The Nature of Business: No greenwashing!
A friend recently told me this story:
Walking down a street in New York City, she came upon a small dry cleaner that prominently displayed the following sign in their window:
“All dry cleaning done on premises – 100 percent organic!”
The owners, new American citizens, understood the value of making ‘organic’ claims in promoting their services, but they didn’t understand what ‘organic’ meant in the dry cleaning context. Indeed, many common dry cleaners are chemically organic – and carcinogenic to humans. Some are also common soil contaminants whose toxicity makes site cleanups and remediation very difficult.
The point of the story is that business of all sizes and types have learned the value of incorporating environmental messaging into their marketing efforts. Green, natural, organic and eco-friendly are just some terms we often hear in connection with cleaning services, household cleaners, food, etc. They are buzz terms intended to boost the value of a product (or service), expand competitive advantage, and promote brand and bottom line.
Demographics reveal the reason for the green claim explosion:
• Gen Y/Millenials (those born 1977-1995) represent approximately 60 million people with an estimated spending power of $172B
• 74 percent are more likely to pay attention to a company’s messages if the company has a deep commitment to a cause
• Consumers who regularly purchase green products grew from 12 percent in 2006 to 36 percent in 2009
• Lifestyles of Health and Sustainability (LOHAS) is a consumer demographic with spending power of $230B USD and $546B worldwide (2009)
The lesson: demand for sustainable products and services – produced by corporately responsible companies – is growing. Moreover, it is forecasted by some that green will become so mainstreamed within the next 5-10 years that it will be the norm.
While demand has resulted in a wider variety of higher quality, lower cost green products, it has also raised important questions of what is natural, organic or environmentally friendly.
A claim that inflates the value or benefits of a ‘green’ product is called greenwashing. It’s basically about misleading consumers or other businesses in the supply chain regarding the environmental benefits of a product or service, or about the environmental practices of a company.
Since consumers are increasingly savvy about these issues, they are demanding more transparency from companies making such claims. For a business, this means full disclosure – not just about product ingredients but also about its business practices. If greenwashing is perceived, the company risks brand impairment and losing market share.
Another reason why full and accurate disclosure is crucial to your business is regulatory compliance. For instance, new Federal Trade Commission (FTC) requirements have sharper teeth and apply both to business and customer relationships.
The instruction is clear:
1. Tell the truth
2.Substantiate your claims
Best practices include:
• Claims must be rooted in science
• Claims must be clear, understandable and prominent – e.g., if you advertise something as “biodegradable,” qualify whether it’s the product, the container or both.
• Claims must not overstate environmental attributes or benefits – e.g., if a product represents it’s “carbon neutral,” but the company is carbon neutral only in packaging and not in all other respects of LCA (life cycle analysis), then the claim is misleading.
• Claims must be presented in a manner that allows for clear comparison – e.g., “less plastic,” “less paper,” and “less dye” mean nothing without a reference point. The claim must say something such as, “35 percent less plastic than our previous half liter container.”
In sum, companies are recognizing that the conscious customer means that sound green marketing is at the core of keeping your business competitive.
Roxane Peyser is president of maurgood, a sustainability consulting firm with offices in Frisco that helps companies and organizations achieve business responsibility and sustainability goals. She can be reached at firstname.lastname@example.org.
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