Making the Green by Going Green: Increased Demand for Green Products and the FTC’s Role in a Greener Future Georgetown Environmental Law Review

Title CardMaking the Green by Going Green: Increased Demand for Green Products and the FTC’s Role in a Greener Future

By Michael Hozik, Staff Contributor

Businesses are in a unique position to capitalize on the environmental anxieties of millennials. As a 2015 study by The Nielsen Company suggests, despite high unemployment rates and low wages, millennials are willing to spend more for products that are environmentally friendly[1]. Just over the span of one year, millennials willing to pay more for products and services from companies committed to positive environmental and social change increased from 55% in 2014 to 72% in 2015[2]. Although seen by some as a niche minority[3], eco-minded consumers are now a major concern and opportunity for marketing departments across the country. Such a rapid expansion in green-conscious customers has spurred a surge of companies making green claims, sparking gridlock at the United States Patent and Trademark Office[4]. Between 2006 and 2007, filings for eco-friendly labels doubled and stores offered 73% more green products in 2010 compared to 2009[5]. Thus, even if a business owner does not believe the threat of climate change is real, businesses should nevertheless invest in eco-friendly practices so they may advertise and sell to green-minded customers[6].

Businesses attract green-minded customers by advertising their products’ environmental friendliness. This puts them in a position to sell to a demographic whose buying power will increase with age. Although surrounded by environmental ads and political discussion on the environment, consumers do not typically understand the real meaning behind environmental ads [7]. Terms like “sustainable”, “carbon neutral”, and “compostable” leave consumers guessing about the real environmental impact of the products they see[8]. This also creates an incentive for companies to “greenwash” their products with false, deceptive, or unsubstantiated eco-friendly claims[9]. As the leading organization in consumer protection in the United States, the Federal Trade Commission (FTC) is in a position to protect consumers from deceptive ads used by companies to promote, and profit from, self-proclaimed environmental initiatives.

“Despite the EPA’s lead in protecting the environment, the FTC plays a substantial role in aiding the EPA in positive environmental change.”

With authority derived from the Federal Trade Commission Act, the FTC developed “Guides for the Use of Environmental Marketing Claims”, known as the “Green Guides”[10]. Quite often, what a company thinks its ads are portraying may be different than what consumers interpret[11]. The Green Guides intend to prevent this disconnect, and the FTC has enforcement powers under section 5 of the FTC Act if an advertisement is inconsistent with the Green Guides[12]. The Green Guides were originally created in 1992, and revised in 1996, 1998, and 2012[13]. Although targeted at the marketers of green products, the regulations are written in an easy-to-understand way, making them beneficial to consumers. A readable document, with numerous examples, the guides alleviate confusion over terms used by marketers to promote the eco-friendliness of their product. Through the Green Guides, the FTC has substantial leverage in enforcing green marketing claims and supporting environmental policy. Despite the EPA’s lead in protecting the environment, the FTC plays a substantial role in aiding the EPA in positive environmental change. The FTC has the ability to ensure products have the eco-friendliness consumers seek by verifying the truthfulness of advertisements, resulting in increased revenue for companies involved in green initiatives. Increased revenue for such companies will hopefully result in larger profits, thus giving eco-friendliness a profitability and attractiveness not seen in the past.

“Instead of companies boosting profits from practices that harm the environment, increasing profitability from sustainable, eco-friendly or eco-neutral processes is a win-win for businesses and environmentalists.”

Profiting from the eco-concerns of millennials is the best way to help the environment. However it requires strict enforcement from the FTC to ensure companies are truly being environmentally friendly. One may have an adverse feeling towards companies profiting from being green, but that is the best means to accomplish the ultimate goal of a greener and sustainable way of life. Instead of companies boosting profits from practices that harm the environment, increasing profitability from sustainable, eco-friendly or eco-neutral processes is a win-win for businesses and environmentalists. Therefore, a greener future includes businesses fulfilling the demands of millennials who make purchasing decisions partly on greenness, despite potentially higher prices for such products. This common ground between businesses and environmentalists will grow as environmentally aware millennials age. Therefore, green products will likely become mainstream in the near future.

“It is much simpler to convince a business owner to make changes that will increase profits, than to convince them that global warming is a man-made threat.”

Some say the millennials are burdened with fixing the environmental damage of previous generations, but that burden is reduced if this task becomes profitable for companies, resulting in economic growth. With consumers increasing demand for environmentally friendly products, companies must respond to that demand, or become obsolete, a staple of our free-market, consumer driven economic system. Companies will supply what the consumer demands, and consumers are increasingly demanding eco-friendly products. This decreases concerns that business executives who don’t believe in environmental threats won’t react to the demands of eco-conscious consumers, because if they don’t their businesses will fail. It is much simpler to convince a business owner to make changes that will increase profits, than to convince them that global warming is a man-made threat. However, this relies on the FTC’s enforcement of green marketing, and prosecution of deceptive advertising that could undermine the green-market. Without the FTC’s strict enforcement of the Green Guides, the EPA loses one of its most vital teammates in the fight for a better future.

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[1] The Nielsen Company, Green Generation: Millennials Say Sustainability is a Shopping Priority, The Nielsen Company (Nov. 5, 2015), http://www.nielsen.com/us/en/insights/news/2015/green-generation-millennials-say-sustainability-is-a-shopping-priority.html.

[2] Id.

[3] Rebecca Henderson, Making the Business Case for Environmental Sustainability, Harvard Environmental Economics Program, at 8 (June 2015), http://heep.hks.harvard.edu/files/heep/files/dp64_henderson.pdf?m=1434644814.

[4] Timothy C. Bradley, Likelihood of Eco-friendly Confusion: Greenwashing and the FTC “Green Guides”, 4 Landslide, no. 1, (Sep/Oct 2011), http://www.coatsandbennett.com/images/pdf/Likelihood-of-Eco-Friendly-Confusion-Greenwashing-and-the-FTC-Green-Guides-by-Timothy-Bradley.pdf.

[5] Id.: Will Help Marketers Avoid Making Misleading Environmental Claims,.millennials who make purchasing decisions partly based on ec

[6] Cf. Henderson, supra note 3, at 9-10.

[7] FTC Guides for the Use of Environmental Marketing Claims, 16 C.F.R. §260 (2012); see also FTC Issues Revised “Green Guides”: Will Help Marketers Avoid Making Misleading Environmental Claims, F.T.C. (October 1, 2012), https://www.ftc.gov/news-events/press-releases/2012/10/ftc-issues-revised-green-guides.

[8] 16 C.F.R. §260 (2012); see also It’s too Easy Being Green: Defining Fair Green Marketing Principles, F.T.C. (June 9, 2009), https://www.ftc.gov/public-statements/2009/06/prepared-statement-federal-trade-commission-its-too-easy-being-green.

[9] Bradley, supra note 4; see generally Sarah E. Merkle, Tips for Navigating the “Greenwashing” Landscape, A.B.A. (June 16, 2015), http://apps.americanbar.org/litigation/committees/businesstorts/articles/spring2015-0515-tips-for-greenwashing.html.

[10] 16 C.F.R. §260.

[11] Id.

[12] Id.; see also Merkle supra note 9.

[13] 16 C.F.R. §260.

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