Will Radical Transparency Save the Earth?
There's a growing school of thought that unfettered information about the environmental impacts of our world will smoke out the bad guys and help the good guys win.
I wish it were that simple.
I've just finished reading Ecological Intelligence, the new book by Daniel Goleman, whose 1997 bestseller, Emotional Intelligence, helped broaden our thinking about what it means to be "smart." (It's not the IQ test, stupid.) Now, he's turned his sights on the environment — specifically, the quantity and quality of information available about the environmental impacts of the things we buy. His highly readable book describes how the lack of good information belies the hidden impacts of our purchases — the way they are sourced, manufactured, used, and disposed of when they are no longer of use.
Goleman calls for "radical transparency," a term I've been hearing increasingly lately, one of those coinages that sneaks up on you en route to becoming a full-fledged meme. Goleman didn't invent the term — it's been around for some time — but it is a central theme of his book: the virtuous circle that develops when companies, voluntarily or not, lift the veil of secrecy to reveal the ingredients and sources of their products, enabling consumers to make smarter choices, thereby moving markets toward less-harmful products. That cycle, argues Goleman, can occur only when we fully exploit the full arsenal of technologies and human networks:
Psychologists conventionally view intelligence as residing within an individual. But the ecological abilities we need in order to survive today must be a collective intelligence, one that we learn and master as a species, and that resides in a distributed fashion among far-flung networks of people. The challenges we face are too varied, too subtle, and too complicated to be understood and overcome by a single person: their recognition and solution require intense efforts by a vastly diverse range of experts, businesspeople, activists — by all of us.
I can't argue with the premise, but my 20 years of watching the green marketplace leaves me, well, unsold.
Like Goleman, I am a steadfast believer in the power of transparency: the more we know, the smarter decisions we can make. But I'm more skeptical than Goleman about how willing and able consumers are to actually harness such information to make changes in the way they shop and live. At least, not at the scale and speed needed to transform the marketplace toward one that embraces sustainability, in all its many forms.
Here's what I see as the central flaw in Goleman's case: While he is correct in stating that the complexity and sheer number of products and manufacturing processes requires the collective intelligence of the global village, actual shopping choices are still made at the individual level. And it's here that saving the Earth often takes a back seat to simply saving the day.
It's been almost exactly 20 years since the first-ever survey of Americans' attitudes toward making green purchases, by an outfit called the Michael Peters Group, told us that a whopping 89% of shoppers said that they were concerned about the environmental impact of the products they purchased. And nearly as many — 78% — said that they were willing to pay as much as 5% more for a product packaged with recyclable or biodegradable materials compared with its conventional counterpart.
Since that August 1989 survey, dozens of market researchers have unearthed similarly tantalizing findings describing consumers' interest in aligning their purchases with their environmental concerns. But behind those impressive numbers are some conditionals that aren't always picked up. They sound something like this: "Yes, I'd happily pick the greener product — IF it comes from a brand I know and trust, IF I can buy it where I currently shop, IF it is at least as good as the product I'm currently buying, IF it doesn't require me to change habits, IF it doesn't cost more, and" — this last one is significant — "IF it is somehow better — for example, that it lasts longer, performs more effectively, saves money, is healthier for my family, or will be perceived by others as cool."
That's a pretty high bar to clear. The result is that while the research data haven't changed much over the past 20 years — neither have most consumers' purchases.
Can radical transparency change this? Admittedly, things are different now. Companies are opening up — some voluntarily, others less so — disclosing more about their ingredients and supply chains than ever before. Technology is helping too: the myriad blogs, widgets, websites, and apps, and the networks they enable, are allowing more information to be shared faster and more effectively than ever before. An emerging era of Environmental Product Declarations is upon us, using an ISO-blessed standard for reporting life-cycle impacts. Everyone from Washington to Wal-Mart are demanding companies to provide more information about the environmental (and health) impacts of what they do, and much of the information that results is being made public.
Says Goleman: "These new approaches to managing information herald a coming flood of data about the heretofore unnoticed consequences of a host of common ingredients in everyday products. What had previously been successful brands may be in danger of becoming tainted in our minds."
But content is of little use without context. Goleman and I are both fans of a website called GoodGuide, in which a team of researchers and credentialed experts have pulled together millions of data points about thousands of products, on everything from toxic ingredients to the climate policies of its manufacturer. It makes comparing products easy, providing a high-level view for those who want to know simply "Is it good?" and a deeper dive for those wanting the gory details. GoodGuide's growth trajectory during its roughly 14 months of operation suggest that there's a hunger for this information, and that's encouraging.
Says Goleman:
Radical transparency promises to create a marketplace mechanism that takes the consequence of shoppers' choices to scale: each individual purchase, aggregated with all the others, becomes tantamount to votes on the nature of the goods they buy. As businesses respond by making more of the improvements that shoppers want, shoppers can feel empowered by seeing that their ethical choices matter.
