Volume 9, Issue 9 - October 2008

Shady Practices

FTC Explores how to Put an End to Untrue Green Claims
By Tara Taffera

When members of the building industry met in July as part of a public workshop hosted by the Federal Trade Commission (FTC) to examine green claims in the building and textiles industry, one fact was certain: many companies are making general “green” claims with little or no basis behind them.

The workshop was part of the FTC’s review of its Guide to Environmental Marketing Claims, also known as the “Green Guides.” It was the third one to examine developments in environmental claims for  building products, buildings and textiles, along with consumer perceptions of those claims. The FTC’s goal was to provide an opportunity for interested parties to study green textile and building claims. Discussion topics included consumer perceptions of environmental claims for building and textile products; the state of substantiation for green building and textile claims; and the need for additional or updated FTC guidance in these areas.

Some similar themes were voiced by panelists in many of the sessions: how to fit single attributes of a product into a whole system, such as a home or a building; the issue of metrics— how to gauge and measure what a label says, and how to compare the different programs in the marketplace; and how the industry can implement life cycle analysis in place of the broad sweeping claims that are made currently.

Different Programs/
Different Viewpoints In one of the sessions, “Overview of Green Claims for Building Products,” Corey Brinkema, president of the Forest Stewardship Council and Rick L. Cantrell, vice president and chief operating officer of the Sustainable Forestry Initiativegave an overview of their programs. Cantrell brought up the topic of lifecycle analysis, a frequent theme throughout the workshop.

“We believe in life-cycle analysis and the value that it can bring,” he said.

The two speakers noted the differences in their programs, such as the fact that the National Association of Home Builders (NAHB) recognizes SFI in its Green Building program as does Green Globes. The USGBC’s LEED program, however, only recognizes FSC-certified products. In another session, representatives of the various green building programs had an opportunity to give an overview of their programs, and again, it was easy to note that there are notable differences among them. The challenge for the FTC is conveying these different programs to the homeowner and what each label means.

The session, “Framing It Up -
Consumer Protection Issues Regarding Green Building Certifications” included the following panelists: Michelle Moore, senior vice president of policy and public affairs at the U.S. Green Building Council; Erin Shaffer, consultant to the Green Building Initiative; Carlos Martín, assistant staff vice president at the NAHB, and Sam Rashkin, manager for the Environmental Protection Agency’s ENERGY STAR® for Homes program.

“Much guidance is needed on green building claims … to substantiate benefits and performance claims,” said Martin.

The moderator of the session, Robin Rosen Spector of the FTC’s Division of Enforcement, pushed panelists of what specific things the panelists would like to see in the updated Green Guides.

Rashkin said the challenge for the FTC comes down to metrics and how to gauge whether a label meets the criteria defined on the label. He also mentioned how it is difficult to compare the different systems.

He did take a minute to point out that the ENERGY STAR Homes system is very easy to understand, though. “Compared to green building programs that have tiers, etc., with ENERGY STAR Homes, either you are [efficient] or you aren’t,” he said.

He said an ENERGY STAR Home controls key elements of a home including airflow, moisture flow and thermal flow. He also spoke specifically to the use of low-E windows.

“You have to have advanced windows appropriate for the climate,” he said.

But since there are a variety of programs in existence, Rashkin said that the best thing the FTC can do is provide guidance about the various green labels.

“In one system, ten points means a lot while in another it means very little,” he said, as an example of the variances between programs.

FTC: Here to Help What may have been the most interesting and valuable session of the day was the closing session titled, “Roundtable on Consumer Protection Challenges and the Need for FTC Guidance.” Panelists included Allen Blakey, vice president of industry and government affairs for the Vinyl Institute; Christine Chase, Green Seal; John Girman, senior science advisor for the Environmental Protection Agency’s Indoor Environments Division; Sophia Greenbaum, executive director of the Sustainable Buildings Industry Council; Thomas R. Reardon, executive director of The Business and Institutional Furniture Manufacturer’s Association; and John Spears of the Sustainable Design Group.

Again, the topic of metrics and tying different components into a finished system was discussed. “When a consumer buys a home, he buys a system. When [consumers] go to Home Depot, they buy components. There has to be a way to differentiate this,” said Reardon.

“Some companies say ‘If it’s got some recycled content, it’s green. If it’s got some bamboo in it, it’s green.’ We have to figure out how to fit these single attributes into a whole system,” said another panelist.

The speakers agreed that the FTC can help consumers by providing much needed education. “When you’re shopping for energy efficiency, here are some standards and labels to look for on products and buildings. That’s about the best you can do,” said one panelist.

But the salespeople selling the products also need to be educated.

“Consumers are very gullible and they get most of their information about their purchases from salespeople who represent the companies that are trying to sell them something,” said one panelist.

“I mystery-shop thousands of home stores to see how they sell it to the consumer,” said Rashkin. “The salesperson is willing to do anything to sell. How do you control the sales process?”

While the speakers agreed that some companies are making outrageous claims when it comes to green attributes, session moderator James Kohm, associate director for the Division of Enforcement, asked the panelists to delineate one or two of the most important things the FTC
can do to help with this issue? The answers came quickly.
• “Opinions don’t count. We need data,” said Blakey. “Eliminate broad sweeping claims and offer life-cycle data.”
• “Substantiation,” said Chase.
• “People need to know that all certification programs are not created equal,” said Spears.
• Maybe the FTC can say that a certain label is X percent better than the code, suggested another.

Examples of Misleading Claims “Many people on the panel today have talked about sustainability as being a three-legged stool, right people, profitability or prosperity and planet,” said Michelle Moore, senior vice president of policy and public affairs at the U.S. Green Building Council. “We would argue that particularly at this stage in our development, there’s a fourth P and that’s proof.”

