1. BACKGROUND

A. Scope of Guides

The Guides for the Use of Environmental Marketing Claims or "guides" were adopted by the Commission on July 28, 1992, and published in the Federal Register on August 13, 1992 (57 FR 36,363 (1992)). Like other industry guides issued by the Commission, the Environmental Marketing Guides "are administrative interpretations of laws administered by the Commission for the guidance of the public in conducting its affairs in conformity with legal requirements. They provide the basis for voluntary and simultaneous abandonment of unlawful practices by members of industry." 16 CFR 1.5. Conduct inconsistent with the guides may result in corrective action by the Commission if this conduct is found to be in violation of applicable statutory provisions. The Commission promulgates industry guides "when it appears to the Commission that guidance as to the legal requirements applicable to particular practices would be beneficial in the public interest and would serve to bring about more widespread and equitable observance of laws administered by the Commission." 16 CFR 1.6.

The Environmental Marketing Guides indicate how the FTC will apply Section 5 of the Federal Trade Commission Act ("FTC Act") in the area of environmental marketing claims.¹ Section 5 of the FTC Act prohibits unfair or deceptive advertising claims. The guides apply to all forms of marketing of products to the public, whether through labels, package inserts, or promotional materials.

The guides reiterate Commission policy regarding how Section 5 applies to advertising claims generally, as enunciated in the Commission's Policy Statement on Deception,² and its Policy Statement on the Advertising Substantiation Doctrine.³ They outline four general principles that apply to all environmental marketing claims: i.e., that qualifications and disclosures should be sufficiently clear and prominent to prevent deception; that claims should make clear whether they apply to the product, the package or a component of either; that claims should not overstate an environmental attribute or benefit, expressly or by implication; and that comparative claims should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception.

In addition, the guides address eight specific categories of environmental claims: general environmental benefit claims, such as "environmentally friendly"; "degradable" claims; "compostable" claims; "recyclable" claims; "recycled content" claims; "source reduction" claims; "refillable" claims; and "ozone safe"/"ozone friendly" claims. Each guide describes the basic elements necessary to substantiate the claim, including suggested qualifications that may be used to avoid deception. In addition, each guide is followed by several examples that illustrate different uses of the particular term that do and do not comport with the guides. In many of the examples, one or more options are presented for qualifying a claim. The guides state that these options are intended to provide a "safe harbor" for marketers who want certainty about how to make environmental claims, but that they do not represent the only permissible approaches to qualifying a claim.

B. General Areas of Interest for FTC Review

The guides provide that three years after adoption, the Commission "will seek public comment on whether and how the guides need to be modified in light of ensuing developments."

As part of this three-year review of the guides, the Commission is seeking comment on a number of general issues relating to the guides' efficacy and the need, if any, to revise or update the guides. The Commission is also seeking comment on a number of specific issues related to particular environmental claims addressed by the guides.

The first issue of general interest to the Commission is whether and to what extent any changes in consumer perceptions related to environmental marketing may warrant revisions to the guides. The Commission believes that this three-year review is important to ensure that the guides are responsive to any changes over time, both in consumer knowledge and awareness of environmental issues and consumer perception of specific claims. On this question, the Commission is seeking to obtain specific consumer survey evidence and consumer perception data addressing consumer understanding of environmental claims as well as the efficacy of various approaches suggested in the current guides for qualifying such claims.

Second, the Commission is generally interested in whether and to what extent new developments in environmental technology may need to be taken into account. The Commission recognized in originally issuing its guides that the science and technology in the environmental area was constantly changing, and that new developments, for example, in the areas of recycling capabilities and composting, might affect the accuracy of environmental claims. This concern about evolving technology was one of the principal reasons the Commission chose to reexamine the guides three years after their issuance.

Third, the Commission seeks to evaluate the impact of the guides on environmental marketing and is seeking to obtain information about what effect the guides have had on the prevalence and accuracy of various environmental claims and whether new environmental claims have emerged that should be addressed by the guides. As it indicated in its original notice on environmental marketing claims, the Commission is concerned both that its guides not inadvertently encourage misleading claims and that they do not chill truthful, non-misleading claims.⁴ The Commission has some data to suggest that certain types of claims, such as recycled content claims, are being more frequently qualified and that other claims that would likely be found deceptive under the guides, such as degradable claims for products that are typically disposed in landfills, have become extremely rare. These data also suggest that the total number of environmental claims, at least as measured on a wide range of supermarket products, has not diminished.⁵

A fourth question of general interest to the Commission is the interaction of its guides with other regulation of environmental marketing at the federal, state and local level. The Commission is seeking comment on how federal, state and local laws and regulations governing environmental marketing relate to the guidance provided by the Commission.

