Environment

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The Truth About Green Advertising

July 25, 2009 07:00 AM
by Sarah Amandolare
Almost all companies claiming to be friendly to the environment are making false claims, a study showed. Competitors can challenge each other's green advertising claims in court.

Rampant Greenwashing Uncovered

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The study, carried out by TerraChoice, an eco-consulting firm, looked at almost 4,000 products claiming to be "natural and environmentally friendly." Almost all claims were found to be "false or misleading," a phenomenon known as greenwashing, according to Suzanne Goldenberg of The Guardian.

According to Goldenberg, "[P]roliferation-both of products claiming to be green and of certification programmes purporting to back up those claims" is an issue. With so many supposedly green products to choose from, each claiming to be certified by one program or another, how are consumers to know what is standardized and what is not? Labels aren't always helpful, either, because, "[c]ompanies are not required to disclose the use of some substances believed to be dangerous," Goldenberg writes.

Scott Case, a representative of TerraChoice, presented the study to members of the House of Representatives committee on commerce, trade and consumer protection, The Guardian reported.

Background: NAD and relevant cases

While Congress determines how to help consumers discern which environmental claims are true or false, there are already guidelines in place at the National Advertising Division (NAD), part of the Council of Better Business Bureaus.

NAD is a self-governing entity of the advertising industry that reviews "truthfulness and accuracy in marketing claims," Azadeh Ensha explained in a June entry for Green Inc., a New York Times blog.
 
When Dell recently took issue with Apple advertisements claiming MacBooks were "the world's greenest family of notebooks," NAD listened to both sides to "determine the veracity of Apple's assertions," Ensha reports. NAD found that Apple's claim was ambiguous and recommended some modifications to make things clearer for consumers.

On its Web site, NAD explains that the Information Age has made it increasingly difficult "to monitor the message content of advertisements," and encourages businesses "to use the NAD to voice their concerns about potentially misleading national advertising claims." NAD deals with a variety of claims: "[p]roduct performance claims, superiority claims against competitive products and all kinds of scientific and technical claims in national advertising."

Opinion & Analysis: The Wal-Mart model

In addition to NAD, consumers will soon be able to look to an unlikely source of verifiable greenness: Wal-Mart.

Earlier this month, the mega-retailer announced a new policy that will require "all of its product suppliers to calculate the environmental costs of their products," according to Alex Salkever of DailyFinance. The data will be assessed and companies will receive a "green rating" that will be displayed near product price tags. Companies that do not comply will not be allowed on Wal-Mart shelves. The process is expected to take about four years.

Despite worries that the program will force Wal-Mart to raise prices, and that consumers might ignore the new labels, Salkever thinks Wal-Mart has undertaken an important project that will force "transparency and accountability on the entire consumer products market."

In a Harvard Business blog entry, Rosabeth Moss Kanter suggests that Wal-Mart's move "shows that a single company using its unique clout can accelerate public action to reduce greenhouse gases and reverse climate change." She sees other retailers following Wal-Mart's lead, and predicts competition among retailers to have the greenest program. "That might make 'cheapest' the battle of the past and redefine 'value' in the minds of consumers and the public," Kanter writes.

Related Topic: The FTC and green advertising

The Federal Trade Commission (FTC) along with the Environmental Protection Agency (EPA) "has developed guidelines for advertisers to ensure that their environmental marketing claims don't mislead consumers." The FTC presents tips to help consumers assess a product's green claims.

Among the tips is a crucial bit of advice: "Look for claims that give some substance to the claim-the additional information that explains why the product is environmentally friendly or has earned a special seal." Too many products are labeled with phrases like "environmentally friendly" or "environmentally safe," the FTC explains, but such claims "generally offer little information of value." 

In its "Guides for the Use of Environmental Marketing Claims," the FTC addresses environmental terms often found on product labels, such as "degradable, biodegradable or photodegradable," "recyclable" and "compostable." The FTC provides examples of false, ambiguous or misleading advertising claims related to each term.

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