What Marketers Should Know About Environmental Law

As the chair of the Sustainability and Climate Change Practice for Katten Muchin Rosenman, Nancy J. Rich not only knows a lot about environmental law, but has great insight into how these policies and rules affect today’s green marketing efforts. She recently spoke with Good And Green E-ssentials about the importance of knowing environmental law facts and how the Obama administration is doing with their current environmental efforts.

Patti Minglin: How does environmental law affect today’s green marketers? Why do they need to be aware of new policies and rules?

Nancy J. Rich: Retailers and consumers want to know that your product is high quality, a good value, and now more than ever, sustainable. The success of your marketing message depends, in part, on your ability to anticipate and adapt to new legal requirements and trends. Sustainability claims are not persuasive if you simply meet basic environmental and other legal requirements. Today, green conscious consumers want you to demonstrate that you exceed those requirements and show that your company and its products are ahead of the bare-bones command and control laws that apply to all products. Even better, understand and communicate how your company supports regulations that promote sustainability.

Most people think greenwashing is just false or inaccurate marketing claims, but with the proliferation of products claiming to be green, there will be an increase in greenwashing litigation. We’re actually seeing much more litigation regarding the accuracy of representations and warranties in contracts, such as Shaw case involving green building claims. The fact that the defendant settled will almost certainly encourage other companies and individuals to litigate these issues. Other related concerns for sustainable product marketing include disclosure of greenhouse gas (“GHG”) liabilities and litigation regarding claims for “sustainable” and “green” patents.

Minglin: The Obama administration has really moved environmental initiatives to the forefront. What are some of the policies that are being put in place that will most definitely affect how brands connect and communicate with consumers?

Rich: Pending federal legislative and policy initiatives are primarily focused on the biggest emitters of greenhouse gases (“GHG”). Left unaddressed for the moment are those smaller GHG sources that may not be big contributors when considered individually, but collectively add to the national GHG emissions significantly. If companies address the smaller internal GHG sources or work with those in their supply chain to reduce GHG emissions, they can get ahead of the curve and demonstrate to consumers how they’re going beyond what is required for them in the interests of sustainability.

The businesses that see the complete picture and take a comprehensive approach to reduce both regulated and non-regulated sources can position themselves to be ahead of the curve environmentally, while also educating the public about sustainability and providing concrete examples of how it can be done. This approach also offers an opportunity for companies to show consumers that they are not only going above and beyond what is required from them, but it will also show that they are in alignment with the green jobs initiative, another major undertaking of the Obama administration.

Marketers need to address sustainability, or fall behind in communicating with consumers on the issues that consumers expect their products to address. The Obama administration’s green economy initiative will affect our clients’ brands and businesses by making the clients focus on why their products and services save money for consumers and improve the environment. We’ve already seen that approach in the promotion of fresher, often cheaper local food products that are better for the environment because fewer GHGs and other pollutants are emitted from shipping. Another example is a marketing strategy used by one of our clients, who focuses on the fact that its reusable bottles are sustainable cradle-to-cradle (is it cradle to cradle, or cradle to grave? ) and save money in the long-term because of their lifespan.

The Obama administration will push the Federal Trade Commission (“FTC”) to finally take some action to update the Green Guides and pursue enforcement against greenwashers. In view of the administration’s numerous other priorities, it’s difficult to say how quickly that will happen. That means the bulk of action on greenwashing for the next couple of years will occur from private parties litigating over sustainability claims, rather than from government enforcement.

Minglin: Do you think the Obama administration is doing a good job of marketing—or communicating-- these new policies and decisions to the public? What are they doing right and what could they be doing better?

Rich: One of the primary goals of the Obama administration is to develop a green economy to mitigate the impacts of global warming and reduce national dependence on foreign oil. The Obama administration has definitely connected with consumers regarding the need to take action on these issues. But the administration needs to do a better job of addressing the practical problems related to its decisions and most important, address criticism that has the potential to seriously erode confidence in its policies.

At least one analysis of the new fuel economy regulations -- set to take effect in 2016 -- argues that there are significant loopholes that will allow manufacturers to claim credits from modifications that don’t improve actual fuel economy – for example, enhancing air conditioning efficiency. Also, consumers reasonably associate smaller, lighter cars with reduced safety, and they are not willing to sacrifice safety in return for better gas mileage. We need to hear from the administration on these serious issues.

Another concern is the quality of green jobs. If the engineering on a project is outsourced to India and the primary activity in the U.S. is low-paying manual or repetitive labor, then the jobs program won’t fulfill its promise of improving the economy by creating well-paying jobs.

In my role as a legal advisor I find that I need to remind clients – and myself -- that both commercial and retail consumers are skeptical of “green” claims. They won’t pay a premium for products that can’t easily demonstrate that they are substantially more sustainable than ordinary products. The administration needs to convince the public that its sustainability measures are significantly improving the environment and the economy at a reasonable cost. As green marketers already know, there is a great story to tell because many sustainable products can be more cost-effective for the consumer in the long-term, especially when tax incentives are available. That’s why tax credits and green energy incentives are going to be a key factor in making sustainable products and production methods more competitive. The key factor in determining the administration’s credibility on sustainability issues is the extent to which it is willing to provide stimulus money or tax incentives in order to level the playing field for sustainable products.

Minglin: What exciting things are you currently working on through Katten Muchin Rosenman?

Rich:  Earlier this year, we formed a Sustainability and Climate Change Practice, of which I am the chairperson. With ‘going green’ becoming an economic mandate in the marketplace, and regulation continuing to increase at local, state and federal levels, we are addressing a broad range of legal matters, including green building issues, corporate disclosure, greenwashing and many other legal matters. Unlike many sustainability practices, we take an interdisciplinary approach and our attorneys’ specialties include real estate, corporate governance, finance (private and public), mergers and acquisitions, environmental, tax, insurance and intellectual property. Our web site is http://www.kattenlaw.com/sustainability-and-climate-change-specialized-practices/.

The Practice is especially cutting edge because we are working with clients to identify and address both the challenges and the opportunities created by new sustainability requirements and initiatives. This is new territory and there are great possibilities for clients who are thinking creatively and successfully marketing new products and services. We represent clients facing legal issues relating to sustainability and climate change matters including waste-to-energy projects, carbon sequestration and trading, greenhouse gas liabilities and disclosure obligations, green building standards, tax credits, alternative energy project financing, regulatory analysis, renewable energy portfolio standards and water rights. We also assist foreclosing lenders, owners, and developers in restoring value to their environmentally distressed properties by developing programs to identify and pursue the companies who caused the contamination. Redeveloping these sites (often referred to as “brownfields”) is critical to preventing urban sprawl. That’s because it’s usually easier and cheaper for developers to build on previously undeveloped properties, which are generally located away from urban areas.

Minglin: Wow, Nancy—you certainly have a lot of exciting things on your plate at the moment. Thank you so much for sharing your wisdom with our Good And Green E-ssentials audience.