During the workshop, speakers talked a great deal about the need to prove claims, and they gave examples of unsubstantiated or unclear “green” claims that are being made every day by companies. The following are but a few that were noted as concerning to the FTC:
• “The area we’re concerned about is the fluffy words. It’s the environmentally friendly or the eco-safe or the great green or clean air—I like that one—those kinds of claims that clearly, there’s no basis behind them. From my perspective they’re using the fluffy language and stuff you guys [the FTC] say don’t use and many cases it simply needs somebody sending them an e-mail raising a flag and saying, ‘what’s the basis behind this? What’s the data?’” said Kirsten Ritchie, direction of sustainable design for Gensler.
• “I think probably one of the most frequently over-used terms for chemical products, if you will, is non-toxic,” said Stephen Richard Sides, vice president of Environmental Health and International Fairs for the National Paint and Coatings Association.
• “In addition to being free of something, it’s comparative claims that are based on little or no data,” said one panelist.
• “PVC-free is a term we run across,” said Alan Blakey, vice president of industry and government affairs for the Vinyl Institute. “We know of one
company who says this, but never says what its products are made of.”
• “Something touted as being natural. In some cases you may want to use a synthetic. You have to look at the whole thing holistically,” said Thomas Reardon, executive director of The Business and Institutional Furniture Manufacturer’s Association. “That’s where life-cycle analysis comes into play.”
• “Often times, a company says my product is 5 percent more recyclable than theirs, therefore we’re environmentally preferable. We don’t buy that. You’ve got to consider the product as well as the process,” said Ritchie.
• “People use terms incorrectly. For example, what does ‘low-emitting’ mean? You have to tell people what the information means,” said one panelist.

How One Industry Supplier
Put the FTC Guide into Practice
The FTC currently is updating its Guide to Environmental Marketing Claims to provide more useful data to marketers. LAMATEK, a supplier to door and window manufacturers, found the guide extremely helpful, according to Laura Basara, director of sales and marketing. After reading about the guide in an article on www.dwmmag.com she took the time to take a close look at the FTC document. “The examples they give were very helpful,” she said. “It helped us determine what they deem to be acceptable. For me it confirmed that we were going down the right path [with a new product].”

For example, one product her company introduced recently contains recycled material in it so Basara paid particular attention to that section in the guides.

“Manufacturers need to make sure they back up their claims,” she says. “I hope these make manufacturers [become] more conscientious.” It definitely has for LAMATEK.

“In the future when we have ideas for new products I would likely use this Guide to make sure what I’m doing in terms of marketing is correct,” she says.

She adds that reading the FTC information also has made the company more aware when it comes to developing new products but also when they’re thinking of improving existing ones.

Plus, a manufacturer can back up its claims, but if this message isn’t conveyed to the salespeople, misinformation could be the result.

“We are going to meet with vendors to make sure they are in line with the guides when selling,” said Basara.

While many companies do make untrue claims, Basara believes many are also more careful than they were six months ago. She adds that green claims are definitely being over-sold and has seen cases where a potential customer rolled his eyes when he heard a product was green.

She cautions that this is all the more reason to make sure any manufacturer’s claims are defendable.

“We have a product that has a soy-based material in it. But we couldn’t determine how much was from soy, and we decided we would be leaning toward green-washing if we marketed that way, so we didn’t,” she said..

FTC’s Guide to Environmental
Marketing Claims—A Closer Look Following are some excerpts from the FTC’s Guide to Environmental Marketing Claims. To view the guide in full, visit http://www.ftc.gov/bcp/grnrule/ guides980427.htm.

Overstatement of environmental attribute: An environmental marketing claim should not be presented in a manner that overstates the environmental attribute or benefit, expressly or by implication. Marketers should avoid implications of significant environmental benefits if the benefit is in fact negligible.

Example: A package is labeled, “50 percent more recycled content than before.” The manufacturer increased the recycled content of its package from 2 percent recycled material to 3 percent recycled material. Although the claim is technically true, it is likely to convey the false impression that the advertiser has increased the use of recycled material significantly.

Comparative claims: Environmental marketing claims that include a comparative statement should be presented in a manner that makes the basis for the comparison sufficiently clear to avoid consumer deception. In addition, the advertiser should be able to substantiate the comparison.

Example: An ad claims that the advertiser’s packaging creates “less waste than the leading national brand.” The advertiser’s source reduction was implemented sometime ago and is supported by a calculation comparing the relative solid waste contributions of the two packages. The advertiser should be able to substantiate that the comparison remains accurate.

General environmental benefit claims: Every express and material implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product or service must be substantiated.

Example: A pump spray product is labeled “environmentally safe.” Most of the product’s active ingredients consist of volatile organic compounds (VOCs) that may cause smog by contributing to ground-level ozone formation. The claim is deceptive because, absent further qualification, it is likely to convey to consumers that use of the product will not result in air pollution or other harm to the environment.

Recyclable: A product or package should not be marketed as recyclable unless it can be collected, separated or otherwise recovered from the solid waste stream for reuse, or in the manufacture or assembly of another package or product, through an established recycling program.

Example: A container can be burned in incinerator facilities to produce heat and power. It cannot, however, be recycled into another product or package. Any claim that the container is recyclable would be deceptive.

Recycled content:A recycled content claim may be made only for materials that have been recovered or otherwise diverted from the solid waste stream, either during the manufacturing process (pre-consumer), or after consumer use (post-consumer).

Example: A paperboard package with 20 percent recycled fiber by weight is labeled as containing “20 percent recycled fiber.” Some of the recycled content was composed of material collected from consumers after use of the original product. The rest was composed of overrun newspaper stock never sold to customers. The claim is not deceptive.


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