“Sustainable” Green Marketing:An Update on Best Practices in Environmental Advertising ClaimsCatherine Bate, Heenan Blaikie LLPcbate@heenan.ca ∙ 416 643-6875

Osgoode Professional Development Teleseminar Series: May 27, 2010

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Dreaming in Green

Certified Hypnotist

Can help you• Quit Driving• Stop Littering• Conserve Water &

Energy

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Black & White Reality

75% of Canadians believe that environmental claims are

just marketing ploys

A Consumerology Report on the Impact of Environmental Issues, Bensimon Byrne (2008)

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False or Misleading Advertising

Competition Act: Section 74.01

(1) A person engages in reviewable conduct who, for the purposes of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever,

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False or Misleading Advertising

Competition Act: Section 74.01(1)

(a) makes a representation to the public that is false or misleading in a material respect…

(b) makes a representation to the public [concerning] performance, efficacy . . . that is not based on an adequate and proper test thereof, the proof of which lies on the person making the representation.

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Possible Penalties

• Civil:– Court may order Administrative

Monetary Penalties:

First Offence Subsequent Offence

Corporation Up to $10 Million(was $100, 000)

Up to $15 Million(was $200, 000)

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Possible Penalties

• Court may also make an order to:

– not engage in the conduct, or substantially similar reviewable conduct

– publish a corrective notice, with the same reach as the original ad

– impose restitution

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Past enforcement

• Gas-saving devices (PVI)

• Lululemon: Power of Seaweed

• ‘Bamboo blitz’

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Advertising Standards Canada

• Self-regulatory body, administering Canadian Code of Advertising Standards.

• Put out a brief Advisory on Environmental Claims in 2007.

• October 29, 2008 - Interpretation Guideline #3: When evaluating complaints involving allegedly deceptive environmental claims, ASC’s Consumer Response Council may take into account the standards in Environmental Claims: A Guide for Industry and Advertisers.

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ASC Decisions (Consumer Complaints)

• Centra Gas British Columbia Inc. - 2000– Claim that natural gas reduced global warming and acid rain, thus

making it the “most” environmentally friendly fuel available. – Natural gas was the least carbon intensive fuel readily available in the

market; that it was part of the solution to global warming; and that combustion of natural gas released significantly less greenhouse gas than oil or coal.

– Misleading: superlatives such as “best” and “most” unequivocally conveyed that no other energy source was as “good” environmentally as natural gas. Further, the warming process would not be reversed by burning natural gas.

• Alberta Livestock Industry Development Fund – 2007:– “Is pig manure good for the environment?... Yes….”– Misleading: Runoff from intensive livestock operations can adversely

affect water bodies and produce other negative environmental effects.

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Environmental Claims: A guide for industry and advertisers• Prepared by Competition Bureau and Canadian

Standards Association

• Released June 2008

• Addresses standards of evidence and ‘best practices’ related to advertising environmental claims (ISO 14021/Competition Act)

• One-year transition period

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Is “Green” Good Enough? (4.4)

• “An environmental claim that is vague or non-specific or which broadly implies that a product is environmentally beneficial or environmentally benign shall not be used”.

• Vague / general claims likely to require more comprehensive test results than fact-specific claims like “contains no chlorine”.

• • “Environmentally friendly”, “green” reserved for products whose

entire life cycles have been thoroughly examined and verified.

• “An environmental claim . . . which broadly implies that the product is environmentally beneficial or environmentally benign shall not be used unless it is accompanied by a statement that provides support for the claim.”

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Example: Nestle Waters Canada (Excerpt)

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How Specific Must a Claim Be? (4.4)

– Preferred: • “This product uses 20% less electricity in normal

use than our previous model”.

– Discouraged: • “This new and improved product is better for the

environment.”• “This product uses green electricity.”

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Examples from the EU:

Unacceptable: • Simple Heating Solutions (ASA, June 10, 2009): • “Their performance is just REMARKABLE and the potential for low running costs

and energy conservation is ASTOUNDING!” • The ASA concluded that the advertiser had not introduced robust evidence

showing that the electric heaters were energy efficient, or that they would be less harmful to the environment than conventional gas central heating.

Acceptable: • GDC Group Ltd t/a Dimplex (ASA, November 18, 2009): • “The new Dimplex range of oil-free column radiators with its rapid warm up, is

approximately 30% more effective at heating a room than its nearest equivalent oil-filled competitor …".

• Ad upheld by the ASA.

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Comparative claims (9)

• “…greatest potential to mislead purchasers…”

• Comparative claims shall be evaluated against one or more of the following:

a) an organization's own prior process;b) an organization's own prior product;c) another organization's process; ord) another organization's product.The comparison shall only be made:— using a published standard or recognized test method (as set out in

6.4); and— against comparable products serving similar functions, supplied by

the same or another producer, currently or recently in the same marketplace.

