Today's "Lost In The Wash" seminar on sustainable products at the Commonwealth Club got me thinking about how sustainability (or lack thereof) impacts a company's bottom line. Consumers can search for sustainable products by using the GoodGuide and businesses can engage the services and networks of BSR to make their supply chains greener. One comment from the panel revealed how funny consumers can be; about 70% of consumers say they want to buy sustainable products but less than 3% actually buy them. Consumers may not know where to get information on green products. Corporations know how to make their stuff greener, but it may not make much difference to their bottom lines.
Companies that make inflated claims about their products' sustainable impact greenwash their brands. Irate consumers full of righteous indignation can rate the most egregious advertisements on the Greenwashing Index. The economy rates these advertisers on their profitability, as reflected in financial statements. Do the greenwash ratings match up with financial performance? Let's see.
GE got a bad greenwash rating in 2009 for its Ecoimagination campaign. GE's stock was tanking in 2009 along with the rest of the market, but it has recovered since then and its five-year ROE has been pretty healthy (despite negative EPS growth). Chevron also got hammered for a couple of its ads but its stock has also rebounded nicely from 2009, along with very healthy EPS and ROE. Outrage from vocal green consumers didn't hurt investors in these alleged big greenwashers.
The advertising ratings are subjective but the financial results are not. The FTC has crafted some handy-dandy guidelines for making environmentally friendly claims in advertisements, so IMHO the folks at the Greenwashing Index should recalibrate their scoring system to match those guidelines. The index's ad submissions are too small in number to be statistically significant so I can't take them seriously as a measure of consumer sentiment. Some media-savvy activist sites can punch above their weight.
TerraChoice (part of Underwriters Laboratories) publishes a much more comprehensive "Sins of Greenwashing" report. The 2010 report unsurprisingly refrains from naming any corporate violators. That's a smart move for a consulting company catering to the Fortune 500. Reading up on all of the new standards and labels provides corporate marketers with plenty of rebranding targets that go way beyond the Good Housekeeping Seal of Approval (and BTW there's a Green Seal too).
The big winners from greenwashing aren't necessarily the consumers who are worried about the processed foods they stuff into their pie-holes, or even the uptight activists who make careers out of making life difficult for job creators. The real winners are the corporations who can re-brand themselves to fit a hip trend and the consulting firms that help them pull it off. The focus on greenwashing has created another marketing niche. Nice work, if you can get it.
