Can Orange Juice Claim To Be Green?

Green marketing provides an opportunity to tap into consumer demand for products that do not harm the environment. But green marketing is also a potential minefield for consumer product manufacturers. Consumers are becoming increasingly sensitive to green claims made with varying degrees of certainty—also known as “greenwashing.” False advertising allegations are governed by broad standards that are susceptible to varying interpretations, and sellers of goods with complicated, global supply chains may lack a complete picture of products’ environmental impacts. This combination presents serious litigation risks from the FTC, states, and class action plaintiffs alike.

As these types of suits become more common and the market for sustainable products grows, consumer product manufacturers must take into account the growing judicial and administrative guidelines for green marketing. This article provides a snapshot of how these claims are governed. It also discusses the opportunity for manufacturers to weigh in with the FTC as it revises its environmental marketing standards, with a comment period open through April 24, 2023.

Over the last year, dozens of notable greenwashing cases have been filed or resolved, including:

Orange juice advertised as “all natural.” Class action plaintiffs allegedly tested and discovered PFAS in Simply Orange orange juice, which is advertised as “all natural,” made with “pure filtered water” and “simple ingredients and the great taste of Nature.”[1] Plaintiffs filed suit against Coca-Cola, owner of The Simply Orange Juice Company, alleging claims of deceptive acts, false advertising, fraud, and breach of warranty.

Underwear “free of harmful chemicals.” Thinx made sustainability a cornerstone of its brand as a manufacturer of period underwear and other products. The brand marketed its underwear as “free of harmful chemicals,” “safe . . . and sustainable,” “organic,” and free of “toxic metals or engineered nanoparticles.” In 2022, a class of Thinx customers filed suit alleging the marketing was fraudulent because the underwear contained PFAS and silver nanoparticles.[2] Earlier this year, Thinx settled the lawsuit for $5 million.[3] Scores of similar lawsuits have been filed, targeting products that allegedly contain PFAS but are marketed in an inconsistent way.[4]

“Eco-friendly” bamboo textile goods. The FTC demonstrated its growing appetite to confront alleged greenwashing of products. On April 8, 2022, the agency initiated enforcement actions against Kohl’s and Walmart over towels, sheets, pillows, and other textile goods that the companies had advertised as being composed of “bamboo,” and thus, among other things, “highly renewable,” “eco-friendly,” “gentle on the planet,” “sustainable,” and “environmentally friendly.”[5] But because the products were composed of rayon, a regenerated fiber derived from chemically treated cellulose that releases air pollutants during the manufacturing process, the FTC alleged that these products were deceptively advertised to exaggerate the products’ environmental benefits.[6] Kohl’s and Walmart settled the cases for $2.5 million and $3 million, respectively.[7]
 

Role of FTC, States, and Private Litigants

Suits targeting greenwashing can come from the FTC, state entities, and private plaintiffs. The FTC is an independent federal agency charged with enforcing civil antitrust law and promoting consumer protection. The FTC Act prohibits “unfair or deceptive acts or practices in or affecting commerce.”^[10] Deceptive acts or practices are defined as material misrepresentations that are likely to mislead customers acting reasonably under the circumstances.^[11] Actual reliance is not required to show a violation of the FTC Act.[12]

In response to growing consumer interest in the environmental impacts of their products, marketing has increasingly emphasized products’ environmental attributes. To that end, the FTC has issued Guides for the Use of Environmental Marketing Claims, also known as the Green Guides, which state the Commission’s views on what standards manufacturers should meet before making certain green claims about their products.[13] The Guides establish several general principles governing environmental marketing. First, they provide that all qualifications and disclosures should be “clear, prominent, and understandable.”^[14] Second, unless it is clear from context, environmental marketing claims must specify whether the claim refers to the product, packaging, a service, or just a portion of the product, package, or service.^[15] Third, the Green Guides discourage general, insufficiently qualified claims of environmental benefits.^[16] Fourth, all green marketing claims must be supported by a “reasonable basis,” which often will require “competent and reliable scientific evidence.”^[17]

The FTC Act does not include a private right of action. It is instead primarily enforced by the Commission itself.[18] However, nearly every state has adopted consumer-protection laws that incorporate the FTC Act’s definitions of unfair and deceptive practices.[19] In most states these laws provide for enforcement by state agencies in addition to a private right of action. Although the FTC frames the Green Guides as “not confer[ring] any rights on any person” and “not operat[ing] to bind the FTC or the public,”[20] courts applying state laws use the Guides as interpretive guidance. Some states like California, Maine, Michigan, and Rhode Island also explicitly incorporate the guides by reference, in whole or in part, in their laws controlling unfair and deceptive business practices.[21] California goes the furthest, making compliance with the Green Guides’ standards or the examples therein a complete defense to liability.[22] California even has dedicated greenwashing laws imposing specific requirements on products advertised as recyclable, compostable, home compostable, biodegradable, and decomposable.[23]

