On September 25, AMERIPEN, the leading voice for the packaging industry, held its first session of its three-part webinar series focusing on 鈥淯nderstanding Packaging Claims and Labeling Requirements鈥�. This series provides insights and guidance in order to prepare for current and future challenges in packaging claims and labeling, including regulatory compliance, marketing, and product development. The first session, 鈥淢oving Target: The Fluctuation of Environmental Claims and Labeling Guidance鈥�, focused the discussion on an examination of applicable laws and legislation governing packaging claims and labeling plus looking at the 鈥淭ruth in Labeling Law鈥� and its business impact. Current AMERIPEN Executive Director, Dan Felton, introduced the session by first recognizing the annual partnership program sponsors and webinar sponsors and talking about the association鈥檚 mission before highlighting the session speaker, Sheila Millar, Partner, at Keller and Heckman LLP.
Millar started the session talking about claims versus labeling. She said claims generally refer to voluntary statements, while labeling traditionally means mandatory disclosure. For example, nutrition labels, state law labels, Federal Hazardous Substances Act (FHSA) labels, Textile Fiber Products Identification Act labels, etc. Voluntary 鈥渃laims鈥� on 鈥渓abels鈥� can be subject to agency authority, such as USDA鈥檚 Food Safety and Inspection Service issuing updated guidelines. She also emphasized that advertising challenges can be lodged against 鈥渃laims鈥� that appear in any media, including TV, radio, digital, online, and on labeling.
So, what is a green claim? She explained that in advertising, these claims highlight environmental attributes (with a focus on images and color). Examples could be compostable, recyclable, circular, sustainable, green, eco-safe, carbon negative, net zero, non-toxic, degradable, recycling content, etc. When it comes to advertising claims, they must be truthful and not misleading, substantiated by a reasonable basis, prevent deception, clear as to benefits of products, packages, and services. You must look at it through the lens of the consumer and have a reasonable basis for all material claims regarding the advertised product at the time the claims are made (including aspirational claims). Green claims require 鈥渃ompetent and reliable scientific evidence鈥�. While supplier certifications and assurances may provide support, tests of raw materials may not support finished product claims, and generalized knowledge or technical feasibility may be insufficient.
Millar then dove into aspirational claims, which involve actions today that will not result in environmental benefits until the future. A company must have a realistic basis to believe that it can achieve aspirational ESG commitment/goals at the time that it claims them within a certain timeframe. She explained that claims should be clear and qualified with regards to the method, basis, and timeframe. If the basis supporting the claim change, it qualified once again.
FT Guides
Millar then examined the FTC鈥檚 Guides for the Use of Environmental Marketing Claims, which was originally issued in 1992, revised several times and is currently under review. This provides guidance on specific claims, such as compostable, recyclable, recycled content, refillable, and renewable materials but do not preempt state law. Currently, Alabama, California, Maryland, Indiana, Michigan, Minnesota, Rhode Island, Washington and Wisconsin have general or specific green claims laws. Some of them restrict labeling of products marketed with claims such as degradable, compostable, recyclable and mandate specific substantiation, certification. With regards to refillable and renewable content, the marketer should provide means for refilling the package, and for renewable content, it should be similar to recycled content claims and made of entirely new content.
FTC 鈥淐ompostable鈥�
Millar pointed out that per Green Guides, compostable claims must be substantiated with competent and reliable scientific evidence that all the materials in the item will break down into, or become part of, usable compost in a safe and timely manner in an appropriate composting facility or in a compost pile. An unqualified compostable claim is when the item says home compostable, however you still need reliable scientific evidence of this claim. The same goes for if a product is compostable only in industrial compost facilities.
State 鈥淐ompostable鈥�
In California, Colorado, Maryland, Minnesota, and Washington, they have added restrictions for compostable claims, with California and Maryland expressly recognizing home compostable and Colorado, Minnesota, and Washington recognizing 鈥渃ompostable鈥� as industrially compostable. Plastic/plastic-coated products must meet ASTM D6400 or D6838. The Washington bill also recognizes ASTM D 8410, ISO17088, and EN13432. 鈥湽槎� compostable鈥� and 鈥渉ome compostable only鈥� claims have been barred in Washington. Some state laws also apply labeling, marking, coloring requirements, certification requirements to packaging and/or products.