In reality, this positive feedback loop hasn't worked very well. On the one hand, when it comes to green business practices, many companies are walking more than they're talking — that is, they're making more green improvements than they're taking credit for. One reason is that many of their green achievements are about "doing less bad" — using fewer toxic ingredients, creating less waste — which are tough stories to tell. Moreover, a lot of their most significant efforts don't end up directly in the products or packaging — they're embedded in their suppliers, perhaps far upstream — or aren't part of the value proposition for those products. (If I'm buying potato chips, should I care that the potato processors are recycling their rinse water, thus saving millions of gallons of water and hundreds of thousands of dollars a year? Or do I just want a salty, crunchy underpinning for my guacamole dip?)
Moreover, these things aren't being done so much for the planet as for profits; the fact that it has a positive environmental impact (or, at least, a less negative one) is a happy outcome. Does consumer power born of radical transparency play a role in spurring companies to make such changes? Likely not.
The same is true with one of the stories Goleman tells, about how Procter & Gamble did a life-cycle study of several of its products, measuring their impacts at seven stages, from materials selection through manufacturing, use, and disposal. When they plotted the various impacts on a 3-D bar chart, one of the bars loomed far longer than any other: the home-use stage of liquid laundry detergent — specifically, the energy used when people do their wash in hot water. The result, Tide Coldwater, has significant potential: if everyone in the U.S. used it, we'd reduce household energy use by about 3 percent.
Neither radical transparency nor consumer concerns about hot-water use had anything to do with this move. No one told them to do it. It was simply good business: a win-win-win for the company, their customers, and the environment.
That's where Goleman's thesis falls short, discounting that change happens fastest when there's something in it for everybody. Sure, increased information will get some consumers to change a little, prodding manufacturers and markets along the way, but unless companies make products perceived to be better, however that's defined or measured, and can make money doing it, we won't see wholesale change at the scale required. And all of the data in the world won't get mainstream consumers — the 80% or 90% who aren't true-blue green consumers — to become part of the solution.
Note: Daniel Goleman's response can be found here.
June 16, 2009 in Business Practices, Green Marketing, State of the Art | Permalink | Save This Page | Comments (12)
The Future of Green Product Design
We're about a month away from our upcoming conference, Greener By Design 2009, and I wanted to share what's coming and why I think this will be an extraordinary event. I also want to share information about a limited number of unpublished deep-discount registrations I have available for a few lucky blog readers. (More about that in a moment)
Greener By Design focuses on the intersection of product design, innovation, supply chains, and sustainability — how both large and smaller companies are baking environmental thinking into their products and manufacturing processes in a way that makes products not just greener, but better. This year's theme, "Greener Products for Leaner Times," reflects the elephant in the room — the economy — and how companies are aligning green considerations with the need to make products cheaper, lighter, simpler, and more energy efficient.
Suffice to say, this is no mean feat, though part of the problem is perceptual. Most companies still view that designing and building greener products is a costly endeavor resulting in products that are inferior, either in quality or in their ability to be cost-competitive with their conventional counterparts. As we report regularly on GreenBiz.com (and GreenerDesign.com), this is no longer the case. Companies making everything from clothing to cleaners to chips are finding their way.
And it's not just small innovative companies, though many of them are leading the pack. According to a recent survey by the research firm Forrester, a large number of companies are developing greener products, looking at outside factors as well as who within companies are pushing for product changes. Eighty-four percent of the consumer product strategy professionals surveyed said that their companies have environmentally conscious or socially responsible products in development or on the market.
We saw ample evidence of that at last year's Greener By Design (click here for video and other highlights), with companies ranging from 3M to Nike to Xerox — as well as upstarts like IceStone and Method — shared their learning and insights.
That trend has only grown over the past year, as the twin pillars of environment and cost-cutting have led companies to accelerate plans, as Forrester found. Much of the pressure is coming from retailers like Wal-Mart, which itself is ramping up efforts to push suppliers to innovate, reducing or eliminating packaging, making products more energy-efficient, and reducing toxicity — without raising prices. Clearly, this is no longer a "nice to do." It is the future of product design.
This year's event builds on that theme, as well as on last year's success. It includes keynotes from green design master Bill McDonough and iconoclastic entrepreneur Tom Szaky of Terracycle, along with the kinds of panels you'd expect. But also things you wouldn't: a hands-on workshop on innovation, by the renowned firm Systemic Inventive Thinking; small, consultative "guru" sessions with designers and innovators, in which attendees can pose their own design questions and challenges; and an Innovators Showcase, with entrepreneurs doing lightning-fast elevator pitches of their creations. We'll also have products on display from the latest electric vehicle to a new machine that's about to be released across Whole Foods Markets that I can't yet describe. (Click here for the current agenda.)
One of the things that most impressed me about the audience at Greener By Design is the sheer diversity of professionals it attracts. In my opening remarks last year, I scrolled the job titles of everyone in the room across the screen. It was a remarkable assemblage: designers, brand managers, and supply chain professionals, of course, but also engineers, biologists, chemists, and chief marketing officers, among many others. It was that diverse and high-level mix that contributed to the event's success just as much as the program itself.
So, about that discount: Thanks to the generous, record sponsorship we've had this year — from Autodesk, HP, Steelcase, UL Environment, and others — I have a handful of sponsored conference passes for less than half-price of the going rate — sort of my Earth Day gift. I'd like to make them available first to loyal readers of this blog — first-come, first served, and there are only a couple of minor qualifications required for eligibility.
If you're interested, send a note ASAP.
