Harvard Business Review

Green Marketers Are Still Sinning


Posted on Harvard Business Review: October 28, 2010 11:54 AM

The green marketing research firm Terrachoice released its annual "Sins of Greenwashing" study on 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 categories with a longer track record of claims 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.

Copyright © 2012 Harvard Business School Publishing. All rights reserved. Harvard Business Publishing is an affiliate of Harvard Business School.

Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.

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