Eco-Friendly Marketing Claims Face Scrutiny by State Lawmakers

State lawmakers across the country will take aim this year at environmental marketing claims with proposals to limit “greenwashing,” or overstating the sustainability or environmental benefit of a product or business.

Bills filed in states including New York, Washington, and New Hampshire propose bolstering requirements against deceptive or misleading claims that plastic products are recyclable. The efforts are primarily led by Democrats, who hold legislative majorities in New York and Washington.

A new Colorado law that largely took effect on Jan. 1 introduces stricter standards around representing a product as compostable.

The state action comes as the Federal Trade Commission considers updates to its guidance on the principles companies should follow when pitching themselves or their products as environmentally friendly. Backers of the state-level proposals say new laws could provide enforcement power and buoy waste reduction goals.

Industry groups have raised concerns about differing standards across the country. They’ve previously mounted opposition to such labeling restrictions, including against a law enacted in California and an unsuccessful New Jersey bill.

Policymakers’ interest in green marketing claims is growing as consumers increasingly want to choose companies that are environmentally responsible, said Sedina Banks, a partner in the environmental group of Greenberg Glusker Fields Claman & Machtinger LLP. New corporate disclosure and transparency requirements will likely lead to more greenwashing litigation brought by the government and private parties, she said.

“Overall, companies just have to be careful for not overstating the environmental benefit, and really, I would err on being more cautious when making these claims,” Banks said.

Chasing Arrows

Industry groups note an increasingly complicated regulatory landscape for how products are labeled and marketed. A few state proposals to be considered in 2024 are similar to a 2021 California law that restricts when a product can use the “chasing arrows” symbol that indicates recyclability.

Numerous packaging and other business associations asked Gov. Gavin Newsom (D) to veto that law, arguing it creates a new and unworkable definition of “recyclable.”

Labeling based on individual state standards “would be a complete disruption to commerce as we know it,” Alison Keane, president and CEO of the Flexible Packaging Association, said in an email. State “one-off” bills work against the harmonization needed to increase recycling, she said.

“Further, it will only create more consumer confusion about recycling as people purchase and dispose of goods across state lines,” Keane said.

On Tap in Statehouses

In New Hampshire, a bill that would prohibit plastic containers and bottles with the chasing arrows symbol unless the recycling rate is 75% adds to efforts to divert waste from landfills, bill sponsor Rep. Tony Caplan (D) said in an interview. The bill would require that companies keep records to support recyclability assertions.

The recycling logo can mislead people into thinking “plastic products aren’t as dangerous as they could be because they’re recyclable, whereas in fact, we’re not recycling plastics hardly at all,” Caplan said.

A New York bill geared at recyclability claims accompanies other waste reduction efforts in the state, bill sponsor Assemblymember Deborah Glick (D) said in an interview. The measure would require the state Department of Environmental Conservation to develop regulations around what types of plastic products and packaging can be labeled as recyclable.

“We don’t believe in false advertising,” Glick said. “This is an extension of a) not misleading the public and b) not contaminating the recyclable waste stream to make it more difficult to actually recycle those things that are more readily recyclable.”

The new Colorado law that regulates compostability claims stems from interest in addressing climate change as well as a recent compost contamination issue in the Denver metro area, said Sen. Lisa Cutter (D), one of the lawmakers who led the effort. The law intentionally mirrors a Washington statute to avoid creating piecemeal state standards, she said in an interview.

“You see it across lots of product categories where there’s greenwashing and things that are labeled as compostable or as environmentally friendly that really aren’t,” Cutter said.

Novel Law on Carbon Neutrality

Other states may also look to a new California law that is the first in the US to require companies to support claims around carbon neutrality and voluntary carbon offsets. The law that took effect Jan. 1 requires posting disclosures online.

“Some of these recent ESG anti-greenwashing initiatives that California has come up with are increasingly becoming kind of a reference point for other regulatory frameworks that other US states may consider or even that may get promulgated at the federal level,” said Paul de Bernier, partner at Mayer Brown LLP.

The California law prompts a close look at what climate-related materials a company has publicly available, said Jayni Hein, co-chair of the carbon management and climate mitigation practice at Covington & Burling LLP.

“The ability for many different entities to bring potential lawsuits—combined with the fact that it’s a very novel law, with some ambiguities in the way that it’s been drafted—just has raised a lot of questions regarding how companies should seek to come into compliance,” Hein said.