FTC Examines Green Building Marketing Claims

July 21, 2008

A recent study by McGraw Hill Construction found that by 2009, “82% of corporate America will be greening at least 16% of their real estate portfolios.”  McGraw Hill also projects that the value of green building starts will increase to $60 billion by 2010.  Responding to this market trend, many developers rightly see “green” as a market advantage for their new projects, and they are touting their investment in “green” developments and features, but what does it really mean for a building to be “green”?  How “green” does a building or building product have to be before you can market it as “green”?

The Federal Trade Commission (“FTC”), which is charged with protecting consumers against false advertising claims, is asking questions like these in its review of the Guides for the Use of Environmental Marketing Claims (16 C.F.R. Part 260) (the “Green Guides”).  The Green Guides offer the FTC’s interpretation of how the FTC Act’s prohibitions against false and misleading marketing claims apply to statements about an environmental benefit or attribute of a product or service.  If the FTC adds guidance related to green construction in the next edition of the Green Guides, those who market green or sustainable buildings and building products will need to review their practices to reduce the risk of an enforcement action based on false advertising.

As part of its review process, the FTC is hosting a series of public workshops and soliciting comments to determine how they should update the Green Guides.  Comments regarding Green buildings and construction are due on August 15, 2008.  At the Green building workshop, held on July 15, 2008, participants-with varying perspectives-raised a host of issues and points, including the following:

  • Confusion in the market can arise when manufacturers fail to distinguish between the environmental benefits of a product and the process of creating the product.
  • Green construction means more than just a single “green” element.  It involves many factors, including energy efficiency, water efficiency, supply chain impact, waste management, moisture flow, indoor air quality, and health effects, but how do you evaluate these factors and how do you establish a threshold for “green”?
  • Determining whether something is truly “green,” requires a life-cycle analysis that takes into consideration the environmental impact of everything from collecting the materials for the building or product to what can be done with it once it is obsolete and everything in between.
  • The US should adopt international standards for what it means to be “green.”
  • Third party certifications such as LEED®, Energy Star Qualified Homes, Green Globes and NAHB Green should have a place in determining whether a building is “green.”

If you would like to learn more about the FTC review of the Green Guides, weigh in on the discussion by filing a comment with the FTC or if you would like advice about marketing your green buildings or building products, we would be happy to assist you.