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September 16, 2022
The Federal Trade Commission is revising its Guides for the Use of Environmental Marketing Claims, otherwise known as Green Guides, to push for more transparency and accuracy in companies marketing the sustainability of their products, The National Law Review recently reported.
The FTC established the Green Guides in 1992 to prevent marketers from using deceptive or misleading claims in marketing and labeling. The guides have been updated three times since then; the last update came in 2012.
No buzzword has had quite the impact in CPG industries that "sustainable" has. Sustainable materials and packaging were once considerations only for the most conscientious consumers, labeled a luxury by manufacturers rather than a foundational factor in purchasing decisions. Manufacturing sustainable products requires more expensive materials, which in turn, raises the price of CPGs.
Companies, however, are increasingly finding the additional costs are worth it. A Nielsen study on consumer purchasing decisions found that 55% of respondents would pay more for products that come from companies "committed to 'positive social and environmental impact.'" A Harvard Business Review report found in more than 90% of CPG categories, sustainably marketed products grew faster than conventional counterparts. "Consumers are voting with their dollars—against unsustainable brands," the report's authors asserted.
The sustainability revolution is not without its own concerns, however. A July report on Bloomberg.com called into question whether there should be a higher bar to call something "sustainable."
The International Consumer Protection Enforcement Network, a global consumer watchdog, reported in 2021 that as many as 40% of sustainability claims made online may be misleading.
At that time, "sustainable" was not one of the categories defined by the Green Guides—the FTC said it lacked sufficient evidence to base guidance on. "The word 'sustainable' is everywhere, and there's a lot of leeway on how it's being used," said Hilary Jochmans, a government affairs consultant in Washington. Jochmans, the founder of PoliticallyinFashion.com, led a group of advocates and experts to call on the FTC to overhaul its guidance regarding sustainability. Although exact definitions are not necessary, "we do need guardrails," she said.
The FTC updates to its Green Guides are projected to be in development for the next few years, and an exact timetable has not yet been established. There is increasing pressure, however, from both industry and consumer groups regarding what constitutes a sustainable product, and what is merely deceptive marketing.
Younger generations are even more likely to place value on sustainability. According to a 2018 survey from global consulting firm Deloitte, 77% of Gen Z respondents said it was important to work at an organization whose values aligned with theirs. Multiple studies have found Gen Z cares much more about climate change than preceding generations.
In a 2021 study, U.K. health insurance company Bupa found 68% of Gen Zers—more than any other generation—are anxious about environmental issue. It affects where they plan to work, also. Sixty-four percent of surveyed 18-to-22-year-olds thought it was important for employers to act on environmental issues, and 59% would remain longer with employers who demonstrated environmental responsibility.
As Gen Z enters the workforce and grows in purchasing power, their deeply held values about environmental responsibility are spilling over into their decisions about what products to purchase. This segment of the market appears to be poised for additional growth for many years to come.A version of this piece originally appeared on Food & Beverage Insider, a New Hope Network sister website. Visit the site for information on ingredients, product development and regulatory issues.
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