Have you seen products that claim to be “eco-friendly” or have “50 percent more recycled material?” How about businesses that claim to be socially responsible? Most importantly, how do you know if you can trust these claims?

Dr. Carol J. Miller, distinguished professor of business law in the finance and general business department at Missouri State University, has a unique interest in answering this question.

Miller, who currently teaches business law and environmental regulation, has spent much of her 32-year career at Missouri State examining environmental regulations and seeking out opportunities for research that can be tied back to the classroom.

During her time on sabbatical this past semester, Miller combined these two interests to research current guidelines for transparency in eco-friendly advertising as well as advocacy efforts to encourage state governments to adopt benefit corporation statutes.

Holding eco-friendly advertising accountable

Potential issues with dishonest eco-friendly advertising arose as early as the 1970s, according to Miller.

“There was awareness that some of these green claims were not necessarily valid,” said Miller. “For example, if a product claimed to have 50 percent more recyclable material than in the past, but in the past they only had 2 percent and now they have 3 percent, is that really a significant environmental attribute?”

To address these issues, the Federal Trade Commission (FTC) published the first set of guidelines for eco-friendly advertising in 1992, with the most recent update published in 2012.

“The overall purpose of the FTC guidelines is to prevent deceptive claims,” said Miller. “Qualifications and disclosures should be clear, prominent and understandable, and should specify whether it refers to the product or the product’s packaging.”

Thanks to these guidelines, when a corporation promotes inaccurate or unclear environmental claims, the FTC can issue warning letters that will encourage transparency when informing consumers about the products they purchase.

Incorporating social responsibility into the business structure

Benefit corporation statutes are changing how businesses address social and environmental concerns.

First introduced in Maryland in 2010 and now adopted by 30 states, benefit corporations include within their articles of incorporation a general public benefit purpose as well as a specific public benefit purpose related to social or environmental components.

“They require a corporation’s board of directors to consider not only profit, but the social and environmental components in its decision-making process,” said Miller. “They now have a legal responsibility to consider these components.”

While Missouri does not currently have its own benefit corporation statute, Miller hopes to generate enough interest with members of the Missouri Bar and state legislature to get the statute introduced.

For more information, contact Miller at (417) 836-5079.