April 22, 2009 in Business Practices, Clean Tech, Green Marketing | Permalink | Save This Page | Comments (0)
The Seven Sins of Greenwashing: Is Everybody Lying?
An updated version of the 2007 report The Six Sins of Greenwashing has just been released. And like its predecessor, this version offers sensational findings: of 2,219 products making environmental claims that researchers found in North American retailers, "over 98%" committed one of several "sins." The 2007 report identified six such sins. This year's edition adds a seventh.
I suppose that's what passes for progress these days.
First, some background. In 2007, TerraChoice, a Canadian research firm that operates the Canadian government's EcoLogo program, sent research teams into six category-leading "big box" stores with orders "to record every product-based environmental claim they observed." TerraChoice then assessed each of the claims to see if they passed muster — that is, that they were specific, substantive, and could be backed up with some reasonable proof points, among other criteria. All told, out of just over 1,000 products, "all but one made claims that are either demonstrably false or that risk misleading intended audiences."
Late last year, TerraChoice repeated the process, though extended its reach: Its researchers were sent into retailers in the U.S., Canada, the U.K., and Australia. The track record was slightly better: 25 products found in North American stores were deemed "sin-free," says TerraChoice. The trends were similar in the other countries.
At first glance, those findings seem dire and depressing. But much like some of the eco-claims themselves, TerraChoice's report doesn't hold up to scrutiny. What's really going on here? Are manufacturers truly that overwhelmingly misleading? Is just about everyone out there pulling the green wool over our collective eyes? Or has TerraChoice set a bar so unreasonably high that even the most well-intentioned companies can't clear it, and lumped the imperfect claims together with the truly bad ones in order to make its point? In other words, who's greenwashing who?
Truth is, there's a little of each going on.
First, honor is due. TerraChoice has performed a public service here, calling attention to the fact that so many companies are making claims that are anything from fuzzy to fraudulent. The groundwork they've done here is invaluable, even if the conclusions they've drawn from it are, in my opinion, a bit misleading.
At first glance, TerraChoice's methodology seems reasonable. They put products making green claims through their filter that asks, in effect:
- Is the claim truthful?
- Does the company offer validation for its claim from an independent and trusted third party?
- Is the claim specific, using terms that have agreed-upon definitions, not vague ones like "natural" or "nontoxic"?
- Is the claim relevant to the product it accompanies?
- Does the claim address the product's principal environmental impact(s) or does it distract consumers from the product's real problems?
Products that failed to meet such requirements committed one or more "sins." As you can see, almost every product has done so.
Is the bar too high? Scot Case doesn't think so. "Manufacturers are doing a lot of great things," Case, the TerraChoice executive who headed the study, told me recently. "They are making significant advances. The challenge seems to be that their rhetoric is outpacing the actual improvements that they're making. So, we found all of these products — many of them make wonderfully specific, legitimate environmental claims. And they would be perfect, except that they want to take one more step and make an outrageous claim. And that's why the percentage of products that end up on the sinner's list is so high. It's because the marketers don't seem to know when to stop."
I asked for an example. "A product will make a claim that it contains 30 percent post-consumer recycled content," Case explained. "That's a good, simple claim. But then what they'll do is add on top of that that 'This is the greenest product ever made.'"
I countered that such a statement, should it truly exist, isn't an environmental claim so much as the typical hyperbole that is part and parcel of marketing of all types. It's akin to a mattress company claiming that their product is "Your ticket to a better night's sleep," or a beer company's claim that its product, "Tastes great. Less filling." It's not provable; it's just hype. Consumers are left to use their own smarts to discern the difference.
"I think that the challenge is that in this particular sector, we've got to be particularly precise with our language," responded Case. "Because what we're talking about are things that consumers can't see. When a manufacturer claims, for example, that their product is energy efficient, or that it meets the Energy Star standard, that's not something that I as an average consumer can test. When I'm walking the store down the refrigerator aisle, I don't have some sort of magic device to know if it's really energy efficient or not. So it seems appropriate that a manufacturer should be willing to provide proof and to make that proof widely available for me and other consumers."
(You can listen to a podcast of my entire conversation with Case here.)
Now, before we go further, it should be noted that not long ago, Case bought a refrigerator he believed to be energy efficient, but which ended up uising twice as much electricity as the manufacturer claimed. So, he's got some cold, hard experience here about misleading green claims. However, it sounds to me like he was a victim not of greenwashing, but consumer fraud.
But that's not what much of the "greenwashing" documented by TerraChoice is about. Some of it is about companies like SC Johnson, the maker of such venerable consumer brands as Glade, Pledge, Raid, and Windex, which has taken aggressive measures to reduce the toxic ingredients of its products and processes. Its Greenlist rating system — about which I've written in the past — has been systematically reducing the toxic ingredients and packaging of all of its products since 2001. Greenlist has won a bevy of awards, including honors from environmental groups and a Presidential Green Chemistry Award.
But Greenlist is a self-certified claim — that is, it has not hired an independent third-party organization like Case's to verify the claim. Thus, it's verboten — a "sinner," according to TerraChoice.
I asked Case about Greenlist. "It's a wonderful program," he acknowledged. But, he added, "The litmus test for whether a label was legitimate or not was quite simple: Can a consumer find out exactly what that label means?"
