November 2, 2010

Are Green Marketers Still "Sinning"?

[Note: Below is the blog I posted at Harvard Business Online last week about Terrachoice's new "Sins of Greenwashing" report. It received some passionate commentary, particularly from friend and green marketing guru Jacquelyn Ottman. I've reposted her comment and my response below the blog. See also Joel Makower's excellent criticism of the report.]

The green marketing research firm Terrachoice released its annual "Sins of Greenwashing" study last Tuesday. I got a sneak peak on Monday and spoke with Scot Case, one of the key execs behind the report.

For the past few years, this study has been one of my favorite reviews of the pitfalls of green marketing. It's always a clever piece of analysis based on painstakingly assembled data about thousands of consumer products. This time their researchers explored 34 stores in Canada and the U.S. (from chains that have over 40,000 locations) and looked for any product that made a green claim — all while managing not to get arrested as they trolled store aisles for hours. They then counted how many products made any of seven mistakes, or "sins," that Terrachoice has previously identified.

Check out the report (page 10) for the exact definitions of the Seven Sins, but they include making claims that are vague ("all-natural"), having no proof (from, say, third-party certification), or stating irrelevant details (such as "CFC-free" on aerosol cans —the substance has been banned for 30 years).

This year's report is very well timed. The U.S. Federal Trade Commission just proposed changing its Green Guidelines, the standards for what marketers can legally say. The new, stricter rules are open for public comment (PDF) now. I'll be keeping a close eye on that story, but in the meantime I'll point out what I see as the key findings of the report. This report houses some of the best data on what marketers are trying to do and the pitfalls you should avoid. Here are the big picture findings:

1. The number of products making some kind of green claim is rising fast.
This year, Terrachoice cataloged 5,296 products. In just the two dozen stores it visited both in 2009 and 2010, the number rose from about 2,700 to 4,700, a 73% increase. Given the economic climate, this increase is particularly impressive. Because greener products are often considered to be (or actually are) more expensive, marketers would be forgiven for avoiding that pitch in a recession. Clearly there's a belief that consumer interest is still rising. (Side note: The overall increase in green claims has not gone unnoticed by certification and safety giant Underwriters Laboratory, which bought Terrachoice this year to help round out its UL Environment business.)

2. The vast majority of products with green claims are still committing at least one "sin"
In the first report in 2007, literally one product avoided all the sins. Terrachoice tries to put a positive spin on the new data, which shows a moderate increase of "sin-free" marketing. But the percentage of products that are still sinning remains very high at 95%. This level of greenwash, no matter how minor, leaves companies wide open to significant risk in the marketplace.

3. The mix of sins committed is shifting, and the sin of "worshipping false labels" is on the rise. An amazing 70% of these products now have no proof of their claims, and 31% go so far as to include some kind of label that looks like a third-party certification. As the report put it, "ease of access to false, completely meaningless eco-labels has become almost comical." The labeling world is much in flux and it's incredibly over-populated - the group EcoLabel Index is currently tracking more than 350 labels officially, and something like 600 in reality. Companies have to be very careful about this one - inventing your own label to make a claim is dangerous for the brand and could bring actual penalties.

4. The product and industry sectors with a longer track record of green marketing are doing better. Almost 30% of products in categories with a history of green claims, such as building and construction materials, include a legitimate certification (but still may sin in other ways). In newer categories such as toys, less than 15% include a certification. This finding bodes well for the future though, as companies learn and get more careful.

5. Claims about toxicity are on the rise, particularly in toys and baby products. A few years ago, nobody had heard of the chemical BPA or of phthalates. These substances help make plastics malleable or line the inside of canned goods, among other things. The focus on these chemicals, which may mimic hormones and screw up our endocrine system, has increased greatly. States and countries like Canada are banning the substances in kids' products. Not surprisingly, this year the number of products making "BPA-free" or "phthalate-free" claims rose 577% and 2,550% respectively.

