IATP submitted the following comment to the Federal Trade Commission on April 21, 2023.
The Institute for Agriculture and Trade Policy (IATP) thanks the Federal Trade Commission (FTC) for this opportunity to comment on updating the Guides for Use of Environmental Marketing Claims, also known as the Green Guides. IATP is a 37-year-old nonprofit organization based in Minnesota that works locally, nationally and internationally for fair and sustainable food and farm systems. IATP has focused on the intersection between climate change and our food system for more than two decades and has tracked closely corporate marketing claims related to climate change.
Corporate marketing claims on climate change have become much more common since the FTC last updated the Green Guides in 2012. There are currently a wide range of climate marketing claims that include terms and jargon (such as “climate neutral,” “zero carbon” and “net zero”) that most consumers are unfamiliar with. These climate marketing claims are increasingly being used by agribusiness and food companies. There are currently no clear rules and standards to ensure consumers understand what many common climate claims mean and which are credible.
The FTC’s decision to update the Green Guides comes at an opportune time. As countries around the world implement the Paris Climate Agreement, many are developing new rules and guidance about climate marketing claims, including in the European Union1 and the United Kingdom.2 By updating the Green Guides, the FTC can set strong guidelines on climate claims for companies operating in the U.S. (which would also influence global companies operating elsewhere), and set a high bar for governments around the world establishing similar rules.
The Green Guides implement Section 5 of the FTC Act on environmental advertising and labeling claims. Section 5 “prohibits deceptive acts and practices in or affecting commerce. A representation, omission, or practice is deceptive if it is likely to mislead consumers acting reasonably under the circumstances and is material to consumers' decisions.” Under the current Green Guides’ General Principles3for all environmental marketing “qualifications and disclosures should be clear, prominent, and understandable”; and an “environmental claim should not overstate, directly or by implication, an environmental attribute or benefit.”
With these comments, we also ask the FTC to consider how “deceptive” climate claims are also “unfair” (Section 5a of the FTC Act) in that they provide clear advantages to companies making deceptive environmental claims over companies making verifiable, credible environmental claims.
Many current climate claims in consumer marketing violate the core Green Guide General Principles. Too often, climate claims: 1) do not reflect measurable emission reductions from the company’s current (not future) operations, including supply chains; 2) espouse emissions reductions that are not certified by an independent, transparent and credible third party, with ongoing monitoring; 3) rely on carbon offsets or removals that are not scientifically credible and lack integrity.
IATP’s comments focus on several of the Section 3 “Issues for Comment” as presented in the federal register notice. These comments outline why we believe an update to the Green Guides is needed, what consumer expectations are for climate-related marketing claims, how food companies currently use deceptive marketing terms, and how the use of carbon offsets as a basis for climate claims is deceptive. We make a few final points on the use of the marketing terms “sustainable” and “renewable energy” where developments since 2012 warrant an update. In the below comments, we point to the relevant parts of Section 3, prior to each comment.
A (1), (2): The need for Green Guides and proposed modifications to benefit consumers.
The climate crisis requires strong, immediate action to sharply reduce emissions from all actors, including governments, the private sector and consumers. The latest reporting from the National Oceanic and Atmospheric Administration (NOAA)4indicates the planet is entering uncharted territory as greenhouse gases rose rapidly in 2022. The Intergovernmental Panel on Climate Change (IPCC) synthesis report5issued in March warned, “There is a rapidly closing window of opportunity to secure a liveable and sustainable future for all (very high confidence). The choices and actions implemented in this decade will have impacts now and for thousands of years (high confidence).”
The IPCC also highlighted the critical role of governments to spur action: “Effective climate action is enabled by political commitment, well-aligned multilevel governance, institutional frameworks, laws, policies and strategies…Clear goals, coordination across multiple policy domains, and inclusive governance processes facilitate effective climate action.”
In a January 2021 Executive Order,6 the Biden administration committed to taking a “whole of government approach” to responding to the climate crisis, including decisive actions across departments and agencies. For example, the Securities and Exchange Commission (SEC) will soon finalize rules7requiring publicly-traded companies to disclose their operational and supply chain exposures to physical risks from climate change and their climate-related transition risks (e.g., cost of credit and insurance) to investors, insurers and other interested parties within the SEC’s long established financial disclosure regime. The rule also allows companies to report their climate related “opportunities,” including new product lines, services, investments and operational efficiencies as part of their reported business plan to reduce the company’s financial exposure to physical and transition risks.
The FTC update of the Green Guides complements the SEC rules by requiring that company marketing claims about its products and services are substantiated for consumers. By ensuring greater transparency and credibility of climate-related marketing claims, the FTC can also fulfill its mandate to prevent unfair competitive advantage that may result from deceptive marketing claims.
Unfortunately, there is growing confusion and skepticism in the marketplace on a wide variety of corporate marketing claims related to climate change. A recent analysis8of over 700 companies making “net zero” claims found that more than two-thirds had not provided details on how they would achieve that goal. An analysis by Carbon Market Watch9concluded that 24 of the world’s largest companies were greenwashing in announced net zero plans, while largely continuing business as usual. Global polluters like Shell, Chevron, BP and ExxonMobil boast about renewable energy investments, while increasing fossil fuel related emissions, another set of researchers found.10 In the absence of a clear regulatory framework for climate marketing claims, organizations and citizens have resorted to the courts. At least 20 climate-washing cases have been filed before courts in the U.S., Australia, France and the Netherlands since 2016, while a further 27 cases have been filed before non-judicial oversight bodies (such as advertising standards boards), legal researchers report.11 Experts expect the number of climate-washing cases will rise in the future without clear guidance and rules.
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