VIEWS: What do the new FTC Green Guide rules mean for small business ?

Yesterday the U.S Federal Trade Commission released a long-awaited update to their Green Guides, the federal government’s rules about green marketing. Originally published in 1992 (updated in 1996 and 1998), the Green Guides had not kept pace with the most recent sustainability revolution. As claims of greenwashing continue to grow, companies and sustainability advocates were eager to have the FTC step up and take a more robust look at green marketing claims (and where they go wrong). So when the new guidelines came out yesterday, we jumped at the chance to take a look.

Overall, we're underwhelmed. While the new guidelines do provide some clarification on basic issues like when you can claim something is biodegradable and when you can claim something is “recyclable” (the facilities needed to recycle it must be widely available), they fall short in other areas. For example, they don’t address the definition or rules around terms like “green” or “sustainable”. (See a cheat sheet on the new rules here.)

This isn’t really news, since we expected the FTC to play to the “least common denominator” on green marketing rules. Instead of creating a guidebook that shows how to make good green marketing claims, the FTC instead sets the minimum standard against which outright fraudulent green claims can be measured.  This approach is necessary, but not the far-reaching “code of best practices” that the green marketing industry so desperately needs.

One bright spot is that the FTC has placed responsibility for backing up green claims firmly on the company making those claims. Even if a product has a certification or seal that makes the green claim (e.g. FSC, or EnergyStar), the manufacturer is still on the hook for "competent and reliable scientific evidence" to demonstrate its validity. In a world with more than 400 eco-labels (many of which are vague, shady, or outright false), this is an important element of any green marketing rules.

So what does this mean for small business? It’s hard to tell.

On the one hand, experts agree that for the most part the rules of the game are the same. As Joel Makower put it: “For green marketers, it is not the end of the world as we know it. They won't likely change the landscape much, and most definitely won't eliminate critics' charges of "green-washing."

On the other hand, the FTC isn’t shy about calling out companies that are misleading the public. In late 2009, for example:

The Federal Trade Commission has charged four sellers of clothing and other textile products with deceptively labeling and advertising these items as made of bamboo fiber, when they are made of rayon. The complaints also charge the companies with making false and unsubstantiated “green” claims that their clothing and textile products are manufactured using an environmentally friendly process, that they retain the natural antimicrobial properties of the bamboo plant, and that they are biodegradable. (via FTC)

An important point to note is that Green Guides aren't enforceable as law, but the FTC can take action if it decides a company's marketing is unfair or deceptive. With these new Green Guide revisions finalized in the first part of 2011, I would expect to see more FTC enforcement in the coming 12-18 months.

Small businesses, take this grace period to examine your green marketing claims and tighten up your evidence now – you might not get another opportunity again soon.

And if you want to chime in on how the new rules may affect your business, the FTC is seeking public comments on their proposed changes until December 10, 2010.