FTC 鈥淩ecyclable鈥�
For FTC 鈥淩ecyclable鈥� per Green Guides, she said the term 鈥渞ecyclable鈥� should only be used when a product or package can be diverted or otherwise recovered from the waste stream through a recycling process for reuse or use in manufacturing or assembling another item. The FTC Guides and the RIC emphasizes that inconspicuous use of plastic resin ID code is not a recyclable claim. Thirty-nine states have had laws requiring the RIC be placed on plastic packaging (generally 8oz 鈥� 5 gallons). While some states require use of 鈥渢riangle of arrows鈥� design, CA SB 343 says that 鈥渞ecyclable鈥� claims are barred if statewide recyclability criteria not met. It also restricts use of 鈥渃hasing arrows鈥� to products that meet recyclability criteria and restrict plastic RIC.
FTC 鈥淩ecycled Content鈥�
Per Green Guides, 鈥渞ecycled content鈥� includes materials that have been recovered or diverted from the waste stream, either during the manufacturing process or after consumer use. The use of an accompanying symbol is optional, and a percentage of the recycled content must be disclosed to avoid deception. The new issues include state treatment of advanced recycling, disclosure of content derived from advanced recycling technologies, and mandatory post-consumer recycled content requirements. For state 鈥淩ecycling Content鈥�, you should generally follow FTC Guides except in California, where the use of an accompanying law is optional. The California law will affect recycling symbol and restrict RIC triangle of arrows design and more states are adopting laws on advanced recycling.
So, how does advanced recycling fit? She pointed out that 25 states have laws that recognize or encourage advanced recycling. However, we know that waste to energy and waste to fuel are not 鈥渞ecycling鈥�. Some states have expressly recognized mechanical and advanced recycling can generate plastic recycled content. As a result, some states are posing legislative and regulatory barriers. This includes California, New York and Washington laws that characterize gasification and pyrolysis as examples of 鈥渢ransformation鈥� or 鈥渆nergy recovery鈥� and are excluded from consideration as 鈥渞ecycling鈥�.
The Litigation Landscape
With some common criticisms of green and ESG claims, such as failure to disclose, misrepresentation, omission, and inconsistency, Millar said there has been an uptick in litigation in the last few years. The challengers to industry claims are generally the regulators, plaintiffs鈥� attorneys and investors claiming false advertising, misrepresentation, omission of information, breach of warranty, nuisance, negligence and strict liability. There have been filed settlements that are public, there are informal demand letters and discussion about claims. We are also seeing uptick in criticism but they end up being dismissed because the gravity has not been proven.
Green Claims Liability Risks are increasing as well with historically limited enforcement action from FTC, many state regulations focusing on claims for plastics, ESG reporting and other requirements adding to the mix, and attorney general investigations targeting claims (particularly food industry). The global legal landscape is becoming more complex and 鈥済reenwashing鈥� challenges鈥� are on the rise.
Millar wanted attendees to remember the key takeaways from the session. She expressed that almost every business makes green claims, laws are changing and inconsistent, litigation and enforcement risks are increasing, strong processes help manage risks, complete risk elimination is not possible; good processes can help businesses reduce and manage risks. She stressed that organizations should adopt internal procedures by defining internal procedures for creating, collection, maintaining and updating substantiation files; establish claims review and approval process, including for aspirational claims; and that training and education are key to positive collaboration between legal, marketing R&D, sales and investor relations.
When Millar was finished presenting, she welcomed questions from the audience and expressed that for FTC updates, requests for comments came out in 2022, so we may see something in December 2024. For new claims requirements, it is unlikely that the FTC would ban certain claims or certain types of speech, but they may look at granularity on more carbon offsets claims.
The session was a great insight into the subject and an excellent way to kick off the three-part series. Coming up on October 29, Part 2 of the webinar series will discuss 鈥淟egislative Pathways: State or Federal?鈥�, where Joe Dages from Steptoe will discuss federal legislative proposals to help provide standardized definitions in order to bring about great clarity and harmonization on packaging pathways for end of life.
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