For quite some time, I have been trumpeting Toyota as perhaps the best company in the world. The combination of the most successful eco-product ever (Prius), the leanest manufacturing, and top-notch marketing make the company extremely hard to beat. But now we're seeing a disturbing trend around their new hybrids. This past weekend, The New York Times published a scathing, but fair, article about the new Lexus hybrid (cover of the Automobiles section, titled "Conspicuous Consumption with Green Illusions"- ouch).

Apparently, the hybrid gets worse mileage than the non-hybrid version (a not-that-impressive 21 mpg vs. 22 mpg in tests). The extra 700 pounds of weight from the battery and other components don't help. So what exactly makes the car green then? It is a super ultra-low emissions vehicle (SULEV), which is a measure of air pollutants, not CO2. But there are many non-hybrids that get SULEV ratings. So the green must just be the extra $30,000 it costs over the regular Lexus. As the author cheekily points out, you can buy the regular one, then use the extra $30K to buy a Prius for around the town driving.

This kind of false greenness is bad news for a company that has so much brand value riding on its environmental image (and sadly, this isn't the first time the company has been accused of this problem — its hybrid SUVs gain extra power, but not much extra fuel-efficiency).

From a strategic perspective, none of this makes much sense to me. A big part of Toyota's rise to world's #1 was what it did right on green issues — mainly the Prius. I hope this won't happen, but Toyota may find out that brand good will can be destroyed much faster than it's built.

This post first appeared at Harvard Business Online.

Home Depot announced last week that it will collect and recycle compact fluorescent light bulbs (CFLs) in nearly 2,000 of its stores. This is great news since it eases the transition to low-energy bulbs by solving a big customer problem: what do I do with this bulb when I'm done with it? Home Depot is the not the first - IKEA and local stores have CFL recycling programs - but it brings a bigger scale and reach to solving the problem.

First, bravo. Home Depot is, in part, taking responsibility for the "end-of-life" of one of its products (in wonky terms, this is "extended producer responsibility" and it's the law for some products in some parts of the world, such as electronics in Europe). But in the New York Times article on this program, one quote really struck me. Ron Jarvis, the company's SVP for environmental innovation (cool title) said, "We're trying to do the right thing...Some of the things that we do are for the community and not for the bottom line."

I'm always a bit frustrated at a slightly sheepish explanation for a green program that costs some money and might impact the financial performance of the company. Of course it will affect the bottom line. But I think it will help it. No doubt Mr. Jarvis meant what he said, but may be wrong, and here's why. When are people most likely recycling a bulb? I'm going to go out on a limb and guess that it's when they need a new one. Why wouldn't they buy it while they're at Home Depot recycling the old one? And what about that mop or plant or lumber they've been meaning to get? Solving a customer eco-problem can drive business.

From a strategy perspective, Home Depot is utilizing a critical eco-advantage mindset and approach: thinking about the value chain. Here's how I'd recommend finding these kinds of business and green opportunities. To oversimplify...

1) Think about - and measure if possible - the full value chain impact of your products. Where are the big impacts for energy use, water, toxic waste, and so on?

2) Look forward in the value chain (after thinking about upstream opportunities as well). What issues do your customers face? In this case, you might hear two complaints:
A) Boy are my energy bills going up;
B) I have no idea what to do with my old CFL bulb.

3) See if you can solve their environmental problem. Solving A is easy: sell them CFLs (and insulation and better windows and on and on). Solving problem B is harder but possible with scale: start a recycling program.

4) Reap the benefits of a closer relationship with your customer who now thinks of you as a solution provider (and if you're Home Depot, sort of apologize for it).

OK, Home Depot didn't mean to do the last part of #4 I'm sure. But I can't figure out why any company should have to dance around how a green program might help the bottom line after costing some money upfront - in most cases, that's just called investment. Only on environmental initiatives do people feel the need to apologize about short-term expense. Home Depot and its execs were right to crow about the environmental benefit and doing the right thing. But they are also fully justified to promote the likely payback and business benefits of investing and bringing customers into their stores.