Finally, the report comes to one interesting conclusion that I'm not sure I agree with. Larger retailers apparently have a lower percentage of sinning products than boutique and specialty green stores. Terrachoice uses that data to conclude that larger retailers are more trustworthy. But as far as I know, retailers are not really checking the product-level environmental claims that their suppliers make at this point. There are a number of initiatives in the works to provide some standards in the B2B world, the largest of which is the Sustainability Consortium, started by Wal-Mart. But none of these groups are close to rating or checking every product.

I believe that retailers, out of necessity from lack of data, are accepting the claims pretty much the same as consumers are. My explanation for the discrepancy that Terrachoice notes is that the bigger retailers carry a different product mix with more of the larger brand names that face more scrutiny and are thus more careful about claims. No matter what the reason, there are fewer false claims in larger stores. But even so, nearly every product surveyed made some mistake.

Luckily for business, these sins are not actually all that difficult to avoid. So take a good look at this report and explore some of the solutions offered by Terrachoice and in other guidelines — such as the Ogilvy & Mather greenwash guide I've discussed previously.

The standard marketers need to reach is not perfection, but speaking honestly about environmental impacts and not over-positioning the benefits (which is why it's sometimes hard for marketers to avoid). If you don't manage this communication well, you'll confuse your own customers and increase risk to the brand. On the up side, being known as an honest broker of green claims can only build loyalty. We all sin sometimes, but our products don't have to.

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Jacquie Ottman's Comments on HBR Online

“Sinning”, Really? “Painstaking” research, Really?

Andrew, you and I are friends and we usually see eye to eye on all things green, but I have to use my the little bully pulpit provided by this comment box to come clean on what I have long thought of this research —and it’s only been reinforced by Terrachoice’s new “Home and Family edition” (What is this, some type of board game?)

On his webinar Thursday afternoon, Scot MacDougal admitted his firm has not intended to be malicious in their use of the word “sins”. Ironically, however, this report is having the effect of maligning the entire green marketing-related industry—creating skeptics, even cynics, out of the press and consumers. (How many people, especially in the press, do you know who now use the terms “green marketing” and “greenwashing” interchangeably?)

The big issues here in my opinion are as follows. This research admittedly sheds light on some of the issues associated with making green claims in the current environment, but it isn’t close to being credible, “painstaking” research. Terrachoice are third parties themselves, but their research wasn’t even conducted by a respected third party — Roper, Gallup or even the guys in the suits with the briefcases on the academy awards— but probably a bunch of twenty somethings who don’t know beans more about green than the average Joe.

Macdougal also admits that he believes that most of the “sins” being committed today are likely to be inadvertent, the side effect of a fledging industry without self-regulation. Pity then, that this “research” is having the net effect of wiping out an important tool in a market-based economy loath to regulate consumer product manufacturers.

Any research that finds that 99.98% (or whatever astronomical percentage) of the world is not doing one thing or the other, in my experience, has set the bar too high; I can only surmise that Terrachoice, who has a stake in third party labeling, is likely on a witch hunt in self-interest.

The nerve of calling the world of largely well-intended marketers “sinners”! A 35-year marketing veteran, I understand the power of hyperbole —and most consumers do, too. However, as you pointed out in your April 2010 HBR blog post, most “sins” can be classified as mere missteps, and in my opinion, this is not surprising in a fledging market.

As reported, the number of green claims is rising fast, likely in response to consumer demand for greener products. Let’s hear it for a 2,550% increase in (hopefully legitimate) “phthalate-free-claims” to try to protect our children. Rather than maligning their activities and inviting the shackles of wary in-house counsel, let’s encourage this activity by first giving this growing group of green marketers credit for trying to make a difference. (Do you realize how many of these folks are putting their life savings on the line to support their efforts? One of my clients cashed in his entire IRA to support his fledging new green product.)

Let’s put the energy expended by and about this specious research to positive, not negative effect. Let’s work together to: fill in the gaps in what businesses can do to improve internally, perfect life cycle assessment and multi-attribute labeling schemes, certify industry professionals, work positively with FTC , NAD and other bodies to put out comprehensive guidelines and to enforce them, and celebrate the successes. Only by doing these things can we help green marketing live up to its promise of voluntarily skewing the marketplace to the genuinely greener goods and services.

