How Companies Can Make Reliable Green Claims for Products

CEO Insight
CEO Insight

By now it’s clear that sustainable practices are increasingly important to both companies and consumers. However, for brand managers who want to steer clear of perceived greenwashing, actionable guidelines for making green claims that are both effective and defensible remain elusive. With so much confusion about what specific claims mean in the marketplace and uncertainty about the regulatory climate, how can brands be confident that their claims hold up?

A global sweep of websites by the International Consumer Protection Enforcement Network (representing consumer protection authorities from 70 countries) found 40% of green claims made online could be considered misleading. And the past few years have seen an uptick in the number of challenges targeting environmental marketing claims, not only from consumers and NGOs but also from competitors and investors. According to an analysis from the international law firm Alston & Bird, packaging labels, ESG reports, websites, executive statements, and other media have all been targets.

Consumers also are growing more skeptical. A 2021 survey found that most Americans doubt companies that claim to be environmentally friendly, with slightly more than half never or only sometimes believing such a claim, and 45 percent saying they need a third-party validating source.

As companies amp up green product claims to respond to consumer demand, it’s critical to do this in a way that enhances your brand reputation instead of leaving it vulnerable.

FTC Green Guides

The FTC’s Green Guides help brands avoid making claims that could be considered unfair or deceptive under the FTC Act of 1914. The FTC developed the Green Guides with an eye toward “how reasonable consumers likely interpret certain claims.”

While the Green Guides themselves are not binding, the FTC can take action under the FTC Act if a marketer makes an environmental claim inconsistent with the Guides. Recently, the FTC has gone after companies for “Green Promise” and “Eco Assurance” seals, VOC-free claims and certified organic claims, to name a few.

In addition to general environmental benefit claims, the Green Guides address several different types of claims, including compostable, degradable, recyclable, recycled content, free-of and nontoxic claims, as well as carbon offset claims. The FTC is currently drafting an update to the Guides, and the agency has indicated it is considering adding guidance on several terms, including sustainable, sustainability, and organic.

The FTC is not the only entity to hold marketers accountable for false advertising – the National Advertising Division, competitors, and consumers themselves have pursued action against companies for non-toxic, plant-based, and biodegradable claims for cleaning products, personal care products, and trash bags, among other lawsuits.

Rules of Thumb

So how can companies make sure their claims are kosher? By following one overarching rule: Make claims that are specific, qualified, and substantiated. The Green Guides state that, to avoid deceiving consumers, “marketers must identify all express and implied claims that the advertisement reasonably conveys” and “ensure that all reasonable interpretations of their claims are truthful, not misleading, and supported by a reasonable basis before they make the claims.”

In plain speak, a brand’s claims – including product names and images – should identify specific environmental attributes, provide necessary qualifications, and present the supporting data in a place that’s easy for consumers to access.

Adhering to this rule can be tricky because environmental claims are rife with grey areas. In my experience, there are three clear ways brands can avoid the most common greenwashing pitfalls:

1. Stay away from vague, general claims. Terms like eco-friendly, clean, and natural are broad and can be confusing to consumers if they are not qualified. After all, asbestos is ‘natural’ — but that doesn’t mean you want it in your home. These claims are currently unregulated, leaving it up to brands to decide what they mean. However, the Green Guides caution marketers not to make unqualified general environmental benefit claims because “it is highly unlikely that marketers can substantiate all reasonable interpretations of these claims.” If a brand wants to claim its product is eco-friendly, it should explain which specific attributes make it so.

2. Use relative terms. Absolute terms like safe or sustainable are not defensible. Claiming that a product is sustainable, for example, implies that it can be maintained without impacting the environment. While the product may be more sustainable than conventional alternatives or the packaging may be made using sustainably harvested materials, it is highly improbable that the product in its entirety is sustainable. Instead, use relative terms like safer, cleaner or more sustainable, and provide substantiation for the claim on your product label or on a webpage that you point to from your product label.

3. Provide details. Claims that are technically true still can be misleading. For example, if a product states that it is now using “greener packaging than ever before,” an accompanying message should explain how. Would anyone be impressed if the product’s packaging previously contained 8% recycled content and now contains 9%? In this case, the company should provide context on the percentage of weight-reduction achieved with the new packaging, the percentage of recycled content incorporated, or other initiatives that were implemented to make the packaging greener.

For most claims, substantiation is key. The FTC says that substantiating environmental marketing claims “often requires competent and reliable scientific evidence” consisting of “tests, analyses, research, or studies that have been conducted and evaluated in an objective manner by qualified persons and are generally accepted in the profession to yield accurate and reliable results.”

Brands that work with Green Seal often use our third-party certification as their claims substantiation. In fact, we provide a green claims audit for all Green Seal-certified products because we require certified products to conform with Green Guides best practices.

Changes Abroad

Brands with an international presence are keeping an eye on the EU, where the European Commission has begun publishing a package of proposals that aim to make sustainable products the norm. This includes the so-called Green Claims Directive, which establishes common criteria against greenwashing and misleading environmental claims and would make environmental claims and labels reliable, comparable, and verifiable across the EU.

The Green Claims Directive would raise the bar on the EU’s already stringent framework prohibiting misleading claims by introducing detailed requirements for substantiation and communication to consumers.

While global guidance on green marketing is evolving to combat greenwashing, it’s up to companies to act in good faith when making green product claims. However, with the increasing skepticism of green claims from both consumers and regulators, verification from a reputable third party is a clear way to mitigate greenwashing risk and increase confidence in your company’s claims. Thoughtfully considering and verifying product green claims not only guards against litigation and brand risk, but also increases trust in these claims in the marketplace — rewarding leadership and facilitating the sustainability progress we all want.

Doug Gatlin

Doug Gatlin is CEO of Green Seal.