Or perhaps Mr. Jarvis and the Home Depot team are craftier than I realize. Maybe they didn't want to let their competition know how much of a win-win this could be. Sorry if I let the cat out of the bag.

Ok, I'll admit upfront that this isn't a green posting exactly. But I was thinking about customer service after an interesting comment at the Fortune Brainstorm Green event i just went to in California (more posts to come). One attendee said he had seen analysis on companies with high customer service scores (by some independent organization that ranks customer service) vs. those with lower marks for pleasing customers. Through this decade, apparently, the higher group started having a significant advantage in stock market performance. To stretch the analogy to green, perhaps companies that get the intangibles right -- including some aspects of connecting to customers around social and environmental issues -- will be rewarded. The context of this comment was in a session on investing in greener companies and the higher performance (and lower risk) of greener stocks. The session included the always funny and interesting Matt Kiernan, founder of Innovest and one of the true experts on green investing.

But anyway, I was in customer service mindset when I drove my Hertz Prius back to LAX and had two diametrically opposed customer experiences within 5 minutes.
A few blocks from Hertz is the gas station, AM PM Arco, right on La Cienega and W. Century Blvd. Everyone stopping there was filling up a rental. When you pull up to the pump, there are no instructions and you can't put any money in. A helpful gentleman pointed to a central payment station. But that didn't take credit cards. So you have to go in, wait in line, give them a credit card...which they keep and make you come back in for. When I came back in and waited for register, I got to the 'wrong' one and had to wait for the other guy with my card (handing it over was not possible I guess). So nobody was rude exactly, but the only helpful part of the process was the homeless guy out front making a living helping people negotiate this byzantine process.

So cut to 10 minutes later at Hertz. I get on the courtesy bus #26 driven by John, the single best bus driver I've every had. He paused the bus before we left the Hertz parking lot and asked if everyone was sure they hadn't left anything in their cars. Then he told us what to do if we realized we left something in the car later, or even left something in the bus -- "call us and i'll turn my bus around and come back to your terminal." He offered candy to everyone and helped every person on and off the bus. It was remarkable. I actually sent an email through the Hertz website to commend him.

Yes, it's sad when people doing their job well is so noticeable, but we've come to that. It's relatively easy to be remarkable in this environment, so why not? (see the work of Seth Godin and the "purple cow" concept for more on this.

So, a strange Earth Day-week post from me. I'm sure there's a green connection here (like being remarkable, which truly green-focused companies generally are -- think Patagonia -- pays off), but I won't stretch too far to find it.

The Superbowl ads this year were fairly mediocre, on top of often being oddly dated and consistently anti-women. But one ad is getting a lot of discussion/attention in the green world: The Audi ad about the Green Police.

If you didn't see it, it depicts a new police force arresting people for choosing plastic bags at the supermarket or setting their jacuzzis at too high a temperature. Then a driver of an Audi "clean diesel" is waved right through an eco road block.

Was it funny? Yes (it's hard not to laugh when the eco-police, on their Segway's, ask a real policeman to "step out of the car" for drinking out of a styrofoam cup).

But was it also cringe-worthy? Yes. The ad really plays on all the worst stereotypes about how going green is hard and how you'll be judged. The redeeming quality is that the person doing the 'right' thing, the driver, gets a free pass.

But in terms of promoting green consumer choices, does Audi help the movement (and its own product) or hurt it?

What do you think?

Every year, major sporting events get greener and the goals for renewable energy use, carbon-neutrality, or zero-waste get tougher. The Vancouver Olympics which just ended featured a large range of greening activities; the sustainability staff worked on them for years, producing sustainability reports as far back as 2007. In their bids for the 2016 Olympics, not only did Chicago describe its games as "low-carbon", but Tokyo actually claimed its event would be carbon-negative. As a special advisor to U.S. Soccer's bid for the FIFA World Cup in 2018 or 2022, I can tell you that there will be some tough goals in place for that event as well, should we win the bid.

