In the tough forest-products industry, BSL Wood Products president Gino Ouellet stands out as an entrepreneur who has made his fortune by going green.
Since buying a small sawmill in 1995, Ouellet has expanded his enterprise to seven plants, where 210 employees produce hardwood flooring, decorative mouldings and eco-friendly heating logs. All products are made from recycled timber and are extensively promoted as green and sustainable.
"Recycling is the secret of our success and nothing is wasted," says Ouellet, 44. "We use low-cost material usually reserved for wood chips or pallets and turn it into attractive flooring."
BSL Wood Products also recycles wood scraps from its flooring production to manufacture the SmartLog — marketed as cleaner burning and more energy efficient than conventional fireplace logs.
Based in Mont-Joli, Quebec, the company has a green image that is not a marketing gimmick; it's a total commitment to the environment that has paid off in both higher sales and lower production costs from sources such as energy savings, Ouellet says.
That's a game plan an increasing number of Canadian entrepreneurs are following and they're making the right move, according to a recent study by the Conference Board of Canada. It predicts that a green marketing strategy will be the most important source of competitive advantage for companies in the future.
Companies under a microscope
"Widespread acceptance of climate change, oil dependency and water scarcity has caused many consumers to look at the environmental impact of the business world," say Michelle Thomson and Michael Bloom, authors of Turning Green into Gold. "Many organizations are overwhelmed by the complexity of adopting a green strategy and nervous about the potential cost, but firms that move quickly can gain a tremendous competitive advantage."
Quoting a 2005 study, the report says one in five U.S. consumers fit into the "lifestyle of health and sustainability" category — a market totalling $209 billion (U.S.) annually. Similarly, a Canadian survey found that 88 per cent of women and 71 per cent of men evaluated the environmental impact of their purchases.
However, fully three-quarters of Canadian consumers believed that "environmental claims were often just marketing ploys" and 65 per cent said the term "green" had been used so often "that it did not have much meaning any more."
"Consumers are skeptical of the term 'green,'" the Conference Board report says. "Some even see it as simply an excuse for companies to charge more for products with no environmental benefits."
Marketing claims must be backed by solid facts. If they aren't, companies can leave themselves open to charges of greenwashing — the practice of misleading consumers about the environmental benefits of processes, products or services.
The report warns: "The repercussions of greenwashing can be immense and can easily tarnish a company's reputation."
But even if a company is recognized as genuinely green, it's no guarantee of success. According to the report, "Many green products have failed because consumers thought they were ineffective, expensive, difficult to find and hard to use."
BDC Consulting manager Ian Turpin agrees that companies must ensure their environmentally friendly products and services are competitive with conventional options before launching a marketing strategy.
Consumers demand value
"Everyone is for virtue, up until the moment they have to pay for it," Turpin says. "Consumers will all say the environment is important, but their commitment varies greatly.
"While going green is a growing market segment, product performance and price are still the key drivers of consumer decisions," he says. "That's especially true when marketing to baby boomers because many are now retiring and facing reduced incomes."
"On the other hand, the children of the baby boomers, or the Y generation, are more likely to give priority to the environmental attributes of products and services."
To avoid charges of greenwashing, Turpin recommends that companies seek quality certifications such as ISO 14000 from a recognized and independent environmental authority. These certifications offer credibility based on concrete, measurable performance standards.
"At the same time, you don't have to be completely green and absolutely virtuous to use green marketing," he says. "The product or service itself doesn't have to be inherently green. What's important is that you're sincere about mitigating the environmental impacts of your business and conserving resources.
"It just makes good business sense. You don't have to be a tree hugger to want to reduce costs while gaining better market access."
Green marketing tips
- Demand for green products is growing but doesn't guarantee success.
- Performance, price and convenience remain most important.
- Green products must be able to compete with conventional products.
- Be careful not to expose yourself to greenwashing charges.
- Support your green claims with independent certification.
- Not all products are appropriate for green marketing — choose carefully.
- You need not be completely green, as long as you can show commitment.
- Green practices are good business in and of themselves and enhance the company's image.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.