I suspect they can, if they conduct the same 10-second Google search I just did. The top result was a page on SC Johnson's website that provided as much information as I think any reasonable consumer would want or expect, with deeper links for those who want to know more.
The point here isn't to debate Greenlist or anything else. It's that, as I've pointed out before, a lot of what's called "greenwash" is in the eye of the beholder. What for some consumers might be a reasonable and meaningful marketing claim can be seen by others to be a travesty of justice. Sometimes the criticism is justified; often it's nit-picking.
I don't really know how many of TerraChoice's "sinners" amount to nit-picking. That's one of the ironic problems with the study: It lacks transparency and accountability. There are no products named, no sinners shamed. Are the "sins" detected by TerraChoice really all that egregious or, as I suggested last time, are the accused companies more sloppy than sinister? We don't know. Is SC Johnson as big a sinner as the toy company Case described that put its own green seal on a product because it decided unilaterally that wood was a greener choice than plastic? It's hard to tell. We are left with only the sensational factoid — ninety-eight percent! — and not the supporting evidence. We must make up our own minds whether to believe the facts, and what to make of them.
Kind of like some of the "sinners" TerraChoice is trying to fight.
No doubt, countless consumers, already suspecting the worst about companies' green motivations, will accept TerraChoice's findings as gospel — after all, it confirms their suspicions — not bothering to question what's behind them.
In the end, I can't help but wonder which is worse: the companies that aren't being fully truthful or transparent about their claims, or the consumers who will walk away from the green marketplace in frustration, dismissing all green products — the good ones and the rest — as cynical ploys by uncaring companies intended solely at separating consumers from their wallets.
April 15, 2009 in Green Marketing, State of the Art | Permalink | Save This Page | Comments (11)
Earth Day, Green Marketing, and the Polling of America, 2009
Here we go again. In the run-up to yet another Earth Day, here is my third annual take on the bounty of polling data on consumer environmental attitudes that seems to hit my in-box this time each year. (See here for the 2007 and 2008 installments.) This year is no different. I've counted more than a dozen different surveys, market segmentations, and opinion polls since Barack Obama became president. By my estimation, that's a record.
I jumped the gun a couple months ago, marveling at how Americans continue to claim their environmental shopping cred, even during horrendous economic climes. ("Why do nearly all of the surveys seem so gushingly optimistic, even during pessimistic times?" I asked. I'm still scratching my head.) But those polls were just the leading edge of the 2009 data wave.
So, what do they all tell us? As usual, a little bit of everything. Consumers are both more willing and less willing to shop green than in previous years. Consumers care more and care less about environmental issues given the economic times. Consumers are willing and not willing to pay more for greener goods. You get the point.
But one thing remains fairly consistent across nearly all of these studies — and most of the ones I've reported on in recent years: Vast majorities of consumers say they have adopted greener habits in their daily lives, and shop for at least some products with a keen eye on their environmental provenance and energy and climate impacts. In other words: the marketplace is getting greener — way greener, if you were to believe the numbers.
You may wish to not believe them, based on your own experiences and observations. I certainly have doubts. Either way, here is a taste of what the studies are telling us about American consumers in 2009:
- Consumers are more aware of green issues and are finding practical ways to be eco-friendly while also saving money in today's difficult economic times, according to the 2008 GfK Roper Green Gauge study. Nearly three-quarters (72%) of Americans say they know a lot or a fair amount about environmental issues and problems (up 7 points from 2007) and 28% often seek out environmental information (up 5 points). Seventy-six percent have bought energy-efficient light bulbs and 58% have purchased energy-saving appliances. Consumers are purchasing paper products made from recycled papers (72%), green household cleaning products (64%), and environmentally-safe laundry detergent (57%) despite the fact that they cost more. However, those who say the environment is a greater concern than the economy has dropped from 69% in 2007 to 55% in 2008.
- Nearly seven in ten Americans (67%) agree that "even in tough economic times, it is important to purchase products with social and environmental benefits," and half (51%) say they are "willing to pay more" for them, according to the 2009 BBMG Conscious Consumer Report. BBMG found that 77% of Americans agree that they "can make a positive difference by purchasing products from socially or environmentally responsible companies," and are actively seeking information to verify green claims. On the other hand, nearly one in four U.S. consumers (23%) say they have "no way of knowing" if a product is green or actually does what it claims, signaling a lack of confidence in green marketing, revealing what BBMG called a widespread "green trust gap."
- The number of Americans who say they almost always or regularly buy green products remains unchanged since last year — at 36%, after tripling the previous year from 12% in 2007 to 36% in 2008, according to Mintel consumer survey data. Cost remains an impediment to the green market's growth. Mintel found the majority of adults are willing to pay "only a little extra" for green products.
- More shoppers in North America, Europe, China, and Japan systematically purchased green products in 2008 than in 2007, according to a report by the Boston Consulting Group. In the United States, 16 percent of consumers — one in six — were systematic shoppers for green products in 2008. Some 61 percent said the environment is in a very bad state.
