04 July 2023
Deceptive “Green Marketing” is in the spotlight in the upcoming update of the US Federal Trade Commission (FTC) marketing guidelines. Sales of consumer-packaged goods in North America carrying sustainable advertising labels rose to an estimated $269 billion as of July 2022 from $248 billion in 2021 according to NielsenIQ. The refreshment of the environmental marketing guidelines has initiated debate amongst America’s biggest consumer goods companies in particular over tighter rules on what can be labelled as sustainable. Nestlé has been one of the most outspoken companies for example, arguing that the framework should remain flexible so that they can be updated as consumer perception of environmental claims changes over time.
We think that the guidelines are currently ambiguous and consequently pose a high risk for greenwashing and consumer deception. Also, they are updated only every 10 years. Since they came out in 1992, there have only been two updates, while it is evident that the discourse on the environment and climate change, terms and acronyms that dominate this space and how consumers behave have changed tremendously. Currently the average consumer cannot fully understand let alone verify “net zero”, “carbon-neutral” or “sustainable” claims that companies make. If the commission votes to approve the FTC as rule-making authority it would empower them to seek civil penalties via the U.S. Department of Justice for each instance a person sees a misleading advertisement.
Another area the FTC is focusing on for the guidelines is recyclability claims in the packaging space. Currently, the guides say that a package can be labelled as recyclable if recycling services are available to 60% of the people where it is sold (whether it ends up recycled or not). When only 5-6% of plastic waste was recycled in the US in 2021, and 40% of people unable to recycle a package despite it being recyclable, it becomes a concerning matter. Companies like L'Oréal, Procter & Gamble and Unilever have commented their support to keep the current 60% threshold and defend that recyclable claims cannot be based on how much their products get recycled. However, what is the point of recyclability if it ends up in landfill? In our view, the manufacturer responsibility needs to be extended to the whole lifecycle of their products – even if they do not have direct control over every aspect of it.
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