US EPA Urges FTC to Update Green Guides as EU Enacts Greenwashing Legislation

The U.S. Environmental Protection Agency (EPA) has called on the Federal Trade Commission (FTC) to update its "Green Guides," which provide guidelines on environmental marketing claims, citing concerns over misleading representations. The EPA's focus is particularly on issues related to PFAS (per- and polyfluoroalkyl substances). Simultaneously, the European Union (EU) has passed its own legislation aimed at curbing greenwashing practices, specifically targeting companies making greenhouse gas emissions claims solely based on carbon offset programs.

Both the potential updates to the Green Guides and the EU legislation will have significant implications for how companies promote and market their products. Non-compliance with these regulations can result in substantial financial consequences.

The Green Guides, enforced by the FTC, regulate marketing statements related to various environmental attributes such as non-toxicity, biodegradability, carbon offsets, and renewable energy. Violations of the Green Guides can lead to penalties under the FTC Act, with fines reaching up to $43,792 per violation.

ESG (Environmental, Social, and Governance) considerations are increasingly important for companies, and compliance with the Green Guides is an essential aspect of minimizing the risks of greenwashing allegations. The Securities and Exchange Commission (SEC) is also expected to intensify its investigation and enforcement actions related to ESG, adding another layer of complexity for companies and investment firms.

The issue of PFAS is of particular concern, as companies marketing products as "non-toxic" or "PFAS free" could face enforcement action if scientific evidence suggests otherwise. The EPA supports the FTC's plan to update the Green Guides and highlights PFAS as a key reason for the revision. The EPA emphasizes that claims of being environmentally friendly, compostable, or recyclable must be allowed only if the products do not release PFAS into the environment.

In the EU, the Parliament has approved legislation that bans the use of general environmental claims without detailed evidence. The legislation also targets misleading practices, such as making claims about the entire product based on only one part or making false statements about durability or intensity of use.

Negotiations between the EU Parliament and member states will soon take place to finalize the language of the legislation.

To ensure accurate and transparent communication of ESG principles, companies must establish ongoing compliance programs to minimize the risk of greenwashing allegations. With increased attention on ESG practices from regulatory bodies like the SEC and the potential for FTC enforcement under updated Green Guides, companies should prioritize compliance considerations in relation to ESG, PFAS, and emerging chemicals.

As legal, regulatory, and legislative actions take center stage regarding ESG, PFAS, and emerging chemicals, companies must remain proactive in upholding compliance standards and ensuring their statements align with genuine ESG commitments.

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