The Commission has posed below a number of questions intended to focus comments on these areas of general interest in evaluating the guides. There are, in addition, a few specific issues that have come to the Commission's attention relating to particular environmental claims. For example, the Commission has, on occasion, received informal input on the efficacy of its guidance on specific claims as well as requests for clarification through additional examples to the guides. The questions included in this notice, therefore, also address a number of claim-specific issues. The inclusion of such issues in this notice is to facilitate comment and the inclusion or exclusion of any issue should not be interpreted as an indication of the Commission's intent to make any specific modifications to the guides.

The Commission requests that commenters address any or all of these questions, focusing on the areas in which the commenter has particular expertise. The Commission also requests that responses to its questions be as specific as possible, include a reference to the question being answered, and refer to empirical data wherever available and appropriate.

C. Empirical Evidence on Consumer Perception and Marketing Trends

Since the guides were issued, the Commission has received some empirical evidence both on marketing trends in the environmental area and on consumer perception of certain marketing claims. The Commission believes that this evidence may provide valuable information on the impact of its guides on the prevalence and accuracy of environmental marketing claims, as well as suggesting certain specific areas where further clarification of the guides may be appropriate to prevent deception.

To aid the comment process, therefore, the Commission is placing on the public record several surveys. The first is an "audit" tracking environmental marketing claims in the marketplace since the issuance of the guides, conducted by Robert N. Mayer, Jason Gray-Lee and Debra L. Scammon of the University of Utah and Brenda J. Cude of the University of Illinois ("Utah Tracking Study"). The audit was performed on brands in sixteen supermarket product categories every six months, beginning in September 1992, with the most recent occurring in September 1994. Auditors gathered data from supermarkets in five geographically dispersed locations throughout the country. The claim categories tracked in the study are recycled content, recyclability, source reduction, degradability, toxicity, effect on ozone, general environmental benefit claims, third party certification claims, and "green" brand names containing words like "enviro," "eco" and "natural."

In addition, the Commission is placing on the public record consumer surveys examining consumers' perceptions of various environmental claims. The first survey was conducted for the Commission in January 1993 ("FTC survey"). This mall intercept survey of 480 consumers tested their perception of several environmental claims on aerosol products including claims that the products are: "Environmentally Friendly," "Environmentally Friendly -- Will Not Harm the Ozone Layer," "Ozone Friendly," and "No CFCs." The second series of surveys was conducted by the Council on Packaging in the Environment (COPE) in March 1993, September 1993, and December 1994 ("COPE surveys"). These omnibus, nationwide telephone surveys have included questions testing consumer perception of various kinds of "recyclable" claims, consumers' beliefs regarding the availability of recycling programs in their community, and consumer understanding of the term "non-toxic." Finally, the Commission is placing on the public record a survey conducted by the Paper Recycling Coalition testing consumer understanding and perception of recycled content claims and the chasing arrows symbol, as well as consumer understanding of the term "post consumer." ("PRC Survey"). The PRC survey was conducted at three geographically dispersed malls in March 1995.

The Commission is seeking comment on these surveys and also requests that commenters provide any additional empirical evidence available to them bearing on the issues raised by these surveys. The surveys are available for inspection and copying at the Federal Trade Commission, 6th and Pennsylvania Avenue, N.W., Washington, D.C., Room 130.

D. Commission Enforcement Actions

Since the adoption of the guides, the Commission has continued to enforce its statutory mandate to prohibit false and misleading claims through a case-by-case approach to environmental claims. In the past three years, the Commission has entered into twenty-two consent orders with a variety of companies and individuals, settling charges that they made false and/or unsubstantiated environmental claims about their products. The advertising claims challenged in these cases include "environmentally safe," "recyclable," "recycled," "ozone friendly," "degradable," "recyclable via municipal composting," "practically non-toxic," and "chlorine-free process." The Commission is seeking comment on whether there are principles in these cases which are appropriate for incorporation into the guides. These consent agreements are available for inspection and copying at the Federal Trade Commission, 6th and Pennsylvania Avenue, N.W., Washington, D.C., Room 130.

Footnotes

¹ 15 U.S.C. 45

² Federal Trade Commission Policy Statement on Deception, appended to Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984).

³ Federal Trade Commission Policy Statement Regarding Advertising Substantiation, appended to Thompson Medical Co., 104 F.T.C. 648 (1984).

⁴ Petitions for Environmental Marketing and Advertising Guides; Public Hearings, 56 FR 24,968 (May 31, 1991).

⁵ See discussion of Utah Tracking Study, infra.

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