Red light on ‘greenwashing’? US regulatory agency takes fresh look at deceptive climate claims

With increasing attention on climate change, the U.S. government is targeting "greenwashing" — companies’ use of false or deceptive marketing to make themselves appear more environmentally friendly than they are.  

For the first time in more than a decade, the Federal Trade Commission is revising its "Green Guides," which offer principles and examples to help companies steer away from greenwashing. 

Though the guides are advisory, the FTC can act when deceptive claims violate federal law. But the agency has done so only eight times since 2018.

The revised guidelines are expected to be more explicit — such as spelling out what counts as "recyclable" — and experts expect increases in enforcement and corporate compliance.

"The Guides are way out of date," said attorney Kathleen Benway, former chief of staff of the Federal Trade Commission’s Bureau of Consumer Protection. "A lot has happened since 2012, and especially consumers’ perception of the importance of things like recycling and other environmentally sustainable practices.

"I think the guides are going to be more specific and prescriptive," Benway said. "We’ll also see more enforcement."

Attorney Frank Gorman, former acting deputy director of the FTC Bureau of Consumer Protection, agreed that the revisions likely will affect corporate behavior.

"Generally, what you’ll see is industry compliance. Companies want to mitigate risk," he said. "The big companies are going to modify their claims, or they’re going to sue to block the guidelines. What I don’t think they’ll do is just ignore them." 

Polls show that most Americans support efforts to mitigate climate change and will pay more for products that are sustainable. In turn, businesses try to market themselves or their products as environmentally friendly, sometimes misleadingly. 

"Greenwashing" is when a company uses advertising and marketing to persuade the public it is doing more to protect the environment than it really is. 

University of Miami climate disinformation researcher Geoffrey Supran called greenwashing "talking ‘green’ but acting dirty."

Some examples include:

• The largest U.S. oil and gas companies, makers of plastic, spent millions of dollars on advertising campaigns that said plastic would be recycled, even when they knew recycling wouldn’t keep plastics out of landfills, a 2020 NPR and PBS Frontline investigation found.
   

• Volkswagen, while touting the low-emissions and eco-friendly features of its vehicles in marketing campaigns, equipped vehicles with a device that allowed cheating on government emissions testing. Volkswagen paid $25 billion in fines, penalties and restitution.

• Delta Air Lines advertised that it is "carbon neutral," indicating it would take actions to cancel out the greenhouse gas emissions it produces. A May class-action lawsuit alleged that the company "grossly misstated" the amount of carbon it offsets through investing in projects such as deforestation prevention. (Delta called the pending lawsuit "without legal merit.")

Oil companies have frequently engaged in greenwashing, according to InfluenceMap, a London-based think tank that monitors corporate climate lobbying.

InfluenceMap reported in September that of nearly 3,500 public communications from five major oil companies, 60% of the messages portrayed the companies as proactive on climate change. Only 23% contained claims about oil and gas, even though just 12% of the companies’ capital expenditures were dedicated toward "low-carbon" activities, the report said.

The companies spend "hundreds of millions of dollars each year on a systematic strategy to portray themselves as positive and proactive on the climate change emergency," which is "inconsistent with the companies' plans for capital investment in their business," Influence Map said.

The FTC enforces federal law prohibiting "unfair or deceptive acts or practices" in commerce. The agency’s Guides for the Use of Environmental Marketing Claims, also known as the Green Guides, were first issued in 1992. The guides apply to claims about the environmental attributes of a product, package or service.

These guides, which are typically reviewed every 10 years, are advisory and don’t carry the force of law. But the FTC can take enforcement action if deceptive claims violate federal laws about misleading consumers, issuing penalties of up to $50,120 per breach.  

Private organizations have cited the Green Guides when suing companies over environmental claims, including in a greenwashing lawsuit filed in May against Nike.

In December, the FTC solicited public comments about how it should revise the Green Guides. It will be the first update since 2012, when the revision mentioned carbon offsets and recycling but didn’t include terms such as sustainable and organic. 

FTC chair Lina Khan wrote in the Federal Register that the latest review was prompted by several overlapping factors: consumers giving more consideration to climate change impact in their purchasing decisions; companies responding by making marketing claims about sustainability or low carbon footprint; and it being "virtually impossible" for consumers to verify such claims. 

The FTC asked for feedback about companies’ use of terms such as recyclable, sustainable and carbon offsets. The agency also asked for ideas about whether to implement rules related to deceptive or unfair environmental marketing claims. 

The agency extended the deadline for receiving comments from February to April and received about 60,000. 

One letter, from Climate Action Against Disinformation, an international coalition, recommended that the Green Guides be extended to include ads that promote a company as being climate-friendly. 

Laura Peterson, a climate accountability advocate at the Union of Concerned Scientists, a Massachusetts-based nonprofit that also submitted comment to the FTC, told PolitiFact that the FTC should set standards for use of terms such as "net zero," "carbon-neutral" and "low-carbon," so that "corporations cannot use them misleadingly."

In announcing its review, the FTC said that it has a "strong track record of suing companies for deceptive environmental claims." The agency cited April 2022 settlements in greenwashing lawsuits it filed against Walmart and Kohl’s, alleging the retailers deceptively marketed rayon products as "bamboo" and as "eco-friendly." Walmart agreed to pay $3 million and Kohl’s $2.5 million in penalties.

That was the first time since 2019 that the FTC has used the Green Guides to support regulatory complaints and federal lawsuits it has filed. The agency has taken no enforcement action so far this year.

Michael Khoo, climate disinformation program manager of the Virginia-based Friends of the Earth environmental group, said the FTC "needs to get serious by actually fining the companies who are openly lying about their climate commitments." 

Greenwashing recently has drawn tighter regulatory scrutiny abroad. In the United Kingdom, for example, the Advertising Standards Authority, a nongovernmental regulator, began a crackdown on greenwashing ads in 2023. 

The authority banned ads by the airline Lufthansa that featured a plane with an image of the Earth and the slogan: "Connecting the world. Protecting its future." The agency said consumers would view the ad as a claim that Lufthansa had taken "significant mitigating steps to ensure that the net environmental impact of their business was not harmful." Lufthansa said consumers would not see the tag line as an "absolute promise" that its business didn’t harm the environment. 

The authority banned six climate ads in May, and in June, it banned a Shell ad promoting its green initiatives because it did not tell consumers that most of its business is based on environmentally damaging fossil fuels. 

The American Fuel & Petrochemical Manufacturers trade association told the FTC the Green Guides should remain a guidance document and not regulation.

Rulemaking "is time and labor intensive, which limits the FTC’s ability to revisit and update the Guides as frequently as may be needed," the association wrote. "Such delays would potentially hamstring FTC’s ability to act quickly to address any changes that warrant updating."

Benway said she expects the Green Guides revision to provide strong examples of true and false environmental marketing claims ​​and spell out the evidence necessary to make true claims.

"The company is responsible for not only the claims that it is intending to make" in its advertising or marketing, "but also any claims that a consumer could reasonably take away," she said. 

Benway expects the revisions could be complete by late 2024, but said that the agency likely will aim to finish them sooner.

Susan Dobscha, a marketing professor at Bentley University in Massachusetts, said companies pay a price in lost consumer confidence when they greenwash.

Consumers generally will only trust environmental claims that aren’t too performative — that is, the companies that are "performing green," but not taking steps to protect the environment, Dobscha said.

Some consumers buying products labeled "green" think they’re helping the environment, so greenwashing "can have a temporarily good effect on a certain group of consumers," she said. 

But for businesses, she said, "most greenwashing ends up catching up to them and having a deleterious effect."

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