Archive for the ‘Marketing Claims’ Category

New England Fisheries to Reopen, and the Missing Identity of Most Seafood

Photo by Jim Maragos, U.S. Fish & Wildlife Service. Some rights reserved.

Photo by Jim Maragos, U.S. Fish & Wildlife Service. Some rights reserved.

The New England Fishery Management Council opened 5,000 square miles of protected waters off the coast of New England Thursday to new applications from commercial fishermen. These areas were closed in the 1990s to preserve habitat on the seafloor and give cod, haddock, and other species a safe place to spawn.

Fishermen have cheered the move, saying the 2010 adoption of a quota-based protection system made the geographic conservation areas an unnecessary restriction. Worried that 2013 will bring drastic cuts to the quotas for cod, haddock, and yellowtail flounder, industry groups will have to wait until January for the Council to review further fish stock data.

Environmentalists and scientists are concerned in particular because the protected areas provide a haven for older female fish that help increase stocks – but hope that the National Ocean and Atmospheric Administration, which has to approve the vote and is expected to act by May, will be more cautious.

Fish are also noteworthy this week with the news – or reminder – that seafood fraud is widespread. That means seafood is often labeled as something it is not, usually a cheaper look-alike. A new report by Oceana, an international organization dedicated to ocean conservation, finds that 39% of seafood from 81 grocery stores in New York City was not what appeared on the label, and that 100% of the 16 sushi restaurants investigated sold mislabeled fish. Last year, a Boston Globe investigation found a problem of similar scope.

The problem goes beyond economic duping. Consumers and diners are buying fish whose incorrect labeling might mean it was caught illegally or contains unlisted and illegal chemical additives. Enforcement, however, has focused on health claims, and individual restaurants know that they are at little or no risk of being caught.

Personally, I was glad to read the tuna steak I bought last week had been injected with carbon monoxide to keep its bright red hue. Many of us in Seattle enjoy our inexpensive Japanese cuisine, but the New York wholesaler quoted in the Times is right: “People want cheap sushi, and this is what happens.”

EPA Uncovers Hyundai/Kia Mileage ‘Discrepancy’

Photo by Alex Proimos, some rights reserved.

Today, we get to see how the EPA can impact 900,000 people almost immediately – that’s the number of car owners across the U.S. who could be affected the agency’s recent findings. Hyundai and Kia will lower their fuel economy estimates for 2012 and 2013 models after EPA testing found discrepancies between the agency’s testing and the companies’ data of up to six miles per gallon, the agency reported last Friday. New labeling on most vehicles will reflect only a one to two mpg reduction.

EPA’s audit testing, which also ensures vehicles on the road meet tailpipe emissions standards, occasionally discovers that the mileage listed on vehicles’ labels is incorrect, and requires the manufacturer to re-label – but this has happened only twice since 2000. Between 150 and 200 vehicles a year are tested, some randomly and others targeted, based partially on consumer complaints. EPA received a number of consumer complaints about Hyundai’s mileage estimates, and after it observed discrepancies between Hyundai and EPA testing data, expanded its investigation into data from other models, including those made by Kia, of which Hyundai is a part owner.

Already, three lawsuits targeting the Korean automakers have been filed. One, filed in the U.S. District Court for Central California, is seeking class-action status and $775 million in damages. Hyundai and Kia, though, have proposed a reimbursement program that reimburses owners for the difference between how much would have spent on fuel had the stickers been right (based on odometer readings and the old mileage estimates) and the amount they actually spent (based on the new estimates), plus a 15% ‘inconvenience’ premium.

Green Guides Give Guidance

Earlier this month, the Federal Trade Commission issued a freshly revised version of its “Green Guides” (a.k.a U.S.C. Sec. 260) for use by marketers everywhere. The Green Guides help ensure that marketing claims regarding the green or environmentally-related attributes of a product are honest and not deceptive. The Guides were first introduced in 1992, with subsequent revisions in 1996 and 1998. The new revisions include expansion and updates of existing sections as well as the addition of new sections on certifications, non-toxic claims, carbon offsets and more. These changes include content addressing the 340 public comments that were filed when this proposed Guides revision was released in a preliminary form in 2010. While the Guiides are not rules or regulations, and do not cover every possible scenario, they are a useful guidance resource to avoid making deceptive claims.

The Bamboom: A Fast-Growing Grass Has Investors Seeing Green

Bamboo is renowned for being the fastest growing plant in the world.  Its status as an environmentally friendly raw material – a more sustainable alternative to wood, pulp, and traditional textiles – is growing almost as quickly.  Bamboo’s ascendancy is even reflected in the IPO market: we can find five initial public offering registrations by companies for whom bamboo is an important if not central product.  All five have been filed since the middle of 2010.  The newest came in earlier today, in the form of an F-1 filed by Dragon Bright Mintai Botanical Technology (Cayman) Ltd.  The extravagantly named Hong Kong-based startup seeks to get into the business of bamboo “forestry” to meet the rising world demand for this woody grass.

