FTC seeks comment on new “greenwashing” rules

from THE CLIMATE 202Washington Post, Climate 202

by Maxine Joselow, with research by Vanessa Montalbano

In today’s edition, we’ll cover the biggest hurdle facing America’s electric vehicle revolution and a federal judge’s ruling that blocked President Biden’s water rule in 24 states. But first:

The Federal Trade Commission is soliciting public comments on its “Green Guides,” which seek to prevent companies from making deceptive environmental claims, as it updates them for the first time in a decade.

And environmental groups are flooding the commission with requests for these guides to crack down on several types of “greenwashing,” the practice of making a company or product seem more sustainable than it really is.

If the commission makes some of those changes, corporations could be barred from making misleading claims about everything from carbon offsets to composting — or risk fighting legal battles and paying steep fines.

The FTC has already prosecuted two major retailers for alleged greenwashing. Under settlement agreements last year, Walmart agreed to pay a $3 million civil penalty and Kohl’s agreed to pay $2.5 million for advertising “bamboo” products that were actually made of rayon, a semi-synthetic fiber.

However, limited funding and resources have prevented the FTC from taking further enforcement actions — something updated Green Guides wouldn’t change. Agency leaders have implored Congress to provide more funding, and environmental claims have to compete for attention on the FTC’s agenda, which is dominated by probes of big tech companies.

Here are some of the changes to the Green Guides that environmental groups have requested, along with some of the pushback from business interests worried about the impact on free speech:

For years, many environmentalists have urged the FTC to explicitly bar oil and gas companies from running ads that could mislead consumers about their efforts to address climate change.

In 2021, for instance, three environmental groups filed a complaint with the FTC against Chevron, accusing the oil giant of running ads that overstated the company’s investment in renewable energy and commitment to cutting emissions.

The complaint from Earthworks, Global Witness and Greenpeace USA noted that the ads touted Chevron’s investments in “ever-cleaner” and “clean” energy, but they neglected to mention that the company spent less than 0.2 percent of its capital expenditures on renewables. 

The FTC did not end up taking action against Chevron in response to the complaint. But the commission would be empowered to act in the future if the Green Guides mandated that oil companies include certain context in their climate ads, such as details on their continued investments in fossil fuels, said Josh Eisenfeld, corporate accountability communications manager at Earthworks.

“The problem with environmental claims is the devil is in the details,” Eisenfeld told The Climate 202. “And we don’t often see details in advertising.”

Across the Atlantic, advertising regulators have already taken a tougher stance.

• The United Kingdom’s Advertising Standards Authority last year banned two ads from HSBC, saying they were “misleading” about the banking giant’s efforts to cut emissions.
• And in March, the European Commission proposed draft rules that would require companies to back up their climate-friendly claims with evidence.

A Chevron spokesman did not immediately respond to a request for comment.

Climate activists have also called on the FTC to prevent natural gas utilities from claiming, without proof, that gas is environmentally friendly.

These activists note that the main component of natural gas is methane, a potent greenhouse gas whose climate warming power is more than 80 times that of carbon dioxide during its first 20 years in the atmosphere.

“The public deserves honesty about growing levels of pollution from the ‘natural’ gas system,” Caleb Heeringa, campaign director at Gas Leaks, said in a statement.

Other advocates have set their sights on hydrogen. The Inflation Reduction Act offers tens of billions of dollars worth of subsidies for “green hydrogen,” even though some companies are using fossil fuels to produce the hydrogen, releasing an enormous amount of greenhouse gases in the process.

“There’s a lot more research that’s needed on the possible impacts for consumers before hydrogen is promoted as a green alternative,” Jenifer Bosco, a senior attorney at the National Consumer Law Center, told The Climate 202.

The American Gas Association, a trade group that has promoted the environmental benefits of gas and hydrogen, has not yet submitted a public comment on the FTC proposal. Association spokesman Adam Kay declined to comment until the group has done so.

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In its own public comment, the National Federation of Independent Business warned the FTC that any effort to “chill certain commercial speech by marketers” could violate the First Amendment.

• Over the past several decades, the federation noted, the Supreme Court has extended increased First Amendment protection to commercial speech, although not to the same degree as political or artistic expression.
• Still, the high court has long excluded false or misleading commercial speech from such protection.