- Americans currently have a higher skepticism "about mainstream reporting" on climate change than at any other time in the past decade, according to a Gallup poll. As recently as 2006, significantly more Americans thought the news underestimated the seriousness of global warming than said it exaggerated it, 38% vs. 30%. Now, according to Gallup's 2009 Environment survey, more Americans say the problem is exaggerated rather than underestimated, 41% vs. 28%. Six in 10 Americans indicate that they are highly worried about global warming, including 34% who are worried "a great deal" and 26% "a fair amount." Overall worry is similar to points at the start of the decade, but is down from 66% in 2008 and 65% in 2007.
I'll be the first to tell you that some of this stuff is hard to report with a straight face. For example, according to Roper:
72% of parents discuss the importance of protecting the environment with their children on a regular basis (up 11 points from 2007). Not only are more American families having the "green talk," they are also emphasizing actionable issues. More are discussing recycling (86%, up 3 points), conserving energy (79%, up 5 points) and conserving water (76%, up 7 points). . . . Additionally, 88% of parents say they teach the importance of protecting the environment to their children by example (up 6 points from 2007).
Call me a cockeyed cynic, but I have a hard time believing that eight in ten parents are teaching their kids about saving energy and water, and that nearly nine in ten preach to them about "protecting the environment." (If it was the other way around — kids teaching parents – I might be more inclined to believe it.)
It's also hard to find solace in some of the rosier findings — for example, that 82 percent of Americans say they're still buying green products despite changes in the economy, according to EnviroMedia Social Marketing, or the 2009 Cone Consumer Environmental Survey finding that 34 percent of American consumers indicate they are more likely to buy environmentally responsible products today and another 44 percent indicate their environmental shopping habits have not changed as a result of the economy — when you also learn how utterly confused consumers are about what and who to trust. For example, according to BBMG, Wal-Mart was simultaneously named by consumers as the most and the least environmentally responsible company:
When asked unaided which companies come to mind as the most socially or environmentally responsible companies, 7 percent of Americans named Wal-Mart, followed by Johnson & Johnson (6%), Procter & Gamble (4%), GE (4%), and Whole Foods (3%). Wal-Mart also topped the list of the least responsible companies (9%), along with Exxon Mobil (9%), GM (3%), Ford (3%), Shell (2%) and McDonald's (2%).
And the kicker:
Interestingly, 41% of Americans could not name a single company that they consider the most socially and environmentally responsible.
Any questions?
April 12, 2009 in Green Marketing, Trendwatching | Permalink | Save This Page | Comments (6)
Green Consumers' Irrational Exuberance
What is it with pollsters and green consumers? Why do nearly all of the surveys seem so gushingly optimistic, even during pessimistic times? That's a question that's been nagging me the past few weeks.
I typically wait until near Earth Day in April to digest the current wave of surveys about green consumers in the U.S. (see here and here, for example), but the trickle of survey results has turned into a gusher much earlier this year than I can recall. Nearly a dozen surveys have crossed my in-box over the past three months, a period that includes a recession, a presidential transition, and the December holidays.
A sampling:
- Four out of five people say they are still buying green products and services today, even in the midst of a U.S. recession, according to a study commissioned by Green Seal and EnviroMedia Social Marketing and conducted by Opinion Research Corp.
- Despite the dire economy, 34% of American consumers indicate they are more likely to buy environmentally responsible products today, and another 44% indicate their environmental shopping habits have not changed as a result of the economy, while only 8% say they are less likely to buy, according to the 2009 Cone Consumer Environmental Survey.
- Thirty-three percent of consumers say they expect to make some type of green consumer electronics purchase within the next two years, according to a survey by the Consumer Electronics Association. More than half (53%) say they would be willing to pay some type of premium for televisions with green attributes, and 89% said that energy efficiency would be a factor in choosing their next television — even as less than half of the 960 people surveyed said they're generally able to make sense of the environmental attributes attached to electronics on the market.
- An overwhelming majority of Americans believe that safer, cleaner and more energy-efficient production are the most important manufacturing issues in today's economy, according to a survey by Opinion Research Corp. When considering a manufacturing company, Americans chose product and employee safety, and environmental issues as the most important attributes. Among the top answers chosen include "provide safe, quality products" (86%); "provide a safe workplace" (84%); "use natural resources efficiently" (80%); and "produce minimal waste" (71%).
- Three-quarters (77%) of consumers describe themselves as green — that is, actively living their lives consciously of their health and environment, according to a survey by Yahoo! More than half of survey respondents (57%) say they have made a green purchase in the past 6 months.
- Americans see a golden age for green investing, according to a survey by Allianz Global Investors. Seventy-eight percent of investors say we are likely to see more policies to promote business investment in new environmental technologies in the first year of the Obama Administration than we did under eight years of the Bush Administration. Further, 74% believe the new Congress will be more supportive of policies to promote business investment in new environmental technologies than the old Congress.
There's more, but I'll spare you. Did I mention that they tended to be a tad optimistic?
Many of these surveys begin to wilt when exposed to sunlight — that is, when you read beyond the headline and first few paragraphs of the press release or executive summary. And some are more than a little self-serving. For example, the survey on Americans wanting "more energy-efficient production" by manufacturers was commissioned by Rockwell Automation, a manufacturer of equipment to make factories more efficient. The survey on consumer electronics was issued during holiday shopping season by the electronics industry's trade group. The one on green investing came from a major asset management company. The study concluding that "About one in three consumers say they don't know how to tell if green product claims are true" came from Green Seal, a purveyor of eco-labels.
