Green marketing presents an enormously valuable strategy for increasing brand value – cutting across all sectors. And the new emphasis on building materials and product makeup in LEED v4® will greatly favor environmentally conscious brands and businesses, far beyond LEED’s influence on the real estate industry. But the legal implications for marketing claims call for caution.

Background

For many people April 22, 1970 was the beginning of the modern environmental movement, the first Earth Day when as many as 20 million Americans became participants in environmentalism.

The 1987 document issued by the World Commission on Environment and Development that defined sustainable development as “the needs of the present without compromising the ability of future generations to meet their own need” became known as the Brundtland Report and was a big step toward businesses’ appreciation of sustainability.

Gerald Butts, of the World Wildlife Fund Canada has talked about allowing businesses to bask in the reflected light on eco organizations benefitting from their munificense. “Coke is literally more important, when it comes to sustainability, than the United Nations.” He explains, “Coke is the No. 1 purchaser of aluminum on the face of the earth – which is one of the most carbon-intensive commodities. The No. 1 purchaser of sugar cane. The No. 3 purchaser of citrus. The second-largest purchaser of glass, and the fifth-largest purchaser of coffee. We could spend 50 years lobbying 75 national governments to change the regulatory framework … or these folks at Coke could make a decision that they’re not going to purchase anything that isn’t grown or produced in a certain way.”

Shortly after the Brundtland Report, General Electric launched Ecomagination setting a revenue target of $25 billion over the next five years from its green design products and Wal-Mart sets aspirational goals of zero waste and carbon neutrality. While it is easy to discuss well known big businesses, market trend reports repeatedly point to small businesses as the dollar value leaders in promoting green products and services.

Public opinion polls have for more than two decades shown that Americans profess a willingness to favor environmental conscious products and businesses. While how much more a business or consumer is willing to pay has varied greatly since the 1970s and swings widely from real estate to kitchen cleaning supplies; such is not currently a major issue both because the first costs of being green are now only nominally different if not the same as non green alternatives, and the efficacy of green has tremendously improved.

There remains no widely accepted definition of what is an environmental conscious or green product or business.

Arguably, the most widely accepted green marketing effort, now in its 20th year, is the U.S. Environmental Protection Agency’s voluntary ENERGY STAR program. More than 4.5 billion ENERGY STAR labeled products have been sold. And more than 1.4 million new homes and more than 20,000 commercial buildings carry EPA’s ENERGY STAR certification.

Greenwashing

The term “greenwashing” was coined by environmental activist Jay Westerveld when objecting to a hotel’s practice of placing notices in hotel rooms asking guests to reuse towels to “save the environment.”

In 2012, Ben & Jerry’s, one of the first companies to issue a corporate sustainability report touting its green bona fides, pulled the “all natural” claim from its ice cream label in response to California investigation of greenwashing finding that 48 of the company’s 53 flavors had chemically modified ingredients.

Eco-labels connote credibility to the consumer and to the business decision maker, alike, looking to make a low risk decision. Businesses rely heavily on third party certification and seals of approval.

LEED is one of those eco-labels cutting across all sectors and available to small business that rents their office as well as to big box retailers with hundreds of outlets. The LEED brand has wide market acceptance for green building and high performance building.

Regulation of Green Marketing

This arena has been regulated for a long time. Originally passed in 1900, the U.S. Lacey Act makes it a crime to poach game in one country or even another state with the purpose of selling the bounty in another. In 2008, Congress approved a new amendment to the Lacey Act combating illegal logging. And while the law created dramatic changes in the global timber industry, the Forest Stewardship Council (FSC) and Sustainable Forestry Initiative (SFI) offer competing eco-labels and even cross selling to other eco-labels like LEED, where the USGBC only gives a credit for FSC labeled lumber.

Some governments go even further incorporating voluntary private third party rating systems into public policy. Increasingly governments have mandated the private LEED certification into public procurement requirements and some have even required private building be LEED certified.

Again accepting there is no single definition of what is a green product or business, the federal government regulates this area. The Federal Trade Commission has issued “Green Guides” to help marketers ensure that the claims they make about the environmental attributes of their products are truthful and non-deceptive.

Last year the FTC updated the existing Green Guides and added new guidance on certifications and seals of approval, carbon offsets, free-of claims, non-toxic claims, made with renewable energy claims, and made with renewable materials claims. The new section of the Guides on certifications and seals of approval (like LEED), for example, emphasizes that certifications and seals may be considered endorsements that are covered by the FTC’s Endorsement Guides, and includes examples that illustrate how marketers could disclose a “material connection” that might affect the weight or credibility of an endorsement. In addition, the Guides caution marketers not to use environmental certifications or seals that don’t clearly convey the basis for the certification, because such seals or certifications are likely to convey general environmental benefits.

And interestingly, possibly because the FTC lacks a sufficient basis to provide guidance or wants to avoid proposing guidance that contradicts rules of other agencies, the Guides do not address use of the terms “sustainable,” “natural,” and “organic.” Organic claims made for textiles and other products derived from agricultural products are covered by the U.S. Department of Agriculture’s National Organic Program.

FTC Enforcement

Two of the nation’s leading paint companies, The Sherwin Williams Company and PPG Architectural Finishes, Inc., were the first to settle FTC charges under the new Green Guides, that they misled consumers to believe that some of their paints are free of volatile organic compounds. The FTC’s administrative complaints charged the companies with violating the FTC Act by making false and unsubstantiated claims that that their paints contain “zero VOCs” after tinting.

According to the Green Guides, when marketers say a product is “free of” an ingredient, the product must not contain the ingredient or have only a trace amount. The “trace amount” test is met if: (1) the level of the ingredient is less than that which would be found as an acknowledged trace contaminant or background level; (2) the ingredient’s presence does not cause material harm that consumers typically associate with it; and (3) the ingredient has not been added intentionally.

State Laws Can Be More Strict

State Consumer Protection Laws generally provide very broad protections from unfair and deceptive trade practices (with much greater breadth than federal protections). By way of example, in Maryland “written statement, visual description, or other representation of any kind which has the capacity, tendency, or effect of deceiving or misleading consumers” is an unfair or deceptive trade practice in violation of law. Such is an incredibly high burden for when engaging in an eco business with consumers versus business to business where these laws do not apply. Arguably this heightened standard for consumers creates risk in residential green building, including LEED for Homes.

We Can Assist You Devise Strategies

Today, corporate sustainability reports are published by over two thirds of Fortune 500 companies. USGBC is now certifying over 1.7 million square feet a day of LEED certified space. Green marketing is huge and accelerating as a key strategy for increasing brand value. And the new emphasis on building materials and product makeup in LEED v4 will cause green to gain momentum.

We can assist you with the legal implications for green marketing claims working with you and your team to devise strategies taking advantage of and touting your environmental bona fides.