Travis J. Allan
Zizzo Allan Climate Law LLP
travis@zizzoclimate.com

In 2010, retailers across North America, including such giants as Walmart and Toys “R” Us, were required to re-label a variety of textiles with tags claiming they were made from bamboo. In fact, the products were made from rayon. The problem, wrote the US Federal Trade Commission (the “FTC”), is that “Rayon is a man-made fiber created from the cellulose found in plants and trees and processed with harsh chemicals that release hazardous air pollution. Any plant or tree – including bamboo – could be used as the cellulose source, but the fiber that is created is rayon.”

The bamboo action is a reminder that advertisers must pay close attention to their environmental claims, which can cover many factors relating to a product or service’s production, use and disposal that have some effect on our environment. Some examples include “carbon neutral” or “made from 100% recycled materials.” In Canada, all marketing claims, including environmental claims, must be truthful, clear and supported by sufficient evidence.

The Risks from Improper Environmental Claims

The Canadian Competition Act contains criminal and civil penalties for improper advertising claims. Fines can run up to $10,000,000 for first time corporate offenders.

In addition to being punishable by law, improper environmental claims are a serious breach of consumer trust. Consumers may respond by refusing to purchase a product and by filing a complaint with Advertising Standards Canada. They can also turn to blogs and social networking sites. They can even use http://www.greenwashingindex.com/ to upload advertisements (including video, print and digital), discuss environmental claims and vote on a scale from 5 (“bogus”) to 1 (“authentic”).

It’s no surprise that smart companies are paying close attention to their environmental claims.

Environmental Claims: Serious Business

Environmental claims are a large and growing business. Canadian respondents to a survey conducted by GlobeScan in 2008 and 2010 felt that good environmental behavior was one of the top two most important things a company could do to be socially responsible. The same survey showed that 57% of respondents had punished a company for being socially irresponsible.

Companies are responding. The Greenwashing Report 2010 byTerraChoice, an Ottawa-based green marketing firm, reports a 73% increase in the number of products making environmental claims between 2009-2010.

Resources and Ideas to Help Improve Environmental Claims

You will need to consult a lawyer to review your environmental claims, but you can keep legal fees down by making sure your claims are well written and supported before sending them to your lawyer. The following are some of the most interesting rules and best practices:

The Canadian Code of Advertising Standards (the “Code”) is the first place to look for the rules advertisements need to follow.

• Your advertisement (whether a picture, words or sounds) has to be clear to consumers. It can’t mislead them directly or indirectly, and it can’t leave out information that, by its absence, makes it deceptive.
• Testing and supporting your claims is your job. You need to support any claims (such as a computer labeled “this product uses 20% less energy than our previous desktop”) with strong and effective testing. While you may be used to talking with potential investors about the immense future potential of your technology or company, you have to limit marketing claims to what you can prove in the present.

A good example of an unsupported performance claim, even though it is not specifically an environmental claim, is one made by Canadian retailer Lululemon. After a Competition Bureau action, Lululemon agreed to remove from its products unsubstantiated claims that its VitaSea fabric, made partially with seaweed, had a variety of therapeutic benefits for skin when exposed to water.

The document Environmental claims: A guide for industry and advertisers provides a helpful discussion of the rules around environmental claims and best practices for environmental labeling.

• Environmental claims should be clear as to whether they relate to an entire product over its lifecycle (including production, use, disposal) or just to one part of the product’s lifecycle or its packaging.
• General or very broad environmental claims such as “this product is environmentally friendly/green/good for the planet” should be avoided unless the product has been extensively tested on a lifecycle basis and shown to be benign. It is much more helpful to consumers and less likely to cause a claim if you tell consumers what is better about the product (such as “this product uses 20% less energy than our previous model”).
• Environmental claims shouldn’t exaggerate the effect of what the seller has done. While it is an improvement, using 20% less plastic in a disposable water bottle doesn’t solve the problem that disposable water bottles use plastic. A claim should speak specifically about the improvement; the bottle isn’t “green” or “environmentally friendly.”
• Advertisers shouldn’t make claims that are irrelevant. For example, a claim that a product has none of a certain chemical when none of the products in its class contain that chemical anyway is not allowed.

Eco-Labels

A green marketing tool that many companies are beginning to embrace is the eco-label, which helps quickly convey some standardized environmental information. The Energy Star label is a well-recognized example, and there has been recent growth in carbon footprint labeling. Some eco-labels are widely used and independently administered, while others are developed in-house by individual companies.

All eco-labels aren’t equally worthy. For example, Accenture reviewed wild sustainable seafood logos for WWF and found a large variation in quality. Advertisers should do their due diligence to ensure that the eco-label they are contemplating is meaningful to consumers and the environment.

Some points to keep in mind:

• Eco-labels can only be used if the labeled product has actually been awarded the right to use the eco-label.
• Natural symbols should have a meaningful link with the claim being made;
• The criteria for awarding an eco-label should be transparent and clearly available to the public.
• Eco-labels should be distinct and easily distinguishable from one another.

In this post, I’ve discussed the growth of environmental claims and some resources and ideas to help you improve your environmental claims. This is not legal advice, and if you are making a marketing claim of any variety, you should consult a lawyer.

Travis Allan is a partner at Zizzo Allan Climate Law LLP, a boutique law firm in Toronto, Ontario. Travis advises clients in Canada and internationally on climate change, environmental and corporate law, including environmental marketing claims relating to greenhouse gas emissions. Travis works with clients in the clean tech, energy efficiency and greenhouse gas quantification and reduction sectors.