Beyond that, there's the slant of some surveys that doesn't hold up to scrutiny. For example, according to the Green Seal/EnviroMedia study:
Half of the 1,000 people surveyed say they are buying just as many green products now as before the economic downturn, while 19 percent say they are buying more green products. Fourteen percent say they are buying fewer environmentally green products.
The way I read this, if I wasn't buying green products before the economic downturn, and am still not doing so, I'm therefore "buying just as many green products now as before" — and fit right in with half the population. Maybe it's just bad writing, but such ambiguity undermines the authority of these studies.
I'm not suggesting that these surveys are frauds, or that their creators are anything but well-intended. But you don't need a degree in market research to conclude that during a time when consumption is down and the people are pinching pennies as never before, the unbridled buoyancy of these findings is suspect. Are green-minded shoppers really going forth into the marketplace as idealistic as ever? Are they immune to premium prices? Clearly, some green purchases may fall into the category of small indulgences whose sales often rise during tough times, but probably not to the extent reported by these findings.
As I've asked in the past: Can researchers be charged with greenwashing?
What, in the end, is the purpose of all these studies? Are they marketers' efforts to convince wary consumers that everyone else is keeping green purchases on their shopping lists in the hopes that it will become a self-fulfilling prophesy? Is that a realistic expectation in a time where layoffs and foreclosures are mounting by the week?
Or are American consumers, and probably those elsewhere, simply telling pollsters what they want them to hear: that they continue vote for a cleaner, greener world when they shop? And if consumers are being misleading, shouldn't sophisticated researchers ferret that out?
What's the truth behind consumers' seeming irrational exuberance for green? I'd love to know.
February 22, 2009 in Green Marketing | Permalink | Save This Page | Comments (13)
Behind IBM's Quest for a 'Smarter Planet'
Over the past few weeks, a series of fascinating full-page ads from IBM Corp. got the better of me. The company launched a series of "Smarter Planet" ads in November, running Mondays in the New York Times, Wall Street Journal, and other publications. They portrayed an image of IBM as a purveyor of solutions to the planet's environmental ills. I wanted to find out what was behind them.
I've long been fascinated with corporate image ads. In a post more than four years ago, I pondered what was behind the surge, as I saw it then, of ads portraying a company's green image. "Are such ads the best way to effect one's image?" I wrote at the time, answering my own question:
It's debatable at best. With consumer trust of big business remaining at cynical levels (though rising in recent months to near pre-Enron scandal levels), it's unlikely that company-sponsored environmental claims are likely to sway many purchases.
The ads kept coming over the years, from oil companies (Chevron, BP, Shell, and Exxon all seem to have some campaign going at any given moment), chemical companies (Dow, for example), and from entire industries: forestry, mining, plastics, coal, nuclear, and others.
IBM's recent campaign goes well beyond mere image — and beyond green — to envision a "smarter" world in which problems as wide-ranging as health care costs, energy and resource shortages, government inefficiency, threatened waterways, climate change, and traffic congestion can be addressed by a blend of systems thinking, technological innovation, and computing power. It's an intriguing campaign aimed at helping redefine IBM from its roots as a computer maker to its more recent incarnation as a self-described "global services company."
"Smarter Planet" isn't IBM's first foray into the green scene. In 2007, the company launched a program called Big Green Innovations to mine the company's vast wealth of expertise and technology to create products and services to help address customers' and society's environmental challenges. Big Green, a play on the company's longtime nickname, Big Blue, takes aim at everything from creating carbon dashboards to help lower companies' carbon emissions, to designing energy efficient data centers and more powerful solar cells. But it seemed more of an inward-looking effort, an attempt to collaborate with existing clients, and not a means of communicating with the marketplace. (You can listen to a 2007 interview I did on the topic with Sharon Nunes, who heads the Big Green Innovations program, and Wayne Balta, IBM's VP of Corporate Environmental Affairs.)
Recently, I talked to Rich Lechner, IBM's VP of Energy & Environment, and John Kennedy, its VP of Integrated Marketing Communications, to learn more about the "Smarter Planet" series — what was behind the ads and what the company hopes to accomplish from them. (Click here for a transcript of the full interview.) Kennedy began the explanation:
"Globalization has many benefits, but also some tradeoffs because many of the systems that the world operates in today — and by systems, we mean systems in every sense of the word, from systems in companies, to manmade systems and natural systems — needed to become smarter, to handle and take advantage of the greater connectedness in the world.
"So it started off with those observations. And the more we worked on this, we began to realize that not only was this a dynamic that was very compelling, but as well, we felt that it was a good opportunity for IBM. This is a company that covers multiple industries, has a depth of research — has through our entire history taken on some of the toughest problems in the world in a way to help the world work better, to help our clients' companies work better, and help governments and universities work better. So we felt like it was a very natural platform for us."
