Eco-friendly labels, such as “green”, “eco-friendly, and “sustainable,” can be a powerful marketing tools, especially as the demand for environmentally friendly products continues to rise. While these labels are a great way to communicate environmental benefits to consumers, they also come with strict regulations, and improper use can lead to legal liability.
In 2022, two large big-box retailers faced penalties of $2.5 million and $3 million, respectively, for making deceptive environmental claims about “bamboo” textiles. The companies marketed these products as being made with “eco-friendly” processes, when in reality, converting bamboo into rayon requires toxic chemicals and results in harmful pollution.
But beyond the legal risks, mislabeling can also damage a brand’s reputation. Consumers are increasingly aware of “greenwashing”—the practice of making misleading environmental claims—and are just as passionate about holding companies accountable as they are about supporting truly sustainable products.
The FTC lays provides guidelines for companies to abide by when making environmental claims in its “Guides for the use of Environmental Marketing Claims” (“Green Guides”). However, in 2022, the FTC announced plans to update these guidelines, though a revised version has yet to be released. In the meantime, companies can follow these general tips to avoid misleading claims:
Avoid Overgeneralizations
Section 5 of the FTC Act, 15 U.S.C 55 prohibits unfair or deceptive marketing claims. Companies should ensure all environmental claims, express or implied, are not deceptive. Even reasonable interpretations of claims need to be supported.
Using broad labels like “eco-friendly” or “green” without context can viewed as misleading. If using these terms, businesses should clarify exactly what they mean by providing specific, substantiated information. For example, instead of simply labeling a product as “eco-friendly,” a company should explain whether this refers to sustainably sourced materials, reduced carbon emissions in production, recyclability or another verifiable environmental benefit.
Make Sure Your Claims Can Be Substantiated
The FTC requires companies to have a reasonable basis for their claims, backed by credible scientific evidence when necessary. Without proper substantiation, even well-intended marketing can be considered deceptive. For example, a brand promotes new hiking gear made with “biodegradable” materials that are widely known to be biodegradable. However, the brand has not conducted any proper testing to very if the gear can actually break down under real-world conditions without releasing harmful chemicals. This may be viewed as deceptive because it implies that the gear can be broken down in a natural and environmentally friendly way, but the company cannot substantiate this claim with any credible scientific evidence.
Pay Attention to Changes in the Consumer Protection Space
Environmental marketing regulations and consumer expectations are constantly evolving. The FTC’s Green Guides are under review, and new federal, state or international regulations may introduce stricter requirements for sustainability claims. Companies should stay informed about updates to FTC guidelines, state laws and other federal regulations to ensure compliance.
In addition to FTC oversight, state laws and other federal regulations like those from U.S. Department of Agriculture may impose additional requirements on environmental marketing claims. Some states, like California, have stricter definitions for terms like “biodegradable” or “decomposable,” and failing to comply can result in penalties or legal challenges.
Eco-friendly marketing can be a valuable way to connect with consumers who prioritize sustainability, but it’s important for companies to ensure their claims are clear, accurate and well-supported.
Amy Zhao contributed to this client alert.
This document is intended to provide you with general information regarding laws and regulations related to eco-friendly marketing. The contents of this document are not intended to provide specific legal advice. If you have any questions about the contents of this document or if you need legal advice as to an issue, please contact the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication may be considered advertising in some jurisdictions. The information in this article is accurate as of the publication date. Because the law in this area is changing rapidly, and insights are not automatically updated, continued accuracy cannot be guaranteed.