In addition to the event committees themselves, what I find fascinating is how big, corporate-level sponsors are increasingly bringing their own sustainability agendas to the table as well.

It's smart, because if you're a sponsor, helping to green big events serves a number of purposes.

First, and most obviously, it's a great way to demonstrate your green bona fides, build your brand, and sell new products. There's no bigger or more passionate audience than live and TV-viewing sports fans. For a World Cup, for example, U.S. Soccer expects roughly five million fans through the gates, another ten million at fan "fests" nearby, and a cumulative audience of nearly 26 billion (multiple views for each of billions of fans, obviously) watching around the world. So of course companies fight to get these coveted spots and use them. For example, in 2008, GE leveraged the Beijing Olympics as a way to demonstrate its ecomagination portfolio.

But second, and perhaps more importantly, these events serve as a testing ground for new products, processes, and ways of doing business. Right before the games, Coke announced its aggressive targets for Vancouver — zero-waste and carbon-neutrality. The tactics behind these goals include employing new refrigerants to eliminate greenhouse gas emissions, deploying hybrid delivery fleets, the use of Coke's new "PlantBottle," and the purchase of carbon offsets as a matter of course.

It's not just the Olympics. At the PGA Phoenix Open (which also just ended), sponsor Waste Management is using the opportunity to try some new waste reduction and management techniques, including moving toward a zero-waste goal, introducing Solar Compactors, and installing "reverse" vending machines that collect recyclables. (Full disclosure: Waste Management hired me to speak at a dinner at this event -- more on that trip later.)

While cynics will say it's just grandstanding by these big brands, I actually do see real action and serious learning going on. Only with live tests like these can Coke learn, for example, how consumers react to a new bottle or whether low-GHG refrigerants perform as expected in the field. These events are pilot projects — they're circumscribed in time and space and allow new thinking and action on a controllable scale.

These efforts offer a great lesson for all companies. Any organization can try green initiatives out in a single office building or at a single corporate event (Earth Day events are the most obvious, but anything will do: a "fun run", fundraiser, etc.). Not all new ideas will work, so look for project opportunities of moderate scale — and sponsoring an external or internal event is a good place to start — and build from there.

(This post originally appeared in an earlier form on Harvard Business Online)

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This week is the fortieth anniversary of Earth Day. The hype is unbelievably high as companies step all over themselves to share their latest sustainability accomplishments. In general, this is a good thing and it's wonderful to see companies competing on green.

But there is a high risk of saying something that isn't quite true, or of overstating the truth. Because this is the time of year for somewhat self-important pronouncements of changing the world, it's also a time for greenwash.

The incidence of actual, pure greenwash -- outright, purposeful untruths about the environmental attributes or impacts of products -- is probably not that high. But there's an awful lot out there that gets close (for a truly excellent review of the key missteps that would qualify, see the Seven Sins of Greenwashing from Terrachoice).

We've all seen some doozies along these lines. An ad touting paper-free banking as a way to save the forests, last year, not in 1997. A cheap car made specifically for the developing world (and not an electric car, mind you) presented for no apparent reason on a backdrop of a wind farm. I'm sure you've seen ads like these, and worse.

The problem of greenwash seems like a mild issue to worry about. But as advertising giant Ogilvy & Mather puts it in a new report, greenwash is actually "an extremely serious matter...it is insidious, eroding consumer trust, contaminating the credibility of all sustainability-related marketing and hence inhibiting progress toward a sustainable economy." In other words, it's very hard for customers to know what choices make a difference when some marketers are muddying the waters for all. When buyers throw up their hands in confusion, we all lose.

This perspective comes from Ogilvy's new guide for managing your brand: "From Greenwash to Great: A Practical Guide to Great Green Marketing (without the Greenwash)." (Full disclosure: I'm an informal advisor to Ogilvy Earth, and I'm quoted in this document, but I had very little to do with its creation).

