Green Claims in 2024: Global Guidelines and Regulations ft. Lauren Scott (The Resilience Report)

In this solo episode, we are going to be diving further into a topic that several of you have asked us to explore on The Resilience Report: green claims and messaging. More specifically, the guidelines and regulations coming into place this year (2024) and how this might change our businesses and how we position our products and services.  

In this episode, host Lauren Scott will share more about how the regulations and guidelines are changing, what you need to know, some of the risks that are associated with making unsubstantiated claims, and then three quick tips that you can immediately action at your business so as to be amore mindful with how you're talking about your products and solutions.

(0:00) Intro
(1:00) Green claims in 2024
(2:50) Why new guidelines and regulations?
(4:36) Understanding the new Green Directives in Europe
(7:52) Green Guides in the USA via the Federal Trade Commission (FTC)
(9:28) Knowing the risks of making unsubstantiated green claims
(11:00) 3 actions you can take today to get ready for green claim guidelines and directives

Chapters

• 0:00 Intro
• 1:00 Green claims in 2024
• 2:50 Why new guidelines and regulations?
• 4:36 Understanding the new Green Directives in Europe
• 7:52 Green Guides in the USA via the Federal Trade Commission (FTC)
• 9:28 Knowing the risks of making unsubstantiated green claims
• 11:00 3 actions you can take today to get ready for green claim guidelines and directives

Transcript

[Host: Lauren Scott] Hi, everyone. Welcome back to this week's episode of The Resilience Report.  

This is going to be a solo one primarily because I've been getting a lot of feedback from listeners, but also in my own day-to-day, this is the topic that I realized we really need to go in deeper, and that is this idea of green claims, and more specifically, the guidelines and regulations coming into place this year (so we're recording in 2024) and how this might change our businesses and how we position our products and services. 

So, for those of you know who know me, maybe a little bit less closely outside of my podcast, I do work in a role that allows me to work both in marketing and in sustainability, and this is a really interesting role (and I should clarify, is very distinct and separate from this podcast). This is my passion project, but in my own role, straddling both sustainability and marketing, a lot of what has been changing this year is we know that we need to be very mindful as to how we talk about sustainability and how we talk about green claims. And today, we are talking a little bit more about how the regulations and guidelines are changing, what you need to know, some of the risks that are associated with making those claims, and then three quick tips that you can immediately action at your business so as to be able to be more mindful with how you're talking about your products and solutions. 

Of course, I'm going to start off by saying if you are part of a larger organization and have a compliance and legal team, please go talk to them. They probably have a lot more context that they're able to apply directly to your business! That being said, I know we have a number of our listeners who are entrepreneurs or leaders as part of smaller organizations and who are really trying to have that positive environmental impact, so hopefully this episode just gives you a little bit of that overview and then also helps give you some of those tips that you can take straight back. 

So, I mentioned that 2024 is a big year when it comes to changes with regards to guidelines and regulations pertaining to green claims. We started the year off really strong, especially in the European market where Members of Parliament took a really important step when it comes to green claims. And before we dive into this, maybe just a quick context as to why this is happening. Why are governments stepping in and creating boundaries as to what companies can and cannot say? I did a previous episode on greenwashing versus green hushing that you can definitely go check t out, but very quickly: I would say more practically in our day-to-day, if you think about it, put your consumer hat on and you go out and you're probably like me. For the most part, you're trying to buy products that have environmental or social claims; you're trying to vote with your dollar and make the right decisions. But how many times are you looking at that product and you're like, “oh, I think this means it's a better choice”, but you're still not totally trusting what the language says. And you're not really sure how much better it is than, let's say, a competitor. And so, this is what these green guides and guidelines and directives are trying to put into place: it is to help us as consumers better trust and know exactly what we're getting when we're buying a product or service. 

So, going back to Europe, (I just wanted to put that little note out there as to why these guidelines are coming, because it can certainly seem like from the business side that this is just an extra challenge when you're trying to do something great that these rules and regulations are coming). But it's really to help us protect the consumer, to make sure that they really know what they're getting. So, in Europe, they're taking this very seriously. In January, we saw that the majority of the Members of European Parliament passed their Green Directives where they are going to be putting stricter guidelines around what companies can and cannot say when it comes to green claims, so definitely worth checking out those Green Claims Directive or Greenwashing Directives(they are actually sister directives that were brought in). Examples of what they're now regulating include the very hot topic of carbon neutrality. And they're basically saying that carbon offsets - the use of carbon offsets which a lot of companies have been using to make carbon neutral claims - can really only be leveraged in messaging when you've done everything else to reduce your emissions, and you're basically using those offsets to offset that last piece of your business that you really cannot do anything further to reduce the emissions that you've really done everything else. So it's really going to be as that last resort I would say versus this Band-Aid solution that a number of companies have been using, especially high emitting industries.