Lechner described the many environmental challenges that, he says, could be solved by "smarter" systems:
"In a world in which water, energy, power are severely constrained, you don't have to look far to see, for example, that only 30 percent of the potential electricity that's available at the energy source actually reaches the doorstep of the consumer. Or that significant amounts of traffic congestion are caused just by people circling, looking for empty parking spaces, wasting fuel. You can look at our distribution systems around the world and see that more than 20 percent of all the shipping containers and more than 25 percent of the trucks moving around on a global basis are empty. You look at the way that food is distributed and understand that the average carrot in the United States — the lowly carrot — has traveled 1,600 miles to get to your dinner table, and you say clearly something could be done to improve the efficiency of our food distribution system. And water: We're projecting that over a billion people won't have access to safe drinking water in just ten years time, and yet today, just five food and beverage companies consume enough water on an annual basis to serve the daily needs of everyone on the planet.
"We looked around and we said there's plenty of room for improvement and our expertise in IT [information technology] coupled with our deep industry knowledge and our ability to look at and re-engineer processes gave us a unique vantage point to comment on the need to exploit this growing intelligence and where the first opportunities for exploitation might exist."
The vision for "Smarter Planet" was laid out in a November 17, 2008, speech by IBM chairman and CEO Samuel J. Palmisano. "The world will continue to become smaller, flatter ... and smarter," he said. "We are moving into the age of the globally integrated and intelligent economy, society and planet. The question is, what will we do with that?"
The "Smarter Planet" ads — what Kennedy calls an "op-ad" campaign — are Palmisano's answer. They are designed "to get a reader to think about the world from a systems point of view, and along the way, describe these opportunities for systems," says Kennedy. Each week's ads cover a different topic: energy, traffic, food, infrastructure, retail, banking, and more. The schedule posted on the IBM website has ads slated weekly through early March.
The ads aren't intended to be overtly commercial, says Kennedy. "They are more agenda-setting, educating the reader about the world becoming smarter, and then in the end we talk a little bit about what IBM is doing today to help make a difference in these areas. So that is sort of an intentional phase we're in now and we're trying to do this in a thoughtful way. It's more of a short essay, and we try to convey this in that kind of a tone."
I asked Kennedy and Lechner how the ads work — that is, how they are supposed to create new business opportunities for IBM. Kennedy explained:
"There are two ways. First of all, in practical terms, over time we will talk about how 'smarter' is a way to think about transformation, and a way that industries can be transformed, and the way that companies in those industries can be transformed. So there are opportunities for banks to become smarter, retail firms to become smarter, healthcare to become smarter, government to become smarter. What you've seen initially are about larger issues because they resonate well. They are ones that the general population are familiar with.
"The reason why this is so timely, we believe, from a business standpoint, is we're in a time of great change in the world and we're in a time in our history where change is being discussed everywhere from the kitchen table all the way to the boardroom table. As a result, the leaders of many of our clients and leaders around the world are focused on transformation and see this as an opportunity to drive a great amount of transformation, and therefore it's a great opportunity to address ways that they can make their companies become more competitive as we come through this time of great change. That's the way we see the commercial opportunity."
So, the ads are all about starting a conversation with current and would-be customers about transforming themselves and the systems in which they operate during an opportune moment in history. I'll admit, I'm unclear how all this works at the ground level — that is, how readers will connect the dots between a series of "op-ads" and a big, fat contract with IBM. But Kennedy assured me that there's a method to their messaging:
"We think this is a business-building platform. We know our clients are looking at this time as a time to drive transformation and change, and the prospect of making their industry smarter, we believe, couldn't come at a better time. That's for our current clients and as well for future clients, to see us as a company that can help them in these areas. So absolutely we wouldn't be doing it if we didn't think it were a way to drive business and client engagement."
Adds Lechner:
"This is really a significant initiative, as significant as when we launched e-business a decade ago. And when the rest of the world was talking about the Internet, browser wars, and spinning logos, we came out and said, 'You know what? There's something more here. This is going to fundamentally change the way the world of business works, the ways that societies interact.' And it turns out we were right."
"It really is an agenda," says Kennedy. "It is a view of how the world works. It's a view of how the world can be improved and the systems that could be improved. We do talk about the role that we believe IBM can play, but one of the important points is that making the world smarter is not something IBM can do alone. This will require partnerships with many different types of companies, companies we have a partnership with, an ecosystem of partners you might not naturally associate with IT per se."
Can a series of ads really start a conversation with customers that will lead to profitable engagements, unprecedented partnerships, and systemic transformations that improve all of our lives? I'll reserve the right to maintain a healthy dose of skepticism. But you've got to like IBM's bold, clear vision, and its recognition that this is a moment in time where the need for dramatic societal change transcends political campaigns and corporate slogans to demand new tools and fresh thinking on the part of leading businesses.
Here's hoping it works.
January 4, 2009 in Business Practices, Green Marketing | Permalink | Save This Page | Comments (4)
Pondering the Sustainable Consumption Conundrum
I'm not sure whether it was strategic or serendipitous that the World Business Council on Sustainable Development released a report on sustainable consumption just a week before a recessionary Christmas — a time when countless millions were torn between the desire to shop and insufficient means to do so. Either way, it made for enhanced reading of what already was a pretty enlightening report.
