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The Stockout: Outdated FTC Green Guides still under review

Upcoming revisions likely to impact CPG ingredients, packaging and labeling

Some CPG items have carbon scores like these boxes of oat milk, but are the scores calculated and how does the reading compare to those of traditional milk or other plant-based milks? (Image: Shutterstock)

Outdated Federal Trade Commission (FTC) Green Guides remain under review

Consumers are increasingly looking to select products that are environmentally friendly, which is particularly true for younger consumers. Recognizing this, companies have redoubled their efforts to highlight their environmental credentials, at times making eco-friendliness a major part of the company ethos and in some cases putting carbon footprint labels alongside nutrition labels. That has opened manufacturers up to accusations of greenwashing (providing misleading or inaccurate environmental claims). Oatly is the first example that comes to mind for me. The oat milk producer put environmental friendliness at the center of its edgy advertising campaign and received pushback from an investment firm shorting the company’s shares and had ads banned in the U.K. after environmental claims were found to be misleading. 

Clearly, there needs to be a referee or there will be endless claims and counterclaims serving everyone’s self-interest. To avoid disruptions and even lawsuits associated with greenwashing, one strategy is for manufacturers to tie their environmental claims to guidelines from the Federal Trade Commission’s Green Guides. The issue is that the Green Guides are badly out of date, last updated in 2012. Since then, environmentally conscious Gen Z has emerged with pricing power and climate change concerns have intensified. 

The FTC announced in December that its Green Guides are under review, and it has been soliciting input in a comment period that ended April 23. The objective is to help marketers avoid unfair or deceptive marketing claims. Areas where the Green Guides may be revised include carbon/climate (to include additional detail), the  term “recyclable” (could be revised for containers that are picked up by recyclers but not ultimately recycled), and the term “recycled content.” Pertaining to the last two areas, on May 23, the FTC is hosting a workshop on recyclability and recycled-content claims. The Consumer Brands Association, which supports updated Green Guides, is advocating for national recycling rules rather than thousands of different recycling rules throughout the country that hurt recycling rates.   

Regulations on carbon claims are perhaps the portion of the Green Guides most in need of revision. The current rules pertain to carbon offset claims stating that marketers should have competent and reliable evidence to support carbon offset claims and use appropriate accounting methods. As more companies add carbon labels, issues that need clarification include what appropriate accounting methods are, such as whether carbon calculations include all parts of the supply chain, and how carbon is allocated for a manufacturing plant that produces a wide range of products. Another question is one of benchmarking — a label with the liters of carbon doesn’t mean much unless it is compared to some industry standard or average.

Tyson shares fall to 3-year low as meat processors grapple with livestock costs

(Chart: Inc.)

After record profits in 2021, the Biden administration targeted the meat processing industry in early 2022, concluding that the high concentration in the meat processing industry is unfairly burdening consumers and driving down prices ranchers receive for livestock. Recent Tyson results suggest that the 2021 profits were instead due to temporary market forces that have reversed and are now working against the meat processors. Now, the meat export markets have softened and consumers are shifting away from more expensive proteins, such as beef and pork. In addition, ranchers are raising smaller livestock herds following droughts and high feed costs. On Monday, Tyson cut its sales guidance for the year from 0%-1% growth from the prior guidance of 3%-7% growth and cut the margin guidance for its chicken, meat and pork segments by 200-300 basis points. In recent weeks, the meat processing giant also announced that it will cut 10% of its corporate positions and 15% of its corporate leadership positions — all while it continues to struggle to find workers for front-line positions at plants — many of which it hopes to automate.

How AI can reduce inefficiencies for shippers, according to Vorto

On Monday’s The Stockout show, CEO Priyesh Ranjan and Strategic Adviser Ramesh Chikkala described how their company, Vorto, can use AI to automate shippers’ and carriers’ supply chains. There is tremendous inefficiency in the freight markets that is largely the result of capacity disruptions from drivers moving around the industry to chase a few extra cents per mile. Using a combination of predictive analytics and high-frequency data that responds to events that cannot be anticipated, Vorto intends to streamline and automate logistics in the retail and CPG industries, as it has already done in the energy industry. To that end, the company brought on strategic adviser Chikkala, who spent 11 years as a senior vice president at Walmart, as well as another strategic adviser with a Procter & Gamble background. See the full interview here.

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Michael Baudendistel

Mike Baudendistel is the Head of Intermodal Solutions at FreightWaves and author of The Stockout, focusing on the rail intermodal, CPG and retail industries. Prior to joining FreightWaves, Baudendistel served as a senior sell-side equity research analyst covering the publicly traded railroads, and companies that manufacture and lease railroad equipment, trucks, trailers, engines and components. His experience following the freight transportation industry also touched the truckload, Jones Act barge and domestic logistics industries. He is a CFA Charterholder.