The guide offers a simple framework in three buckets -- Planning Your Approach, Developing Communications, and Launch and Beyond -- with nine common-sense steps. For a preview of this helpful document (launching on the 21st), and some ideas of the kinds of stories they share, here are a couple deceptively simple prescriptions in the "Planning" phase (for a few more of the ideas in the guide, see my monthly e-letter here).

Focus on Fundamentals
This first step is where so many go wrong. An honest green story starts from inside the company, not from a marketing idea that you then try to spin. You need hard facts on the environmental improvement you're claiming, such as a certain amount of recycled content in your product or the energy used when your customers turn your gadget on. These benefits need to be measurable, verified, and not insignificant to the product's real footprint (e.g., a two-stroke engine lawn mower that hypes its recycled packaging is missing the point a bit). Ogilvy shares the story of Unilever's Hellmann's mayonnaise in the UK. The company explored its sustainability impacts, did the hard work on figuring out its supply chain, and made a switch to free-range eggs. Once it had its new policy in place, the company then made the pitch to consumers.

Get Out Ahead
Starting from an honest place doesn't mean you have to think small. Companies can still be bold and set new standards. One of my favorite examples of getting out ahead is IBM's Smarter Planet, perhaps the best green ad campaign in history. It's, well, very smart.

The company took an issue the IT industry is struggling with -- the significant and growing climate and energy impacts of information and communications technologies (which is now produce over 2% of global emissions) -- and flipped it on its head. Don't worry about the growth of IT, this campaign basically says, we're going to use our technology to solve much bigger environmental and energy problems (it's about tackling "the other 98" as many call it). We're going to build smarter transportation systems, smarter cities, and a smarter world.

Others in the IT community had talked about it, but IBM stuck its head out to own it. And they had the stories and case studies to back it up. It's my favorite green positioning because it doesn't talk about saving us from doom and gloom; it just asks us all to be smarter. And who doesn't want that?

The rest of Ogilvy's handbook shares some best practice ideas on executing a green campaign and beyond. While those buried in the green branding world may recognize many of the stories, there are some good gems even for the most knowledgeable, and a helpful framework for all.

Ogilvy's handbook will be available here on Wednesday, April 21.

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It's very easy to pile onto BP right now. The "accident," which may be due more to negligence, is bad enough. The company lost 11 employees — after losing 15 in a high-profile explosion at a refinery 5 years ago. The damage to the Gulf, its species, and the people who depend on it is almost incalculable. But surprisingly, it's even easier to criticize BP's behavior since the explosion — the company has tried hard to downplay the scale of the tragedy and it has moved slowly to stop the torrent of oil pouring into the Gulf.

The nightmare is not over and the repercussions in terms of regulations and the future of BP are far from certain. But it's high time to start sifting through the wreckage for some learning so we can avoid similar catastrophes. I'm sure there are literally dozens of good lessons (please post yours), and I think many companies already have a solid understanding of the key principles of good behavior. But why do we need to wait for each fresh disaster to relearn the lessons we already know?

Here are my top five lessons, running from geopolitical and philosophical to corporate-level branding and strategy.

1. Our reliance on old, fossil-fuel based technologies is devastating for the planet, for society, and for business. This spill is in many ways an expected result of the path we have chosen. Given the declining stocks of easy-access oil, our addiction is forcing us to dig up extremely remote oil — something very, very hard to do that comes with enormous complexity and myriad risks of catastrophic failure.

The assumption that we will continue to dig up more carbon-emitting fossil fuels may be called into question in a serious way by the Gulf oilpocalypse. Governments may very well ask for companies to invest far more in safety. It's a reasonable outcome that regulators demand that companies invest not only in the technologies to dig oil up, but also in cutting edge ways to greatly reduce the risk of it going all over the place. So far, the oil giants seem to be pursuing only the first part. Which brings me to...

2. Preparing for a world where things only go right is extremely dangerous. To hearken back to the recession for a moment, one of my favorite tidbits about the financial meltdown was something I read about the ratings agencies (you know, the groups that gave horribly risky investments triple-A ratings). In the spreadsheet models they used to estimate the value of mortgage-backed securities, analysts could only plug in a positive number in the "growth" cell. That is, they could not predict the value of those derivatives if housing prices actually went down. You have to wear very large blinders to build a model like that.

