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As companies across the globe race to set greenhouse gas reduction targets and credible pathways to decarbonize their operations, many will feel the pressure to put a rosy spin on lackluster performance. Corporate sustainability buzzwords like “eco-friendly,” “sustainable,” and “carbon neutral” remain unregulated terms that can be used - and abused - by companies looking to boost their green bonafides with consumers. At its worst, unsubstantiated claims constitute greenwashing. One recent study revealed that over 70% of surveyed North American executives say their company is guilty of greenwashing.
Greenwashing is the process of making an unsubstantiated claim that can deceive consumers into thinking that a company’s products are more environmentally or climate-friendly than is the case. A company is at greater risk of greenwashing if it spends more resources on marketing its green credentials than making necessary investments and changes to actually improve environmental performance.
False or misleading claims are largely prohibited under general consumer protection laws, but in practice companies are given significant leeway to make marketing claims and enforcement action against greenwashing has been limited. The official guidance from the U.S. Federal Trade Commission (FTC) on how companies can avoid greenwashing - a document known as the “Green Guides” - has not been updated in over a decade.
Last December, the FTC opened a new public comment period to “make any updates necessary to ensure the Green Guides provide current, accurate information about consumer perception of environmental benefit claims.” It specifically asked for input on whether the Green Guides should include new information related to climate change and carbon offsetting.
The response to the FTC’s comment period on this issue was significant - over 1,400 comments were submitted by companies, organizations and individuals.
Aided by OpenAI’s ChatGPT, we reviewed and synthesized a condensed set of comment letters from over 40 of the most influential nonprofit and for-profit organizations that submitted comment letters, representing over 450 pages of feedback. These organizations span a range of sectors including consumer packaged goods, energy, environmental and consumer advocacy, government, trade associations, and professional services.
Carbon credits relate to climate greenwashing because some companies use low-quality carbon credits as the basis for making claims about climate leadership and performance. Companies whose climate efforts are overly dependent on carbon credits without significant internal emission reduction efforts also risk misleading the public and undermining more structural climate actions.
Stronger rules and guidance from the Federal Trade Commission are critical to separate the substance from the noise. The FTC should place special focus on developing guidance in the areas of carbon offsets and climate labels, which are top areas of concern for commenters.
Recent legislation from California and a proposed directive from the European Union are already putting restrictions on climate claims that companies can make within those geographies. The FTC should compare notes with these and other state, national and international governmental bodies.
While not as impactful as binding regulation, voluntary corporate standards for climate claims and carbon credits like the Voluntary Carbon Markets Initiative (VCMI) and the Integrity Council for the Voluntary Carbon Market (ICVCM) will also play an important role in normalizing responsible corporate marketing behavior. The Change Climate Project’s Climate Neutral Certification also continues to offer a set of clear criteria for high integrity climate claims.
We would like to thank Brandon Comstock for his support in preparing the AI analysis of FTC comment submissions and assistance in preparing this blog post.
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Our partnerships leader, Greg brings nearly two decades of nonprofit experience working on corporate, consumer, and policy solutions to the climate crisis. He loves to find opportunities for uncommon bedfellows to work together to protect the environment. Greg and his family can be found exploring the mountains and coast in North Carolina and searching out epic wilderness areas in Argentina.
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