A full understanding of the Green Guides is critical for consumer product manufacturers that want to make green claims about their products. The FTC is currently soliciting input on expected updates to the Guides. In particular, the agency seeks feedback on standards governing marketing regarding carbon offsetting, climate change, and terms like “recyclable,” “recycled content,” “compostable,” “organic,” and “sustainable.” The comment period is open until April 24, 2023.[24] The agency’s updates could spark substantial changes in the marketing of products.

Recycling Claims

One frequent environmental claim under growing scrutiny is that of a product being “recyclable” or containing “recycled” content. FTC Chair Lina Khan explained, “[R]ecent reports suggest that many plastics that consumers believe they’re recycling actually end up in landfills. One question, then, is whether claims that a product is recyclable should reflect where a product ultimately ends up, not just whether it gets picked up from the curb.”[25] Since the last time the Guides were updated, research has shown that over 90 percent of mass-produced plastic since the 1950s has been incinerated or dumped in landfills and the natural environment rather than recycled.[26] The FTC appears ready to tighten the standards for “recyclable” and “recycled content” claims in response to the growing salience of this issue.

Recyclable. The Green Guides currently provide that a product or package should not be advertised as recyclable unless it can be “collected, separated, or otherwise recovered from the waste stream through an established recycling program for reuse or use in manufacturing or assembling another item.”[27] An unqualified description of “recyclable” will often be insufficient. When recycling facilities are available to less than a “substantial majority” (currently defined in the guides as 60 percent) of consumers in communities where a product is sold, the marketer must qualify the recyclable claim with information on the limited availability of recycling facilities.[28] Nor should a product be described as recyclable if there are components that are not recyclable or if there are attributes like shape or size that render the product unacceptable to recycling programs.[29]

The FTC has requested feedback on whether to alter the definition of “substantial majority” from 60 percent.[30] The agency also indicated that it may add guidance on unqualified ‘‘recyclable’’ claims for items collected by recycling programs for a substantial majority of consumers or communities “but not ultimately recycled due to market demand, budgetary constraints, or other factors.”[31]

In one prominent recent case illustrating the guides’ “recyclable” standards, Keurig faced a class-action complaint alleging that its plastic, single-serving K-Cup Pods (“Pods”) were deceptively advertised as recyclable.[32] When Keurig first switched to a recyclable plastic for Pods in 2016, it tailored its environmental marketing to capitalize on the shift. It placed a three-arrow recycling symbol on each Pod accompanied by the words “Peel, Empty, Recycle” (though with an asterisk on “Recycle” stating “Check Locally”), and wrote on Pod boxes, “Have your cup and recycle it, too” (though the box also stated, “Check locally to recycle empty cup”).[33] An internal study at Keurig revealed, however, that only 30 percent of Pods were successfully recycled because of “their size, their tendency to become crushed by the recycling machines, and residue from the foil tops, filters or other contaminants.”[34] And the plaintiff alleged that most recycling centers did not accept Pods in the first place.[35]

Citing the Green Guides, the district court held that the plaintiff stated a claim that Keurig’s representations about Pods being recyclable were deceptive.[36] “[A] reasonable consumer viewing the recycling claim on the Pods would have believed that the Pods were recyclable” even though only a fraction of Pods were recyclable at facilities that accepted them.[37] The court found that Keurig’s exhortation to “check locally” failed to disclose either the limited availability of recycling programs accepting Pods or the fact that only 30 percent of Pods were recycled even at facilities that accepted them.[38] Keurig settled the claims on a nationwide basis for $10 million.[39][LEF1] [VYX2]

Recycled content. The Green Guides state that it is deceptive to represent a product as containing “recycled content” unless it is “composed of materials that have been recovered or otherwise diverted from the waste stream.”[40] Such materials may have been diverted from the waste stream during the manufacturing process or after consumer use, and they can range from raw material to used, reconditioned, and re-manufactured components. If a product is not wholly composed of recycled content, it must clarify what amount or percentage, by weight, of recycled content it contains.[41]

