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January 9, 2008

FTC Holds First Workshop on Green Advertising

Last year, corporations and shoppers in the U.S. spent more than $54 million on carbon offset credits, but in its first workshop in a series on the issue of green marketing, the FTC, which regulates advertising claims, raised the issue of where that money is going, according to this piece in the New York Times. With the rapid growth of green programs like carbon offsets, “there’s a heightened potential for deception,” said Deborah Platt Majoras, chairwoman of the commission.

Last year, Volkswagen offered an offset plan that included planting trees in the lower Mississippi alluvial valley. Continental Airlines also offered an offset program, as did Dell, but this article notes that it’s difficult for these companies to supply and manage these offsets, which is why they’re turning to little known companies, such as TerraPass, and non-profits, like Carbonfund.org, for help.

Business Week looked at several carbon offset transactions last year, and found that some deals amount to little more than feel-good hype.

And there are further complications. For instance, there is disagreement over how much carbon dioxide can be neutralized by tree planting, and some companies say they have wondered if their offset providers were living up to their agreements. Chris Fischer, the general manager of Gaiam, a yoga-equipment company that began selling offsets for shipping to consumers through the Conservation Fund, insisted on visiting one of the tree sites in Louisiana. “Not only did I want to know it existed, I wanted to make sure it was being done the way they said it was being done,” Fischer said.

Increasingly, companies are promoting their green purchases on their packaging. At the FTC Workshop, Lori Bird of the National Renewable Energy Laboratory, pointed to Silk soy milk as an example of a company that promotes its RECs purchases on its packaging.

The concern is that for some companies, what’s on the package or in the ad doesn’t reflect what’s happening on the ground. “What the headline giveth, the footnote cannot taketh away,” said Lesley Fair of the FTC’s Division of Consumer and Business Education.

Dubbed “the wild west” and “chaotic” by Katherine Hamilton of Ecosystem Marketplace, the U.S. carbon offset market has grown dramatically since 2005 while environmental marketing claims have gone relatively unchecked. Hamilton pegs the U.S. carbon offset market at $91 million. She expects the market to quadruple within the next five years.

“The big takeaway from today is that while the terms are flying fast and furious, there’s not a lot of consensus about what people are really getting from their offsets,” said workshop attendee Steve Roberts, Managing Director of EnviroMedia Social Marketing, who was in Washington to launch a new Web site, GreenWashing Index, that allows consumers to post samples of real green ads and rate them.

The FTC is accepting public comments on its Green Guides through February 11.

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