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Another EU example

• Scottish and Southern Energy” (ASA, October 15, 2008):• “Yes, it really is greener on the other side. At Southern

Electric we're the UK's number one for greener energy and we're putting our energies into supporting local communities and grassroots sport”.

• Not sufficiently detailed about the particular ways in which Scottish and Southern Energy was the “greenest”.

• Misleading because the ad did not make clear that the “green” claim was based on the proportion of electricity generated from renewable sources rather than a measure of CO2 emissions.

• Because the energy company had not specified the exact basis of its “green claim”, it was determined that the company had presented claims it could not support.

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Verification

• All self-declared environmental claims must be substantiated and verified by the claimant.

• Proof of substantiation to be made available: Where feasible, verification material shall be publicly disclosed or

made available to both the purchaser and a potential purchaser, as such information can affect purchasing decisions. (Clause 5.3)

A self-declared environmental claim shall only be considered verifiable if such verification can be made without access to confidential business information. Claims shall not be used if they can be only be verified by confidential business information. (Clause 8.3)

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Verification (cont’d)

“Note: It is recognized that in Canada, businesses or organizations are not required to disclose confidential or commercially sensitive information of a proprietary nature to the public. If information of a proprietary nature is used to support or validate an environmental claim, it should be made available to regulatory authorities and government agencies, upon request. Businesses or organizations are not precluded or restricted from making any type of environmental claim on the basis that the information supporting or substantiating a claim is premised on confidential business or proprietary information. Thus, in keeping with CAN/CSA-ISO 14021, all self-declared environmental claims can be made if they are substantiated and can be verified. See Section 5.3 of this Guide.”

[Emphasis added]

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Verification (cont’d)

Specific Verification Requirements

• Verification requirements for the 12 specific claims defined in the CSA Standard. These include “degradable”, “recycled content”, “recyclable”, “reduced energy consumption” and others.

• For claims not specifically dealt with, other test methods are identified in the CSA Standard. It is also important that all verification accords with good laboratory practice, is scientifically sound or based on generally accepted accounting principles, as applicable, and is documented.

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Verification (continued):

To substantiate a claim the following information must be available:(Clause 8.3)

• identification of the standard or method used;

• documentary evidence, if verification of the claim cannot be made by testing the finished product;

• test results, where these are necessary for claim verification;

• if testing is carried out by an independent party, the name and address of the independent party;

• evidence that the claim conforms with the requirements of 5.7 h) and 5.7 r) of the Guide [i.e., that it is true in relation to the entire product life cycle, and relevant to the area where the environmental impact occurs];

• if the claim involves a comparison with other products, then a description of the method used, the results of any tests of those products, and any assumptions made shall be clearly stated;

• evidence that the advertiser's evaluation gives assurance of the continuing accuracy of the claim during the period over which the product is on the market, and for a reasonable period thereafter, taking into account the life of the product.

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Third Party Certifications

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• The Commissioner of Competition v. Sleepwise Inc. et. al., (December 10, 2009)

• Result of Competition Bureau investigation into retailers who had represented to the public that certain hot tubs were “Energy Star” certified.

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Life Cycle Analysis (5.9)

• There must be a net environmental benefit in the production and dissemination of the product, and not merely a shift in the placement of a negative impact.

Example: The use of non-ozone-depleting gas for refrigeration can have a negative impact on the energy efficiency of refrigerators. If a claim is made with regard to the use of non-ozone-depleting gas, either the net benefit must be verified or the reduction in efficiency must also be clearly stated.

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“. . . Free”/ “Free of . . .” (4.5)

• May be used where the substance is found in trace amounts because it is ubiquitous in the environment.

• Not acceptable when ingredient was never in a product category, or was only ever present at a background level.

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“Sustainable” (4.6)

“At this time there are no definitive methods for measuring sustainability or confirming its accomplishment. Therefore, no claim of achieving sustainability shall be made.”

Some reference to registered management systems may be acceptable, if verifiable.

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“Recyclable” (7)

Be specific: – What is recyclable (product or packaging?)– Recyclable, or recycled content?

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“Recyclable” (cont’d)

• Inadequate to say that a product or package is compostable, recyclable, reusable or refillable “where facilities exist”. (10.1.3)

• Recommended that if at least half the population has access to collection facilities, term “recyclable” may be used without qualification.

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Biodegradable or Compostable?

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To Keep in Mind

• Don’t over-reach an environmental benefit:- E.g. Unlikely to “save the planet” by buying paper towels

made with recycled materials.- E.g. Can air travel ever be “eco-smart”?

• Avoid vague claims – It’s not easy to be “green”.

• Regulators are not the only ones watching – It’s a matter of consumer confidence.

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What’s Next?

- A Guide to the Guide? - Proposed amendments?

“Sustainable” Green Marketing:An Update on Best Practices in Environmental Advertising ClaimsCatherine Bate, Heenan Blaikie LLPcbate@heenan.ca ∙ 416 643-6875

Osgoode Professional Development Teleseminar Series: May 27, 2010