Promoting A Green Business Image

In recent years, many Canadian businesses have begun actively promoting themselves as “green” enterprises. They are doing this because the market for green products has increased rapidly as consumers have become more concerned about the environment. For example, the image of Canada’s oil sands producers is that of environmental “bad boys,” so the companies have banded together to get out the word that they are investing in new technology that will reduce the impact of oil sands activity on the air, land, and water. The campaign includes a new website and a national advertising campaign which is designed to provide information and correct misperceptions that consumers may have about oil sands development.

Even companies that have a good reputation for being green are stepping up their efforts. Body Shop unveiled a major advertising campaign in 2008 that aggressively touted its commitment to having a corporate culture of concern for the environment. The company is advertising because its competitors are touting their commitment to the environment, and Body Shop wants to stand out from the crowd.

But convincing customers that a business is green is becoming increasingly difficult because consumers have become quite cynical, and because watchdog groups carefully scrutinize green claims that are made by companies. A Gandalf Group survey of 1500 Canadians found that the majority of consumers think that (a) environmental claims by businesses are just a marketing ploy, and (b) labeling regulations are needed so buyers can understand what terms like “eco-friendly” mean. These consumer attitudes have developed partly because some companies have tried to claim that their products are more eco-friendly than they really are.

The term greenwashing has been coined to describe the practice of making false or exaggerated claims about the environmentally-friendly features of a product or service. It is a modern variation of the older term whitewashing, which means making things look better than they actually are. EnviroMedia publishes a Greenwashing Index that ranks the eco-friendly advertising claims of various companies.

In 2010, the environmental marketing firm TerraChoice conducted a study of 5,296 different products and found that 95.6 percent of them made at least one false or misleading environmental claim. Children’s toys and baby products were the worst, with almost all of them making at least one misleading claim. TerraChoice also found that green claims are getting more frequent. Between 2009 and 2010, for example, the claim of “BPA-free” increased by 577 percent, and the claim of “phthalate-free” increased by 2,250 percent. The use of fake labels (which purport to show that a recognized third party has certified a product as environmentally-friendly) is also on the increase (up from 23.3 percent in 2009 to 30.9 percent in 2010). These fake logos are available for a fee on the internet

TerraChoice identified several basic greenwashing sins; these include (a) hidden tradeoffs (a company plays up an environmental issue where they do well, but ignores other potentially more serious issues where they don’t do well), (b) vagueness (an environmental claim is made, but it is so vague that it is meaningless), (c) lack of proof (no proof is provided for a green claim), (d) false labels (the use of fake certification logos to impress consumers), and (e) irrelevance (a company plays up an environmental issue that is not addressed by the company’s product). The news is not all bad, however. TerraChoice found that labels with accurate green claims were increasingly evident, and that greenwashing was less evident for products that were certified by a legitimate third party.

Charges of greenwashing can create problems for companies. For example, the World Wildlife Fund (WWF) accused Shell Oil of greenwashing after Shell advertised that its Albert oil sands operations were “sustainable.” The WWF filed a complaint with the U.K.’s Advertising Standards Authority, which ruled that the advertisement was misleading and confusing to consumers. The WWF publicized the ruling (and made critical comments about Shell) on a large digital billboard in central London.

Another oil company that has had difficulties is BP. Its slogan “Beyond Petroleum” promotes its green image, and the company has been praised by the Natural Resource Defense Council in the U.S. as a leader in the industry’s move toward renewable energy. BP has made a concerted effort to market itself as being environmentally friendly, and consumers seemed to have had a positive view of the company. But all that changed as a result of the oil spill disaster in the Gulf of Mexico in the summer of 2010. Intense media coverage of the disaster, as well as allegations that the company did not put enough emphasis on safety (for both workers and for the environment) damaged BP’s green image. BP is also involved in extracting oil from the Alberta oil sands, which Greenpeace has called “the greatest climate crime in history.”

Some green advertising campaigns may strike consumers as downright outrageous. Much to the dismay of animal rights activists, the Fur Council of Canada (which emphasizes its ties with Native Canadians and its made-in-Canada attributes) has promoted itself as a green industry. Its billboard and print advertisements stress the sustainability of the fur industry, and point out that trappers are the first to sound the alarm when wildlife habitats are threatened. The trapping industry has endured much negative publicity during the last couple of decades, so the advertising campaign was controversial.

In response to concerns about greenwashing, the Canadian Competition Bureau, in cooperation with the Canadian Standards Association, has drafted industry guidelines that will require companies to back up their environmental claims with scientific evidence. Laws prohibiting misleading advertising already exist (for example, Lululemon Athletics Inc. was required to remove unsubstantiated claims about the health benefits of seaweed from one of its clothing lines), but environmental claims are difficult to assess since there are no consistent definitions and standards that can be used to judge whether a product is really eco-friendly. The new guidelines will create national definitions for terms like “recyclable” and will also prohibit vague claims about products (for example, “our product is non-toxic”).

Questions for Discussion

1. What is your reaction to the Fur Council of Canada’s green advertising campaign? What would you say to an animal rights activist who is outraged at the claims the Fur Council is making?
2. Consider the following statement: The Competition Bureau’s plan to create national guidelines to define terms like “recyclable” is well-intentioned, but it will not work in practice because companies will figure out ways to get around the rules and still make unwarranted claims about how “green” they are. Do you agree or disagree with the statement? Explain your reasoning.

