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OUR PERSPECTIVES

The FTC Is Now Getting Involved in Corporate Net Zero Goals



On day one in office, President Biden promised an all-in approach to tackling climate change. The private sector has largely focused on the SEC’s Climate Disclosure Rule. However, the Biden Administration has been busy finding new angles to nudge companies to meet their net zero goals. This time, the Administration is looking at policy to influence how companies talk about their net zero goals.


One of these actions is through the Federal Trade Commission (FTC), an independent agency of the United States government that is responsible for enforcing consumer protection and antitrust laws. Back in 1992, the FTC first issued its Green Guides – a set of guidelines developed to help businesses avoid making false or misleading environmental claims in their advertising and marketing materials. While the Green Guides are not legally binding, they have been used in litigation to challenge false environmental claims.


Now, the Commission is considering whether to make changes that would update guidelines around environmental advertising, including how to message “net zero.” Last December, the FTC requested comments on what the changes should look like and received close to 60,000 responses. The 2022 update included several significant changes, including new guidance on carbon offset claims, recycling claims, and claims about products made from renewable materials. The update also includes new guidance on claims about the environmental impact of a product or service throughout its entire life cycle, rather than just during the manufacturing process.


For the Green Guides to go far enough to satisfy sustainability teams within the private sector and environmental groups, the FTC must have clear definitions for what constitutes net zero and carbon offsets – a task that agencies of jurisdiction are struggling to do.


Traditionally, the FTC has not enforced compliance of the Green Guides but has sent warning letters to companies. Despite environmental groups urging the FTC to make this guidance mandatory, the agency seems to be looking to maintain the status quo. The FTC is conducting public workshops and we will likely not see updates this year. If nothing else, this brings to light the many questions facing net zero credibility and the disconnect between companies’ varying commitments to climate action and consumer trust.


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