But the oil companies have done the same thing. They've invested heavily in exploration technologies, finding ways to do things — like dig a mile under water — that were only space-age fantasies until recently. But where are the technologies to avoid spills, contain them, and clean them up?

3. Downplaying your mistakes is, well, a big mistake. It's gospel in business schools that Johnson & Johnson set the bar on handling a disaster when it dealt with the poisoning of Tylenol (and thus murder of some of its customers) in 1982. The massive, and immediate, recall was unprecedented and set the standard for corporate behavior in the face of existential threats to a business.

Cut to 2010 where BP leaders apparently never read the J&J case study. CEO Tony Hayward infamously said that the spill was "relatively tiny" compared to the "very big ocean." That statement is both scientifically baseless and beside the point - the amount of leakage that the CEO should accept from his operations is approximately zero. Unfortunately, Hayward hasn't learned much in the way of media training as he told a reporter this week that he wants to end this disaster because, "I'd like my life back." Wow.

And the response has seemed awfully slow. Why, for example, has each attempt to stop the leak been done in a serial fashion? Meaning, when the "top kill" failed, why didn't BP have the next containment dome in position already instead of waiting a few more days? BP has been acting like a child that doesn't want to clean up its mess and drags its feet, which is strange, given the monumental risk to the company.

4. Environmental risks can threaten the viability of a business. Reducing risk was the core focus of environmental efforts for many years so it got a bit passé as a forward-looking argument for sustainability. But it certainly is making a comeback now. As someone who's written for years about how going green can drive profits and growth, I've probably also downplayed the role of risk reduction in creating green value. So let me make the very easy case for BP's poor risk management.

As of today, BP has lost over 40% of its market value, worth about $75 billion. The New York Times went so far as to suggest that BP could be vulnerable to takeover once all its liabilities for this spill are accounted for.

Of course for most companies, sustainability-related, enterprise-threatening risks are not quite as tangible as miles and miles of your product killing an entire ocean. But even harder-to-measure threats can destroy a business model. Think of the "stroke of the pen" risk from regulations that outlaw a component of a product due to toxicity (one recent candidate: plastics chemical BPA). Or consider at the risk to companies that do not meet the new sustainability-themed supply-chain demands from business customers. Or look at a company's ability to attract and retain talent based on how well the company manages its environmental and social performance. Ironically, BP leaders have told me in the past that their reputation as a green leader was making recruiting the best engineers far easier. But that reputation is shattered.

5. Companies can lose the reputation as a sustainability leader very fast. Warren Buffett famously said, "It takes 20 years to build a reputation and five minutes to ruin it." Having a reputation as a sustainability leader is valuable, but it's a tenuous thing, and it can be lost very fast. In the book I coauthored, Green to Gold, we open with two stories: one about Sony and environmental risk and the other about the money BP saved through carbon reductions. For years, the sustainability community has praised BP as best-in-class. In the 1990s, the CEO at the time, Lord John Browne, set BP on a path to go "beyond petroleum."

But over the last few years, BP has quietly reduced its investment in renewable energy to a negligible percentage of sales and profits. Under Hayward the focus has been on cutting costs, and the company has explicitly avoided talking about "green" initiatives in the media (give them credit at least for trying to reduce greenwash). Given the explosion of 2005 and this spill, it doesn't seem like much of a stretch to guess that the company has under-spent on safety.

BP nets about $20 billion a year. How much do you think BP should have spent on extra precautions and new clean-up technologies? Imagine if every well had a second, relief well nearly dug at all times. Expensive, yes, but so is the destruction of your reputation and business, not to mention an entire ecosystem.

The answer to how much BP, or any company, should spend to avoid these problems is somewhere between zero and how much the company is worth. Unfortunately for BP, that latter number is far smaller than it used to be.

[This post first appeared at Harvard Business Review Online]

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Alternate title: Why are All the Lights in My Hotel Room On?