The FTC is interested in general input on consumer perceptions of “recycled content” claims and the value of its current guidance on recycled content. It is also interested in revisiting how manufacturers can permissibly substantiate “recycled content” claims—currently, the FTC has only endorsed per-product or annual weighed average calculation methods, but it is interested in alternatives like certifications or mass balance calculations.[42]

Free-Of Claims

The Green Guides also address “free of” claims. Even if literally true, claims that an item is free of a substance may be deceptive if the product contains substances that pose the same or similar environmental risk as the substance not present, or the substance has never been associated with the product category.^[43] On the other hand, a “free of” claim may be appropriate even for a product that contains or uses a trace amount of a given substance if (1) the level of the specified substance is no more than that which would be found as an acknowledged trace contaminant or background level, (2) the substance’s presence does not cause material harm that consumers typically associate with that substance, and (3) the substance has not been added intentionally to the product.^[44]

The “free of” component of the Green Guides could pose particular challenges for marketing representations implicating PFAS or similar substances. The ubiquity of PFAS may lead to the discovery of PFAS in products whether intentionally added or not. PFAS may be used in products, the manufacturing process, or in packaging. As a result, consumer product manufacturers should take care that any claims about PFAS content are specific and are backed with substantiation. Since 2020, dozens of lawsuits on these sorts of issues have been filed against marketers of products allegedly containing PFAS.[45]

Consider the Thinx case, in which the crux of the deceptive marketing claims was a characterization of the underwear as “free of harmful chemicals.”[46] The class action plaintiffs argued that such a broad and unqualified statement deceived consumers.[47] Moreover, the use of the broad term “harmful chemicals” meant that Thinx could not utilize the safe harbor for free-of claims relating to trace substances.[48]

Other Environmental Claims

Compostable. Under the 2012 Green Guides, anyone who markets an item as “compostable” should have scientific evidence that the item will degrade into or become usable compost—e.g., soil-conditioning material or mulch—in a “safe and timely manner” in an appropriate composting facility or home compost pile or device.[49] “Compostable” claims must be qualified if the item cannot be composted at home and if appropriate composting facilities are not available to the “substantial majority” of consumers or communities where the item is sold.[50] The FTC is seeking guidance on whether to define “substantial majority” consistent with the definition of that phrase under the “recyclable” guidance.[51] This is a topical issue—plaintiffs have targeted marketers of products allegedly containing PFAS for advertising such products as “compostable” when PFAS does not degrade.[52][LEF3] [VYX4]

Carbon Offsets and Climate Change. Claims about the climate impacts of products are gaining increasing traction. The 2012 Green Guides only briefly address claims about carbon offsets, providing that such claims should be substantiated by “competent and reliable scientific and accounting methods” and disclose when the emissions reductions will not occur for two years or longer.[53] The FTC seeks comment on the adequacy and breadth of the current carbon-offset guidance; it also seeks more information on claims like “net zero,” “carbon neutral,” “low carbon,” and “carbon negative,” which the current guides do not directly address.[54][LEF5]

Organic. In 2012, the FTC refused to issue guidance for when non-agricultural products can be termed “organic.” Under the Organic Foods Production Act of 1990[LEF6] [VYX7] , the U.S. Department of Agriculture has regulatory authority regarding “organic” claims in agricultural products, defined as “any agricultural commodity or product . . . that is marketed in the United States for human or livestock consumption.”[55] Nonetheless, the FTC is seeking further input on whether organic guidance would be appropriate. Notably, one of the challenged representations in the Thinx lawsuit involved the underwear being made of “organic cotton”—supposedly a false characterization due to the underwear’s containing PFAS.[56] The updated Green Guides could shed light on whether similar marketing representations would be appropriate.

Sustainable. The FTC also previously chose not to issue guidance on “sustainable” claims because it said it “lacked a basis” to establish parameters on using the term.[57] The problem appeared to be that describing something as sustainable is puffery—“vague and non-specific” statements that cannot be proven true or false.[58] The FTC is now considering whether to revisit its decision. “Sustainable” representations have been cited in lawsuits challenging the marketing of products allegedly containing PFAS under the theory that PFAS does not degrade and that products containing it cannot be “sustainable.”[59] Such representations were also the focus of a suit against Coca-Cola that was dismissed for failure to state a claim last fall.[60]

Conclusion

Consumers are seeking out environmentally conscious products. But consumer product manufacturers must ensure that their environmental marketing follows FTC guidance and the growing case law around environmental claims. Please contact Marten’s PFAS Products Team, including James Pollack, Victor Xu, and Jessica Ferrell if you seek assistance with your environmental marketing representations or wish to comment on updates to the Green Guides. The comment period closes April 24, 2023.