinguish themselves in a crowded marketplace will help set the stage for us to provide individually tailored advice attuned to the clients’ goals and priorities. In the ever-changing landscape of regulatory guidance, on state and federal levels, companies must exercise caution, particularly with certain hot-button claims. For instance, carbon neutrality claims or goal-setting statements require careful, scientifically backed and measurable substantiation. Assessing risk by medium is also crucial; for example, a social media post, which can be altered or removed if issues arise, is generally less risky compared to national TV spots, which are harder to contain and typically more costly.

Our current guidance includes implementing industry standards and best practices, monitoring how the courts are reacting to certain claims, assessing risk tolerance, and recognizing that claims are now subject to increased scrutiny. Above all, we’re helping clients stay up to date with the latest developments to be more proactive rather than reactive.