Volume 12, Issue 9 - November/December 2011

Eye on Energy

Dispelling the Myths
by Arlene Z. Stewart

Last week, I was asked to be a panelist on “Legal Compliance for Green Building” at the International Builders Show (IBS) in February. It was presented last year and I’m glad it will be again, since it’s a sorely neglected topic. Everyone is so worried about greenwashing that they’re missing the stuff that could really hurt them in the long run. Here are some myths and facts that I think are imperative.

Myth: To avoid liability, avoid greenwashing.

Not necessarily. It’s easy to allege greenwashing, but it’s not so easy to definitively prove because it’s a matter of perception. There are shades of green and what is green for one entity may be a horrible travesty for another. Forest Ethics may think (allege and print) that Sierra Pacific greenwashes, but several successfully defended lawsuits say otherwise. So if you define liability as potential sales loss or reputation damage via word of mouth, address greenwashing. If you define it as regulatory action, then keep reading.

Myth: There is no law prohibiting greenwashing.

True, but there is a law against making misleading advertising claims, including environmental ones. It’s Section V of the Federal Trade Commission (FTC) Act, 15 U.S.C. §§ 41-58. If you haven’t heard about it, you should download “Complying with Environmental Marketing Guides” at http://business.ftc.gov/documents/bus42-complying-environmental-marketing-guides.

Myth: The guides to the use of environmental marketing are voluntary.

Kinda sorta, but maybe not so much. Section 260.1 states the Green Guides, as they are commonly called, “provide the basis for voluntary compliance …” The problem is people stop reading when they see the word “voluntary.” To most of us, voluntary means optional. In other words, it’s a good idea but you don’t actually have to do it.

Remember, though, context is all important when it comes to what a word actually means. The word “voluntary” is used because the guides are administrative interpretations meant to clear up ambiguities. These interpretations technically are not law so they are technically voluntary. But they could still be cited in order against you as evidence that you did not follow the intent or spirit of the law. In fact, they already have been in a number of cases, according to Laura Koss, attorney with the FTC. So continue reading Section 260.1: “Conduct inconsistent with the positions articulated in these guides may result in corrective action…” It’s fair enough warning.

Myth: If the example in the Green Guides is not directly applicable, don’t worry about it.

If you find an example that has some similarities, pay attention and recognize that it’s a transferable concept. Once again, the guides are all about intent. Even better, scour the draft that was released for public comment last fall (www.ftc.gov/os/fedreg/2010/october/101006greenguidesfrn.pdf). It will give you a good idea of how the Commission currently thinks. It’s possible that it may adapt its position based on the more than 5,000 comments that were submitted, but until the final version is submitted, it’s still a good reference.

Myth: If it’s not in the guides, don’t worry about it.

The guides are far from all inclusive. A recent case involving Tested Green is a perfect example of how the FTC can enforce a violation that is not in the current guide. In this case, the FTC concluded that Nonprofit Management LLC violated the Act not only because they provided misleading certifications but also because they provided “the means and instrumentalities for the commission of deceptive acts and practices,” to their client by providing logos and marketing materials. The current Guides have no examples about certification nor any citation against sharing with others.

Myth: The FTC Act is only a federal law.
At least five states cite the FTC act in their own statutes, according to David Crump, director of Legal Research at the National Association of Home Builders.

Arlene Z. Stewart, an energy and green building consultant, will be a panelist on “Legal Compliance for Green Building” at IBS in February 2012 from 1:30–3:00 p.m. She tweets energy/green headlines at @ArleneOnEnergy.


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