- Sales of packaged goods advertised as environmentally and socially conscious have been rising.
- Over the past year, consumers plunked down $73 billion for products described as sustainable.
- The federal government is updating guides around how companies can prove their environmental claims.
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Stroll down the grocery-store aisle, and you’ll see all kinds of food, drinks, shampoos, and cleaning products labeled with claims like “sustainable,” “made with 100% recycled materials,” or, increasingly, “carbon-neutral.”
It pays off for companies to use these kinds of labels. Between 2017 and 2022, sales of packaged goods advertised as environmentally and socially conscious grew 28%, compared with 20% for products that made no such claims, research by NielsenIQ and McKinsey found.
Over the past year, consumers bought more than 13.6 billion products marketed as sustainable for a total of $73 billion, NielsenIQ found.
Yet it’s hard to know whether such claims are truthful, or just greenwashing.
That could change now that the Federal Trade Commission is updating its Green Guides, which outline how companies can prove their environmental claims so they don’t deceive consumers. The current version is more than a decade old and doesn’t define buzzy terms including “sustainable,” “net zero,” or “carbon-neutral” that have proliferated.
“It’s important that consumers are getting what they pay for and aren’t ripped off,” Mary Engle, the executive vice president of policy at BBB National Programs, a nonprofit that oversees businesses’ advertising and privacy practices. “Companies also want a level playing field. If a company is making an investment to reduce the environmental impact of its products or services, it should be able to compete fairly on that and not be undermined by a competitor who hasn’t done the same.”
Engle, a former FTC official who worked on the first Green Guides in 1992, told Insider that she hoped the agency would also address “aspirational” claims. Companies are advertising what they plan to do, such as addressing the climate crisis or using more recycled materials in their products.
The problem is companies don’t have to prove they can achieve their goals in a reasonable timeframe, Engle said.
She pointed to a case BBB National Programs brought against the American Beverage Association, which represents companies such as Coca-Cola and PepsiCo.
The trade group’s “Every Bottle Back” campaign said plastic bottles were “collected and separated from other plastics so they can be turned back into material that we use to make new bottles.” The ad also said this “reduces plastic waste.”
BBB National Programs determined that those claims conveyed that the bottles were made from recycled plastic and didn’t make clear that this was a goal the companies were working toward. There also wasn’t clear evidence of a meaningful reduction in plastic waste by the companies, the nonprofit said.
The beverage industry appealed the finding, arguing that the ad was intended to increase awareness that plastic bottles could be recycled. An appellate body of BBB National Programs upheld the original decision. A spokesperson for the American Beverage Association told Insider it’s exploring how to modify the ad.
For its part, the FTC is accepting comments on how to update the Green Guides until Monday. It might be another year or more before the changes are finalized. And while the guide isn’t legally enforceable, it does influence industry practices, Engle said.