FTC Imposes Green-product Labeling Laws

I’m going to tell you a story.

Once upon a time, a deep-green environmental group and one of America’s largest anti-regulatory, builder-advocate trade associations created separate green-building certification programs. Each group cleverly worked to get its programs, which benefit the groups’ members, ANSI approved. Then, as if guided by an invisible hand, municipalities started adopting these standards—sometimes whole-hog—because they didn’t have the expertise (or cash) to develop their own. Then the International Code Council partnered with the builder-advocate trade association to insert aspects of the association’s green program into the nation’s building codes. As a result, the federal government kept quiet, convinced that the private sector was doing a great job.

Meanwhile, the growth of a government product-certification program continued, and—oh, the majesty of the plot!—though it was billed as voluntary, it is de facto required of any serious building-product manufacturer. The program becomes the most successful government environmental program in world history as manufacturers self-impose green regs and pay for testing of their competitors’ products!

Sounds crazy, right? It’s pretty much what has happened when you think about the U.S. Green Building Council, National Association of Home Builders and Energy Star. If only things worked this well in private-sector green-product labeling. Marketers’ claims have been so egregious and industries have been so adverse to meaningful self-regulation that the feds have finally intervened in the form of the Federal Trade Commission, or FTC.

You really can’t blame the feds here. Think about companies, like SC Johnson, which is making a big marketing push around Windex and Shout being Greenlist products—sort of implying that Greenlist is a third-party certification.

Most consumers won’t bother to research that the certification was created by none other than SC Johnson. Greenlist may have temporarily won SC Johnson a few concerned-mom purchasers. In the process, it also won itself a costly class-action lawsuit that is still pending. You may detect the same consumer manipulation with labeling claims, such as “powered by nature,” “inspired by nature” and “eco-friendly.” These labels are everywhere; Ecolabel Index, a global directory of environmental labels and certifications, says there are almost 90 in North America alone.

To stop the manipulation and confusion, FTC has revised its “Guides for the Use of Environmental Marketing Claims,” which were created 12 years ago (light-years by green standards). Marketers now must qualify their claims on the product packaging and limit the claim(s) to specific benefit(s).

The new FTC rules also demand companies disclose whether their green certifications are from true third parties or were created in-house. Companies also must disclose whether a trade association certified their product and whether they are members of that trade association. “Renewable” claims must be specific about material sources, and new rules govern claims of “nontoxic” or “free of.” A manufacturer no longer can claim a process uses “renewable energy” if any part of the product was derived from fossil fuels. Wow! These rules are strict!

Are the new labeling laws welcome? I’d prefer they came from industry sources because industry sources can react more quickly and in a better manner to the market. Consider the American Tree Farm, Community Supported Agriculture, Forest Stewardship Council and Sustainable Forestry Initiative labels. These industry groups collaborated to offer sustainable wood-harvest standards that were subjected to public comment before adoption.

Up until now, the FTC’s reluctance to update the labeling rules did not do the green-building movement any favors. Instead, it only introduced doubt and cynicism about green products among buyers. On the other hand, the inability of manufacturers to collaborate with an honest, long-term strategy has only cost them all more money and turned off some of the consumers who would otherwise have been their biggest advocates.

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