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Questions linger around green marketing

BY Ken Clark

Marketers of consumer products touting various environmental-benefit claims finally have some closure on how to approach green advertising without running afoul of the Federal Trade Commission, said LeClairRyan partner and 17-year FTC veteran Thomas A. Cohn during an Oct. 12 business-law conference. But while the FTC’s finalized Green Guides do offer more clarity to sellers of packaged goods stamped with the likes of “recyclable,” “biodegradable” or “recycled content,” they fail to offer guidance for other terms that are in widespread use, Cohn added.

“These terms include ‘sustainable,’ ‘natural’ and even ‘organic,’ ” the attorney noted in his presentation to the 42nd Annual Advanced Business Law Conference, a Virginia Continuing Legal Education event in Williamsburg. “Still, the top-level themes of the finalized Green Guides are consistent with the proposed revisions published two years ago — namely, that marketers should not make broad, unqualified, general environmental benefit claims, because such claims are nearly impossible to substantiate and are thus deceptive.”

The FTC announced the final Green Guides, which are designed to help marketers avoid making misleading environmental claims, on Oct. 1, and the agency is unlikely to revise the rules again for another 10 years, said Cohn, who is based in the national law firm’s Manhattan and Washington, D.C., offices. “In recent years, the FTC has been more aggressive about ferreting out what it sees as deceptive or unsubstantiated environmental claims under the mandate of the FTC Act,” he noted. “The agency has targeted the claims of replacement-window sellers, makers of ‘bamboo’ clothing and sellers of supposedly ‘biodegradable’ plates and towels, just to name a few of its recent enforcements.” 

Marketers thus already had good reason to study and conform to the proposed revisions of the guides, which were available online at the FTC’s website since October 2010. It is worth noting, however, that the newly finalized rules do contain some changes from those initially proposed revisions. “The FTC added guidance about the need for marketers to analyze any tradeoffs that might result from a particular product attribute that serves as the basis for an environmental benefit claim,” the attorney explained. “The agency is basically saying that if the benefit you want to highlight is true, but happens to come at a substantial environmental cost or harm, that tradeoff must be considered first.”

Packaging labeled “15% less content by weight,” “recycled content” or something similar, for example, might be deemed deceptive amid an untenable tradeoff. “If you have to get the content from halfway around the world, which involves a bigger carbon footprint, this may outweigh the benefit you are highlighting,” Cohn said.

In recent years the FTC has targeted companies that rely on bogus certifications to trump up their environmental benefit claims. In the final Green Guides, the agency offered further clarification regarding the use of such certifications and seals of approval, Cohn told the audience. “The final Green Guides state that such endorsements must follow the agency’s existing Endorsement Guides,” he said. “They can actually convey some general environmental benefits, but the basis for the certification or the specific environmental benefits conveyed must be clearly and prominently spelled out.”

The clarification on certificates and seals, in fact, could have a side benefit of promoting legitimate certification providers, Cohn added. “If the FTC follows up with enforcement on certifications and seals of approval, there will be a shakeout in which the bad operators go out of business and the legitimate ones differentiate themselves and prosper,” he explained. “This clear roadmap of what you should and should not do could translate into a real opportunity.”

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Electrolux sees gradual North American recovery

BY Ken Clark

Swedish appliance manufacturer Electrolux reported a 5.9% sales increase in its third quarter, with sales of 27.1 billion Swedish krona, or $4.1 billion.

“In the third quarter, Electrolux recorded a significant year-on-year improvement in its sales and earnings despite considerable uncertainty in markets across the globe,” said CEO Keith McLoughlin.

All business areas with the exception of Europe achieved an operating margin above 6%. 

“Market demand for core appliances in North America in the third quarter was slightly positive, and we expect this trend to continue to improve, supported by a gradual recovery in the housing market,” he said. “We will utilize the positive momentum and invest more in brand building activities with the aim of further strengthening the group’s position.” 

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Market Recap: RISI Crow’s Construction Materials Cost Index

BY HBSDEALER Staff

A price index of lumber and panels used in actual construction for Oct. 19, 2012

*Western – regional species perimeter foundation; Southern – regional species slab construction.

Crow’s Market Recap — A condensed recap of the market conditions for the major North American softwood lumber and panel products as reported in Crow’s Weekly Market Report.

Lumber: Sales activity in the SPF lumber market improved, although much of the attention among buyers was directed toward 2×4 #2&Btr. Strong futures gains early, driven in part by fund buying, propelled buyers back into the market to cover needs. Increased demand absorbed surpluses at Southern Pine lumber mills, stabilizing prices early and then lifting them considerably by Thursday. Buyers flocked to mills to take advantage of low prices, needing to bolster inventories. Buyers entered the Coastal species lumber market in greater numbers early, absorbed what mills had on the ground and provided impetus for mills to raise prices. Yards bought greater volumes, having run inventories thin, and mills received immediate destinations for orders purchased by wholesalers. The Inland species lumber market continued a modest rally with excess inventories being cleaned up and prices firming. The action was focused mostly on the narrows of Hem-Fir/White Fir, but Fir-Larch producers saw a fair amount of business as well. Moulding and Shop prices remained firm and unchanged for both Radiata Pine and Ponderosa Pine. The absence of buyers from the Selects and Commons market continued to plague Ponderosa Pine board producers. Inland producers reported sales in the $500-505 range for both 1×6 and 1×12 #2&Btr. Sales volumes for Eastern White Pine remained steady and prices were firm. Continued steady demand for ESLP kept prices firm or up slightly. Buyers seemed more concerned with the mix and shipment time than the price. Western Red Cedar mills reported quieter sales activity for prompt shipping volumes. Both big boxes and their distribution networks spent the week lining up volumes for 2013.

Panels: OSB producers reported steady sales and stronger prices, as buyers returned for another round of buying. Although buying was widespread, the South and Mid-Atlantic regions saw the most activity. Sales activity in the Southern Pine plywood market improved to its strongest level in several weeks. Much of the demand was focused on rated sheathing, which extended lead times for those items out into the week of October 29. Urgency among some Western Fir plywood producers to sell significant volumes of sheathing early forced deep discounts into the market – some upwards of $25. Buyers purchased enough volumes to force prices to bounce. Many Canadian plywood buyers stayed on the sidelines, as the market searched for a solid trading level. Some producers were firm at published levels. Others had wood to move and were willing to discount. Particleboard producers noted a little better pace in their market. The added demand often equated to producers struggling less to move a week’s worth of production. The market for MDF has calmed. However, customers are still on allocation and happy to get what they can. Mills continue to carry lengthy order files. 

For more on RISI, click here.

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