They're also going to be looking a little bit more if you're positioning one product as better than another product (even within your own line or versus competitors), they're going to get strict in terms of seeing what kind of documentation you have to prove that. So, what does this look like from a penalty standpoint? Because in Europe we're talking more regulation, this is where the government locally are going to go back. As the Members of the European Parliament passed it and now it's up to the individual countries within the EU to draft what this is going to look like for their respective countries. But the proposed penalties are serious: fines of up to 4% of the annual turnover for a company - which is a huge fine. It's not one of these ones that a company can just kind of brush off and pay off. They're also talking about possibly excluding you from future procurement opportunities. So not only dinging you with fines, but then also limiting your future business. So, they're getting extremely serious. I would really recommend that you check it out. This is going to be absolutely fascinating to see how this unfolds. But what I do think is really beautiful is that this was almost unanimous and across both sides, if you will, of Parliament trying to push this. I think everyone understands that the Wild West of sustainability claims right now is not working and so we need to have those guidelines. Europe is even talking about bringing in 3rd party validation where they're going to have a number of approved third parties to approve your messaging claims and sustainability claims, so that even before you make them, you're getting this vetting process. This might be, you know, as a marketing professional, I would say this might be a little bit heavy. I'm really curious to see how this is going to play out, just the pure logistics. If you're trying to get a campaign out there, what does that look like, maybe some pre-approved messaging. It's going to be really interesting to see how this plays out. So that's over in Europe.



We know that a lot of sustainability regulations tend to start there and then kind of get cascaded globally. In Canada, ( where I am based) we do have the Competition Bureau which does have guidelines in place. We also know that we are largely shaped by our neighbors to the south in the USA where, in 2024, we are also going to see updates this year. So unlike Europe, where it is actually regulations that are being updated, what we're expecting in the US is in terms of their guidelines being updated. So this is more, I'd say, recommended best practices versus necessarily seeing all the penalties linked with it. But these are the Federal Trade Commission's Green Guides, which are updated every 10 years. This is not a new thing that's being introduced. It's just that every decade or so, they tend to open up their guidelines and update them based on the latest reality of the space. A lot has changed in the last decade when it comes to sustainability. So, it's going to be really interesting to see what these guidelines are going to look like when they ultimately get published this year. 

And we already know that the Federal Trade Commission has opened this up to the public for feedback, and they were asking questions specifically around a few topics. Carbon neutrality, once again. They're also looking at things like claims of recyclability and recycled content. So very curious to see how this is going to shape up. They were also even asking should this be taken a step further and go from guidelines to more of a regulation standpoint. So two very different approaches, but all in the same year and it will be neat to see how one might impact the other. Of course, the risks might vary depending on where you're located in terms of these green claims and might be purely just guidelines and best practices. However, in the US, we know that one of the number one risks of making any green claims that are not substantiated are that of class action lawsuits. We're seeing this in a number of different companies being taken to court over green claims that they couldn't back up and that were really misleading to consumers. And so that's probably the biggest risk, I would say in the US. Some fines, but I would say nothing like what we're seeing over in Europe. So certainly, in Europe, it is that potential now coming risk of those huge fines. And then also, I really do think that the idea of being eliminated as part of that procurement process is also going to be a big push for companies to take it seriously and make sure that they can have that business continuity.

So, we talked about guidelines, we talked about regulations, we talked about the nuances as to what's coming up around the world. We talked about some of the risks, and I would also just say that the biggest risk, especially if you are genuinely trying to do the right thing, is that you just want to make sure you're keeping the trust of your customer. I mean, at the end of the day, they're coming to you because they really believe that you offer a better alternative or better business. And so, it's just really making sure that you are providing the backing to your claims so that they really feel like they can have that trust.

This is the last piece: I promised you that I would have three quick takeaways that you can bring back right away to your business. 

1. The first is avoid general statements. We've seen this a lot over the past few years where companies will say “eco” or “environmentally friendly” or “green”. And they've kind of gotten away with it. So, think of how many times you've been walking in the beauty aisle, and you've seen a soap that says eco-friendly or green. And you don't really know what that means. The worst offender is probably natural. So, avoid these general terms. You might be using them right now and that's OK, but just make sure that you get more specific with your messaging going forward. So, you can sit down with your team and say, well, what is it that makes our product more environmentally friendly, get specific and then make sure that those are the claims that you're talking about on your website. So, for example, maybe the big environmental thing that you've been doing is your packaging. Well, don't say your entire product is environmentally friendly. Say “we have reduced our packaging by X percent by doing this process”. So, get very specific is #1. 
2. If you are making any claims in terms of positive environmental impact and for example, you're saying this product, this new (for example) light bulb will help you save 30% energy in your building. If you generally think that is true and you've done the calculations, you need to document those calculations. So, for any claims that you're making, make sure that the process has been documented somewhere. This is ultimately for, if ever there is an audit by a third party, that you can show why you even made that claim in the first place. So, document that process. 
3. And the third piece is, once you've documented that process, it's kind of like Part 2 of #2, which is once you've documented that process, make sure it's repeatable. Just because you've done a test once and you've gotten a results, make sure that if an outside auditor comes in and tries to do it themselves, that they would get a similar result. So, by documenting it, you're going to help already because you're going to be able to guide that third party as to how you got your number and kind of guide them as to how they can get that number. And then you just need to make sure that, if somebody else attempts to do it, that they're going to get the same result. So: avoid general claims (get specific!), document your process, and then make sure your process is repeatable. Three quick things, but it can make a big difference, especially if you start right now.

We know that a lot of things are going to be changing in 2024 and beyond. Hopefully this gives you a little bit of a snapshot. You can start researching a little bit further, but just by following those three steps you're going to be positioned that much better than your competition, and even just that much better than how you were doing it yesterday. It's all about those incremental improvements, especially as you're trying to disrupt your respective industry in pursuit of better, more responsible, and more resilient business. It's a journey, not a destination, so don't feel bad if maybe you've been doing some of these the wrong way and just try and take this as an opportunity to clean it up, get stronger in your messaging and then just keep an eye out because this year is going to be a fascinating one for all. 

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