Photo by Joi. Some rights reserved.

Dragon Bright does not go out of its way to market itself as an ecologically conscious company.  But on that score it is the exception among its fellow bamboo-focused registrants.  A recent case in point is Sugarmade, Inc. (S-1, 8/4/2011), a distributor of non-wood paper products.  Wearing its eco-passion on its (green) sleeve, the company declares that its use of such “earth friendly sources” as sugar cane and bamboo instead of wood “significantly reduces its manufacturing carbon footprint, energy consumption, and attendant water pollution . . . .”   Similar rhetoric is found in the filings of Biopower Operations Corp. (S-1, 2/9/2011; closed in August), which aims to use bamboo pulp as a biomass energy source; Artison Investments, Ltd. (S-1, 9/10/2010) , developing a composite building material made from bamboo; and Asia Green Agriculture (S-1, 9/20/2010; closed in July), cultivating organic bamboo shoots for the dinner table.

Perhaps even more illuminating is how other already-public companies have reinvented themselves to jump on the bamboo bandwagon.  In some cases, these transformations run a predictable course: for example, a company called Hemptown Clothing Inc. changed its name to Naturally Advanced Technologies Inc. and began supplementing its hemp-based textile offerings with other eco-friendly fibers like bamboo.  But in many other cases, the switch to bamboo seems to come out of left field.  Ivany Nguyen, Inc. (which grows bamboo for paper pulp) and Clenergy Inc. (bamboo for biomass energy generation) both began their corporate lives as mining companies.  And then there is One BIO Corp., whose business now includes the production of bamboo-based organic food products and fertilizers.  Long before it became focused on the growth of this versatile member of the grass family, back when it was still called Contracted Services, Inc., the company was invested in keeping grass short.  It offered commercial lawn mowing services.

Carbon Neutral Coffee: May Both Your Beans And Your Marketing Claims Be Green

Photo by איתן. Some rights reserved.

Like coffee? Well, duh. (I write this from Seattle, WA, so excuse my assumptions.)

But most eco-conscious consumers know that every fragrant, tasty, and imported cup comes at an environmental cost. Last year, a Canadian coffee company commissioned a study that was used to calculate the carbon footprint of a single person’s coffee consumption (based on an average 2.6 cups/day). The study considered every step in the coffee-making process, from farming, roasting, and transporting the beans to boiling the water in your kitchen and eventually tossing the used grounds. The findings? This fortifying habit generates an eye-opening 35 kilograms of CO2 annually (comparable to driving a car about 105 miles).

The environmental impact leaves a lot to be desired, though it nicely sets the stage for companies who would like to work towards – and market to customers who strive for – carbon neutrality.

Enter Coopedota R.L. Earlier this week, the 800 farmer coffee cooperative in Costa Rica announced that after 12 years working towards carbon neutrality, their efforts had finally paid off – they are reportedly the first of their kind to export this certifiably “carbon neutral” coffee.

The certification comes in the form of PAS 2060, a set of materials developed by British independent standards-setter BSI that “allows organizations to ensure their carbon neutrality claims are correct and gain customers’ confidence.” While PAS 2060, which was launched in April of 2010, may be one of few private standards to be recognized internationally, no formal international certification scheme currently exists.

And what is carbon neutrality? Generally, “carbon neutral” describes an entity whose greenhouse gas emissions net to zero, usually by both decreasing carbon emissions as well as sequestering or offsetting an equivalent amount of carbon, or purchasing carbon credits to cover the difference. However, according to the FTC, no uniform definition of the term exists (though I’m sure The CarbonNeutral Company, who purportedly first coined and registered the term in 1998 would disagree).

In the states, we’re still far from any kind of national standard or certification scheme. However, the FTC is making progress towards developing federal regulations that dictate how products can use marketing claims of “carbon neutrality.” The FTC’s Green Guides cover environmental marketing generally, but it’s only in the past few years that consumers and marketers alike have clamored for more specific guidance on carbon neutrality claims. As we reported last October, the FTC is currently in the process of updating the Green Guides to address consumer feedback and to reflect changes in the marketplace.

You can see section VI.E (starting on page 166) of the FTC’s proposal for a discussion of the proposed changes (and initial feedback) relating to carbon offsets and carbon neutrality, or you can jump straight to page 201 for the actual proposed additions to the Green Guides regarding carbon offsets. This language, once approved, will eventually be codified at 16 CFR 260.5.

In the meantime, ease some of your consumer guilt by following these simple rules.

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