The report's unimaginative title "Sustainable Consumption: Facts and Trends" (download - PDF), belies a bold premise: that companies need to start looking beyond "greening up" their products and services and begin embedding sustainability principles into their core business models — "delivering sustainable value to society and consumers, helping consumers to choose and use their goods and services sustainably, and promoting sustainable lifestyles that help to reduce overall consumption of materials and resources."
That's a tall order, one not easily achieved with the mindset of today's business leaders, or the incentives given most business leaders to grow at any cost. It's hard to imagine the preponderance of today's global companies shifting their business models to this degree, not to mention the preponderance of consumers deciding that maybe "having it all" doesn't necessarily refer merely to "stuff."
Or will the current economic meltdown change things? Is there a scenario in which global consumption patterns could change to embrace more sustainable products and levels of consumption? That's the trillion-dollar question.
Pondering the sustainable consumption conundrum is not new stuff for the WBCSD, a membership organization comprised of roughly 200 of the world's largest companies. For more than a decade, the group has brought together corporate giants like addidas, 3M, British Telecom, Henkel, Johnson & Johnson, Nokia, Procter & Gamble, and Sony to study the means by which companies can not only reduce the impacts of their products, but create new ones that meet the needs of those in both developed and emerging economies with little or no environmental and social impacts.
As far back as 1995, the group issued a policy statement noting that
Sustainable production and consumption involves business, government, communities, and households contributing to environmental quality through the efficient production and use of natural resources, the minimization of wastes, and the optimization of products and services. The WBCSD recognizes the need for business to take a leadership role in promoting sustainable patterns of production and consumption that meet societal needs within ecological limits. Business can best work towards these goals through responsible environmental management, enhanced competitiveness and profitable operations.
The response over the ensuing 13 years has been steady, albeit underwhelming, progress. Most manufacturers have made gradual efficiency improvements, reducing the waste, energy, water, materials, toxicity, and carbon embedded in their products and processes. Pollution prevention and "eco-efficiency" have been the watchwords, as companies found they could lower costs and reduce risks by cutting or eliminating emissions and other waste streams. Some companies have heralded their accomplishments through green marketing. Most don't bother, given that their successes amount to not much more than "doing less bad," a tough tale to spin.
But the WBCSD's newest report takes a notable turn. "This report signals a shift in the nature of the sustainable consumption agenda from the introduction of niche products and services to the embedding of sustainability principles into the core business model," it notes. In other words: "greening up" isn't good enough.
It's not that eco-efficiency isn't needed, says the WBCSD. It's necessary, but not sufficient. What's needed is a three-pronged approach:
Each of these three prongs strike me as an order of magnitude more difficult than the one before it. As I see it, Innovation — the growth of more sustainable products (a term, some would argue, that is oxymoronic: something either is, or isn't, sustainable) — is well underway. Each year, we see a steady parade of goods that are more energy efficient, less packaged, or require fewer resources in their manufacture, use, and disposal.
Choice Influencing — creating a market for next-gen green products that transform markets and engender radical innovation, new business models, and changes in customer behavior — is an ideal that never seems to become reality. Companies are inherently timid to disrupt consumers' routines, and consumers seem too comfy in their purchases and habits to make even smallish shifts in their behavior, even when it leads to better outcomes and experiences. It's up to disruptive technologies — the iPod and iTunes come to mind — to shift both market and individual behavior. Even then, the incumbents (e.g., record companies) will drag their feet for years in the name of preserving their dwindling market share.
The third prong, Choice Editing — "editing out" unsustainable products and processes — seems a pipe dream, a long slog of a journey that no one — corporate and political leaders alike — seem willing to undertake, let alone press others to do so, too.
Will the current economic turmoil change that dynamic? Will companies and consumers, chastened by their reversal of fortune, be more willing to consider new ways and means of production and consumption? For example, will citizens see virtue — for themselves and their communities — in community gardens, car-sharing, lending libraries for tools, local banks, and other co-operative and collaborative forms of conducting commerce? Will they open themselves to quality, not quantity, thereby changing the value propositions by which they shop?
Like I said, it seems a far-off vision, even on my more optimistic days.
The WBCSD is quick to point out the institutional barriers to this transformation. Among them:
There is currently no common understanding of what a sustainable product or lifestyle is. Business may determine the sustainability of a product based on a full life cycle analysis. Retailers, governments, and other actors may assess the "sustainability" or "un-sustainability" of a product based on varying disclosure criteria or societal pressure. As a result of this confusion over who determines the sustainability of a product, choices to edit the availability of certain products are often in conflict. Business, governments, and society (including consumers) must work together to define sustainable products and lifestyles.
Clearly, it won't be easy, but the opportunities seem limitless for those that get it right. As I wrote in my new book:
To a large extent, this is the ultimate green-economy strategy — enabling customers to reduce their impacts by doing business with your company. What is the opportunity to create products or services that become the green default — the no-brainer option that is better and greener? What is the opportunity to be disruptive — changing the economics, the business model, the market perception in a way that renders such barriers as the unaffordability and inconvenience of "going green" moot? What is the opportunity to create products that solve customers' problems — enabling them to fulfill their needs in a way that makes them genuinely part of the solution?
Any ideas?
December 27, 2008 in Business Practices, Green Marketing, State of the Art | Permalink | Save This Page | Comments (10)