Sources: Sara Schmidt, “Public ‘Greenwashed’ by Eco-Friendly Claims: Study,”//Winnipeg Free Press//, October 26, 2010, p. A2; Hollie Shaw, “Making the Case that Wearing Fur Can Be Eco-Friendly,” Winnipeg Free Press, December 5, 2008, p. B6; Daryl-Lynn Carlson, “Advertising Guidelines Target ‘Greenwashing’,” Winnipeg Free Press, November 21, 2008, p. B6; Marina Strauss, “Standing Out in a Sea of Green,” The Globe and Mail, August 16, 2008, p. B3; Randy Boswell, “Oilsands Ad ‘Greenwash’ Environment Group Crows,” The Globe and Mail, August 14, 2008, p. C8; Richard Blackwell, “Eco-Friendly? Canadians Want to See the Proof,” The Globe and Mail, July 28, 2008, pp. B1, B3; Shawn McCarthy, “Oil Sands Tries Image Makeover,” The Globe and Mail, June 24, 2008, pp. B1, B7; Sharon Epperson, “BP’s Fundamental But Obscured Energy Contradiction,” cnbc.com, May 21, 2008, www.cnbc.com/id/24758394; Carly Weeks, “New Scrutiny for Green Claims,” The Globe and Mail, March 11, 2008, pp. B1, B6; “Oil Company BP Pleads Guilty to Environmental Crime,” International Herald Tribune, November 29, 2007, www.iht.com/articles/ap/2007/11/30/business/NA-FIN-US-BP-Settlement-Alaska.php?page=1; Terry Macalister, “Greenpeace Calls BP’s Oil Sands Plan An Environmental Crime,” Guardian.co.uk, December 7, 2007, www.guardian.co.uk/business/2007/dec/07/bp.

Answers to Questions for Discussion

1. What is your reaction to the Fur Council of Canada’s green advertising campaign? What would you say to an animal rights activist who is outraged at the claims the Fur Council is making?

Most students will probably agree that the advertising campaign of the Fur Council is controversial, and they will not accept the claim that the industry is eco-friendly. This is largely because the claim that the fur industry is “green” flies in the face of the large amount of negative publicity the fur industry has received during the past couple of decades. High visibility events (such as publicly challenging people who wear fur coats) have probably caused most Canadians to be at least somewhat uncomfortable with the idea of killing animals in order to produce fur products for consumers. So, the willingness to accept a claim that the fur industry is “green” may be quite low. Thus, many people may think that the advertising campaign is actually an example of greenwashing.

On the other hand, some students will note that the Fur Council’s advertising campaign contains two elements that appeal to Canadian consumers. First, the campaign advertises the made-in-Canada attributes of the industry, as well as the industry’s ties with native Canadians. There has been much publicity about foreign ownership in Canada over the years, and the made-in-Canada theme may strike a respondent chord with Canadians (the current high-profile potash takeover debate is a case in point). Second, the advertisements stress the sustainability of the fur industry, and “sustainability” is a word that is increasingly used in the vocabulary of environmentalists.

What a person might say about the advertising campaign when talking to an animal rights activist depends on the position of the person doing the talking. If you support the fur industry and are trying to convince an animal rights activist that the campaign has some merit, the two arguments noted in the preceding paragraph will not likely be well-received by the animal rights activist. If you are opposed to the fur industry, you will likely take note of the arguments and reject them (and your position will be well received by the animal rights activist). In either case, it is unlikely that an animal rights activist will see any merit in the advertising campaign because the person will see the fur industry as lacking any fundamental legitimacy.

2. Consider the following statement: The Competition Bureau’s plan to create national guidelines to define terms like “recyclable” is well-intentioned, but it will not work in practice because companies will figure out ways to get around the rules and still make unwarranted claims about how “green” they are. Do you agree or disagree with the statement? Explain your reasoning.

Student views about the role of government will influence their answers to this question. Students who disagree with the statement will say that bad behaviour by business firms must be controlled, and the way to do that is through tough legislation. They will point to the fact that this is the way Canada’s economic system has been operating for many decades. They will likely concede that legislation varies in its effectiveness, but without the threat of government intervention, some businesses will not behave in ways that benefit the average consumer.

Students who agree with the statement will likely argue that government legislation is simply going to be ineffective in controlling unwarranted green claims. They may also be somewhat cynical about the motives of businesspeople and point out that history shows that a certain percentage of businesses will be very creative in finding ways around any government legislation that is passed. They may point to the proliferation of “green” labels on products as evidence that businesses are trying to promote themselves as being green simply because they think that will help them sell their products to consumers. There is some evidence supporting this view. For example, The Boston Consulting Group in Toronto found that consumers are confused about the green options that are available because there is such a wide array of eco-labels on products. Ecolabelling.org is a Vancouver-based company that has identified 274 eco-labels, 23 of them originating in Canada. There are labels touting compostable products, fair trade products, energy efficient products, forest stewardship products, lake-friendly products, and organic products. These eco-labels are supposed to help consumers sift through environmental claims, but what do these labels actually mean? How can consumers know which products are really eco-friendly and which ones are simply hype?

Whatever position students take, the statement provides the opportunity to discuss the responsibility of companies in a democracy to follow both the letter and the spirit of laws that are passed by the elected representatives of the people.

There are people who are trying to help consumers sort through the maze of conflicting claims. Dara O'Rourke is a university professor who has developed a website called GoodGuide that allows consumers to identify the ingredients found in the products they buy. The website reports on both the environmental impact of products as well as their health effects. Website visitors can enter a product name and then get a score. The higher the score, the safer and more environmentally-friendly the product is. O'Rourke’s goal is to help consumers get past the green claims of companies, and get to the actual facts. The goal is to really change the system. Instead of having companies telling consumers what to believe about their products, the idea is to have consumers tell companies what is important to them in the products they buy.

posted on November 04, 2010