Andrew, thanks for this post — and the opportunity to express my opinion on this. Our respective opinions won’t be agreed with by all, but hopefully airing them in this way, we’ll cause others to chime in, and ideally help trigger some positive change for our industry and economy.

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My response

Jacquie,
Thanks as always for your passion and strong opinions. While it may seem like it on the surface, i don't think we disagree that much. I have a few reactions/comments.

- I can't really comment on the quality of the research they've done -- i'm not sure why it's inherently lower-quality than Roper or Gallup. It seems like a fairly straightforward analysis, which i'm sure has flaws, but is directionally correct.

- I think I take the "sin" language a little lighter than you do. Terrachoice has always used this funny cartoon character, so I think it's meant to be a bit tongue-in-cheek. But, perhaps the "Goofs of Green Marketing" or something like that would be less judgment-laden.

-I’ve actually never heard someone say ‘greenwash’ interchangeably with ‘green marketing’ and I certainly don’t consider them the same. It’s like the difference between testimony and perjury. And I actually think there’s very little of what I would truly call ‘greenwash’ out there—outright lies or misrepresentation on purpose. Only one of the “Seven Sins” is that egregious, and it’s very rare.

- I certainly can't speak for Terrachoice at all, but for myself, and I certainly do not want to belittle or damage the green efforts companies are making, or their attempts to communicate with their customers. Going BPA or phthalate-free is a good thing, full stop.

But this is where I think reports like this are important. It’s because so many companies are working so hard and putting out mostly legitimate claims (even if they haven’t secured a third-party certification yet), that we need to be very careful about claims in general. One high-profile case of outright lies (like something that says it has no BPA, but does), and it casts the entire green marketing world in a bad light. For that reason, setting a very high bar which, yes, only 5% perhaps reach today, is appropriate. The number of claims is confusing to customers, so why not proceed with extreme caution and put fewer claims out there until every ‘i’ is dotted and ‘t’ crossed?

Overall, I’m certainly with you on your call to improve measurement, LCAs, and guidelines, and then make sure they’re enforced.

Thanks for your thoughts!

Andrew

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Comments

On November 2, 2010 4:41 PM, BrookeBF said:

Great topic - and so glad to see it getting aired out in numerous forums.

I started my 'green marketing' work in 2000 and as an early practitioner faced many odd hurdles. The company I was marketing was overcoming reputation issues, so they faced ridiculous scrutiny getting past the network TV approvals when their claims were all quite true and conservative.

On the flip side, I was very concerned to see "natural", "naturally derived" and other vague claims tossed around to wide acceptance. I mean seriously, oil is a naturally derived product of the earth - right?

Some marketers found my "you have a responsibility to tell the whole truth" speech at a luncheon over the top. But I really don't think it is. More than ever, marketers have a responsibility not to kill the golden goose. If green is good for your business, DON'T abuse it.

And, as Jacquie points out - be mindful that we are all learning here. We are at the beginning of a huge innovation cycle. Which is a great opportunity.

Of course, historically this early window of innovation is also when there is a spike in con artists and scams. So, it's right for us to self-police and minimize the flim flam. Just not at the expense of the entire legitimate industry. We should choose our words carefully - whether the words are 'green', 'natural' or 'sin'.

On September 13, 2011 6:25 PM, Frank said:

Terrachoice manages the EcoLogo “green” label that is on thousands of products. Thing is even EcoLogo certified products commit greenwashing sins. Check it out for yourself, you'll find Ecologo certified products claiming "Carbon Neutral", but none of the Ecologo standards verify or prove such claims???

Therefore, Terrachoice needs to protect consumers from Terrachoice! How hypocritical of them to point the finger at other companies when they are fibbing themselves? In the end, what we have learned is to never trust a marketing company that manages a “green” ecolabel. Terrachoice has created of the biggest “greenwashing” marketing campaign and tricking consumers to buy into EcoLogo, a “greenwashing” label that brings millions of dollars to Terrachoice. Shame on Terrachoice! Fraud if I ever saw one.

On February 22, 2012 6:38 PM, Melinda said:

It's good to see that the FTC is gtiteng involved. The labels will be more likely to provide value if companies are held to their claims. Looks like these are open ended regulations, and therefore harder to evade.

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