I recently spent two nights at the lovely, high-end Westin hotel in Ft. Lauderdale, FL. Around my room I found the now-standard signs that describe how the hotel will save water and energy by not changing sheets and towels. These green messages say to customers figuratively, and often literally, "we care about the environment." So far so good. But when I first entered my room, every lamp and light in the place was on...plus two radios.

The cognitive dissonance of arriving at a room with every light blazing, and then being asked to hang a towel up to save energy, can cause even the most mildly environmentally aware customers some heartburn. But worse, this weird in-room disconnect betrays a corporate, internal conflict as well.

I truly don't mean to pick on Westin; the entire hospitality industry is guilty of similar dissonance. For example, who decided that the now-common "turn down" service was a good thing? Even if everyone wants a nice chocolate on their pillow, does anybody really need to come back to a room with lights ablaze and flat screen TV running? Frankly, the first few times I encountered this bizarre hotel practice, it scared the heck out of me since I thought I was walking into the wrong room. Now I leave the "Do Not Disturb" sign up when I leave. But I digress.

My reaction at the Westin was not just me being an overly watchful green strategy guy. One of my clients at the regular (as in non-sustainability themed) event I was speaking at told me that having to turn off all the lights bothered her as well.

I'm not crying "greenwash" here -- this kind of disconnect is much more subtle. I believe that hotels are basically sincere about the "we care" sheet-and-towel cards around the room. The big hotel chains (Westin is owned by Starwood) have been making strides to reduce their footprints. They all have environmental advocates and executives now. But it seems likely that policies about how to greet customers (leave the lights on) come out of some other part of the company.

Because of that organizational disconnect, the hotel is forcing its customers to face two conflicting messages, one conservation-oriented and one theoretically welcoming, but blatantly wasteful. In the spirit of making my stay comfortable, they've chosen a path that forced me to do some work - going around to flip everything off - and annoyed me immediately. Compare this with hotel rooms all over Europe (and a growing number in the U.S., including the Encore/Wynn in Las Vegas of all places) that install master control switches near the door. These handy devices can turn everything in the room off at once or, in their best incarnations, require a hotel keycard to turn anything on.

My point is this: companies need to work these inconsistencies out internally and not make customers wade through them. The number of people who would find the dissonance disconcerting is certainly growing, so the risk of alienating customers is rising as well.

These kinds of inconsistencies are not exclusive to hotels; they crop up everywhere. Consider the rental car companies that automatically "upgrade" you to an SUV, when you've specifically asked for an economy or hybrid car.

But one example from the restaurant industry seems particularly egregious. This past Sunday, the New York Times Magazine ran a chilling article about bluefin tuna, a majestic species driven to near extinction by our ever-rising demand for sushi-grade meat. As part of its campaign to tackle the crisis, the author Paul Greenberg says, Greenpeace has pressured high-profile restauranteurs, particularly the owners and chef of the famous Nobu, to find substitutes. Nobu has continued serving the tuna and responded to the pressure by merely adding what Greenberg describes as a "haiku-esque warning on the menus of its London eateries" which reads:

"Bluefin tuna
Is an environmentally threatened species
Please ask your server for an alternative."

Nobu seems to be saying, "We sort of care about environmental issues and the death of a species our business depends on, but not really enough to do the work for you, our valued customer -- so please make the decision for yourself."

This attempt to "abdicate responsibility" to customers, as Greenpeace's Willie MacKenzie put it, is absurd. It will likely make those customers uncomfortable at best, and really tick them off at worst.

It's inevitable that as organizations navigate the complex world of sustainability, they will experience some internal cognitive dissonance about how they operate. Nobody said it was easy to balance the competing forces of (a) the inertia of how things have always been done, (b) the desire to meet the assumed needs of customers (for, say, welcoming, well-lit rooms), and (c) new pressures and questions about environmental and social performance.

But forcing your customers to confront these choices or, worse, making them do the work themselves, is not a good option.

(This post first appeared at Harvard Business Online.)

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