Fashion's Greenwashing Problem: How FTC Green Guides Are Changing Sustainability Claims

Written by Tirsa Parrish

Sustainability is a growing movement in the fashion industry and across all sectors as people and corporations try to mitigate the effects of climate change. Customers are becoming more educated about the role that individuals, production methods, and finished products have on our environment and are choosing more environmentally friendly options. We are all trying to make smart choices for the planet and have relied on companies to tell us how their products are impacting the Earth.

Greenwashing: Truth In Advertising Hasn't Always Been Truthful

While most companies don’t want to mislead customers and follow ‘truth-in-advertising’ regulations, some have not been so conscientious. Several companies have made overstated claims about the sustainability of their products in an effort to gain customers trying to be environmentally friendly. 

Greenwashing is a deceptive marketing practice where brands make unsubstantiated or misleading claims about the sustainability of their products and practices. Until recently, this was fairly easy for companies to get away with because there were few regulations in place related to sustainability marketing claims. 

Limiting Misinformation

The Federal Trade Commission (FTC) first introduced its Guide for the Use of Environmental Marketing Claims, commonly known as the “Green Guides” in 1992 to hold companies accountable for their environmental marketing claims. These were meant to help the public be able to distinguish truly environmentally friendly products and practices from ill-intentioned rhetoric. However, the FTC deliberately decided against guidelines on “sustainability” or “organic” in their Green Guides to avoid overlap and confusion with the US Department of Agriculture’s (USDA) National Organic Program for organic food. 

This left the fashion industry largely unregulated for sustainability claims. After public pressure to crack down on greenwashing in the fashion industry, however, members of the FTC voted unanimously to review the Green Guides in December, 2022. The guidelines had not been updated in ten years.

For the FTC, review processes typically stay open for at least 30 days. Additional review periods of 10 to 30 or more days may be necessary upon review of commentary. Once the Green Guides have been updated, they only provide examples for marketers seeking to make non-deceptive claims and they do not represent the only permissible approaches.

As administrative interpretations of the law, the Guides themselves are not enforceable. In any enforcement action, the Commission must prove the challenged act or practice is unfair or deceptive. That being said, several states including Maine, Minnesota, New York, and Rhode Island, have adopted the Green Guides to help define their own laws against fraudulent consumer marketing. 

Source: Federal trade Commision; Image via news.bloomberglaw.com

Holding Companies Responsible

The FTC has authority to take actions against companies making deceptive environmental claims. Walmart and Kohl’s, for example, agreed to pay the FTC $5.5 million in total after the regulating agency accused them last year of falsely marketing rayon textile products as bamboo. 

These were landmark decisions holding corporations accountable for sustainability claims. This type of legal and financial accountability is needed to push many companies away from greenwashing and is a big reason consumers have been so vocal about needing updated guidelines. 

Groups that lobbied for reviewing the guidelines included the American Chemistry Council, a national trade association representing more than 190 companies with most of its stakeholders from the plastic packaging sector, as well as apparel trade groups The American Apparel and Footwear Association (AAFA), which represents over 1,000 brands, as well as the advocacy organization Politically In Fashion. More than 40 fashion industry members advocated for updating the Green Guides. 

Direction from the Green Guides includes: 

• General principles that apply to all environmental marketing claims
• How consumers are likely to interpret particular claims and how marketers can substantiate these claims
• How marketers can qualify their claims to avoid deceiving consumers.

Chelsea Murtha, director of sustainability at the AAFA voted to commence regulatory review of the Green Guides saying that modernity calls for it. “The sustainability landscape has changed significantly since 2012 … Consumers are becoming more skeptical of environmental claims. It would benefit both consumers and businesses to have robust guidance on greenwashing,” Murtha said.

Laura Kim of Covington & Burling LLP was one of the authors of the Green Guides during her tenure as chief of staff in the Bureau of Consumer Protection the FTC. She said, “The launch of the FTC’s Green Guides review is one that many stakeholders have been eagerly awaiting given the proliferation and the growing importance of green marketing for both consumers and marketers. As with the last review, I fully expect this proceeding to be a robust process that will focus on changing consumer perceptions of environmental marketing claims.”

Trash Talking at the FTC: Recyclable Claims and the Green Guides

As part of the ongoing review process, the FTC held a workshop to examine “recyclable” advertising claims May 23, 2023. The workshop was called “Trash Talking at the FTC: Recyclable Claims and the Green Guides,” and was free and open to the public. The half-day event covered topics including the current state of recycling practices and recycling-related advertising in the United States, consumer perception of current and emerging recycling-related claims, and the need for any updates or other changes to the Green Guides related to recycling claims.

There were also three panel discussions including one called “The Future of the Green Guides.” This session analyzed whether changes or updates are needed to ensure the Green Guides continue to provide accurate guidance to marketers on how to avoid making deceptive “Recyclable” claims. Additional public comment was allowed until June 13, 2023 to accommodate those who wish to provide input on the topics discussed at this workshop. 

Sustainability is at the forefront of many consumers' minds when making purchasing decisions. A 2023 report from NielsonIQ and McKinsey showed that consumer spending significantly increased when products were labeled with environmental, social, or governance initiative claims. Consumers have become increasingly aware of the need for personal and corporate change to be more environmentally friendly. The FTC’s decision to update the Green Guides will make this easier for all of us.